[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
      THE PRESIDENT'S FY08 FEDERAL AVIATION ADMINISTRATION'S BUDGET 

=======================================================================

                                (110-10)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                                AVIATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 14, 2007

                               __________


                       Printed for the use of the
             Committee on Transportation and Infrastructure

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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia    JOHN L. MICA, Florida
PETER A. DeFAZIO, Oregon             DON YOUNG, Alaska
JERRY F. COSTELLO, Illinois          THOMAS E. PETRI, Wisconsin
ELEANOR HOLMES NORTON, District of   HOWARD COBLE, North Carolina
Columbia                             JOHN J. DUNCAN, Jr., Tennessee
JERROLD NADLER, New York             WAYNE T. GILCHREST, Maryland
CORRINE BROWN, Florida               VERNON J. EHLERS, Michigan
BOB FILNER, California               STEVEN C. LaTOURETTE, Ohio
EDDIE BERNICE JOHNSON, Texas         RICHARD H. BAKER, Louisiana
GENE TAYLOR, Mississippi             FRANK A. LoBIONDO, New Jersey
JUANITA MILLENDER-McDONALD,          JERRY MORAN, Kansas
California                           GARY G. MILLER, California
ELIJAH E. CUMMINGS, Maryland         ROBIN HAYES, North Carolina
ELLEN O. TAUSCHER, California        HENRY E. BROWN, Jr., South 
LEONARD L. BOSWELL, Iowa             Carolina
TIM HOLDEN, Pennsylvania             TIMOTHY V. JOHNSON, Illinois
BRIAN BAIRD, Washington              TODD RUSSELL PLATTS, Pennsylvania
RICK LARSEN, Washington              SAM GRAVES, Missouri
MICHAEL E. CAPUANO, Massachusetts    BILL SHUSTER, Pennsylvania
JULIA CARSON, Indiana                JOHN BOOZMAN, Arkansas
TIMOTHY H. BISHOP, New York          SHELLEY MOORE CAPITO, West 
MICHAEL H. MICHAUD, Maine            Virginia
BRIAN HIGGINS, New York              JIM GERLACH, Pennsylvania
RUSS CARNAHAN, Missouri              MARIO DIAZ-BALART, Florida
JOHN T. SALAZAR, Colorado            CHARLES W. DENT, Pennsylvania
GRACE F. NAPOLITANO, California      TED POE, Texas
DANIEL LIPINSKI, Illinois            DAVID G. REICHERT, Washington
DORIS O. MATSUI, California          CONNIE MACK, Florida
NICK LAMPSON, Texas                  JOHN R. `RANDY' KUHL, Jr., New 
ZACHARY T. SPACE, Ohio               York
MAZIE K. HIRONO, Hawaii              LYNN A WESTMORELAND, Georgia
BRUCE L. BRALEY, Iowa                CHARLES W. BOUSTANY, Jr., 
JASON ALTMIRE, Pennsylvania          Louisiana
TIMOTHY J. WALZ, Minnesota           JEAN SCHMIDT, Ohio
HEATH SHULER, North Carolina         CANDICE S. MILLER, Michigan
MICHAEL A. ACURI, New York           THELMA D. DRAKE, Virginia
HARRY E. MITCHELL, Arizona           MARY FALLIN, Oklahoma
CHRISTOPHER P. CARNEY, Pennsylvania  VERN BUCHANAN, Florida
JOHN J. HALL, New York
STEVE KAGEN, Wisconsin
STEVE COHEN, Tennessee
JERRY McNERNEY, California

                                  (ii)

  


                        Subcommittee on Aviation

                 JERRY F. COSTELLO, Illinois, Chairman

BOB FILNER, California               THOMAS E. PETRI, Wisconsin
LEONARD L. BOSWELL, Iowa             HOWARD COBLE, North Carolina
RICK LARSEN, Washington              JOHN J. DUNCAN, Jr., Tennessee
RUSS CARNAHAN, Missouri              VERNON J. EHLERS, Michigan
JOHN T. SALAZAR, Colorado            STEVEN C. LaTOURETTE, Ohio
DANIEL LIPINSKI, Illinois            FRANK A. LoBIONDO, New Jersey
NICK LAMPSON, Texas                  JERRY MORAN, Kansas
ZACHARY T. SPACE, Ohio               ROBIN HAYES, North Carolina
BRUCE L. BRALEY, Iowa                SAM GRAVES, Missouri
HARRY E. MITCHELL, Arizona           JOHN BOOZMAN, Arkansas
JOHN J. HALL, New York               SHELLEY MOORE CAPITO, West 
STEVE KAGEN, Wisconsin               Virginia
STEVE COHEN, Tennessee               JIM GERLACH, Pennsylvania
NICK J. RAHALL, II, West Virginia    MARIO DIAZ-BALART, Florida
PETER A. DeFAZIO, Oregon             CHARLES W. DENT, Pennsylvania
ELEANOR HOLMES NORTON, District of   TED POE, Texas
Columbia                             DAVID G. REICHERT, Washington
CORRINE BROWN, Florida               CONNIE MACK, Florida
EDDIE BERNICE JOHNSON, Texas         JOHN R. `RANDY' KUHL, Jr., New 
JUANITA MILLENDER-McDONALD,          York
California                           LYNN A WESTMORELAND, Georgia
ELLEN O. TAUSCHER, California        MARY FALLIN, Oklahoma
TIM HOLDEN, Pennsylvania             VERN BUCHANAN, Florida
MICHAEL E. CAPUANO, Massachusetts    JOHN L. MICA, Florida
DORIS O. MATSUI, California            (Ex Officio)
MAZIE K. HIRONO, Hawaii
JAMES L. OBERSTAR, Minnesota
  (Ex Officio)

                                 (iii)



















                                CONTENTS

                                                                   Page
Summary of Subject Matter........................................    vi

                               TESTIMONY

 Blakey, Hon. Marion C., Administrator, Federal Aviation 
  Administration, U.S. Department of Transportation..............    15
 Dillingham, Gerald L., Ph.D, Director, Physical Infrastructure 
  Issues, U.S. Government Accountability Office..................    15
 Scovel, Hon. Calvin L., III, Inspector General, U.S. Department 
  of Transportation..............................................    15

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Boswell, Hon. Leonard L., of Iowa................................    47
Carnahan, Hon. Russ, of Missouri.................................    49
Cohen, Hon. Stephen I, of Tennessee..............................    50
Costello, Hon. Jerry F., of Illinois.............................    51
Matsui, Hon. Doris, of California................................    55
Mitchell, Hon. Harry, of Arizona.................................    57
Oberstar, Hon. James L., of Minnesota............................    62
Salazar, Hon. John T., of Colorado...............................    66

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

 Blakey, Hon. Marion C...........................................    69
 Dillingham, Gerald L............................................    85
 Scovel, Hon. Calvin L., III.....................................   106

                       SUBMISSION FOR THE RECORD

Dent, Hon. Charles W., a Representative in Congress from 
  Pennsylvania, letter to Hon. Marion C. Blakey, Administrator, 
  Federal Aviation Administration, U.S. Department of 
  Transportation, February 14, 2007..............................    11
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


     THE PRESIDENT'S FY08 FEDERAL AVIATION ADMINISTRATION'S BUDGET

                              ----------                              


                      Wednesday, February 14, 2007

                  House of Representatives,
    Committee on Transportation and Infrastructure,
                                  Subcommittee on Aviation,
                                                    Washington, DC.
    The committee met, pursuant to call, at 2:00 p.m., in room 
2167, Rayburn House Office Building, the Honorable Jerry F. 
Costello [chairman of the committee] presiding.
    Mr. Costello. If we can get Jimmy Miller from not talking 
to the witnesses, we can begin this hearing.
    [Laughter.]
    Mr. Costello. Let me first call the Subcommittee hearing to 
order and ask members, staff and everyone here to turn off 
their electronic devices or put them on vibrate, please. I want 
to welcome everyone here today to the first hearing of the 
Aviation Subcommittee. In particular, I want to congratulate my 
friend who is now the Ranking Member of the Subcommittee, Tom 
Petri. Mr. Petri and I have worked closely together when he 
chaired the Subcommittee on Highways and he was very good to me 
in the markup process and to our State. We worked closely 
together in that endeavor and we are going to work very closely 
together on this Subcommittee. So I welcome my friend, Mr. 
Petri, as the Ranking Member of the Subcommittee.
    Obviously this year is going to be a very busy year for the 
Subcommittee. We have the FAA reauthorization, as well as a 
number of other issues that are important to me and to other 
members of the Subcommittee concerning a whole host of issues 
from safety to a lot of other things that we will get into in 
the coming weeks and the coming months. I will give my opening 
statement in just a few minutes and I will then call on the 
Ranking Member, to give his opening statement or any comments 
that he wants to make.
    Then we will give members an opportunity to make an opening 
statement or a comment. I would ask members, in the interest of 
time, to one, consider submitting their statements into the 
record when possible. But I do want to assure every member that 
you will have the opportunity to either give an opening 
statement or make a comment. At this time, I would ask 
unanimous consent that any member wishing to insert their 
statement into the record in its full entirety may be able to 
do so, and that we keep the record open for 30 legislative days 
to submit comments.
    Hearing no objection, so ordered.
    Mr. Mica. Does that exclude my--------
    Mr. Costello. You know, I thought we were going to get 
through at least the first 10 minutes of the hearing without 
the Ranking Member of the full Committee being here. But 
welcome to my friend from Florida.
    [Laughter.]
    Mr. Costello. Also let me say, before I give my opening 
statement, I would like to ask unanimous consent that the 
majority members be recognized in order of attendance for 
questions. What we will DO is we will keep a list of members on 
the majority side as they come in. They will be recognized 
according to when they show up. I ask unanimous consent that we 
recognize members on the majority side in that order. Hearing 
no objection, so ordered.
    I want to welcome everyone to the first hearing of the 
Aviation Subcommittee. Let me say that I am pleased that the 
Administrator of the FAA is here with us today, Marion Blakey; 
the new Department of Transportation Inspector General, Calvin 
Scovel, and Dr. Gerald Dillingham of the Government 
Accountability Office. Dr. Dillingham has appeared before this 
Subcommittee many times in the past.
    I would also note that the FAA just released its 
reauthorization proposal this morning, and this Subcommittee 
will be reviewing the details of that proposal in detail in 
coming hearings in the month of March. On March 14th, we will 
look at the FAA's reauthorization proposal. On March 21st, we 
will look at the FAA's financing proposal. March 22nd, we will 
have a hearing on the FAA's operational and safety programs. 
And on March 28th, we will look at the FAA's airport 
improvement program.
    However, this afternoon, the hearing will focus on the 
Administration's proposed budget for the FAA. The 
Administration's fiscal year 2008 FAA budget request has been 
received and it has received much attention in the last week, 
as it proposes to transform the FAA's current excise tax 
financing system to a cost-based user fee system. Under the 
fiscal year 2008 budget request, and as detailed in the FAA's 
reauthorization proposal, FAA's financing sources will shift 
from a mix of fuel taxes other than excise taxes, and a general 
fund contribution to user fees, fuel taxes and a general fund 
contribution. This proposal would take effect in 2009.
    As I stated at the outset, the Subcommittee will hold a 
hearing on March 21st to discuss in detail the Administration's 
financing proposal and its present and future implications. 
However, I would at this time make at least one initial 
observation about the proposed user fee financing proposal. 
While the FAA has cited the need to finance a major new air 
traffic control modernization initiative as a reason for 
reforming the current tax structure, the Administration's data 
indicates that in fiscal year 2008, user fees and excise taxes 
under the new proposal would hypothetically yield approximately 
$600 million less revenue than maintaining the current tax 
structure, and over $900 million less from fiscal year 2009 
through fiscal year 2012.
    I question the wisdom of moving to a new financing system 
that will not generate as much revenue as the current tax 
structure when we clearly need to make critical investments now 
to ensure that our Nation's air traffic control infrastructure 
is robust for the future. I also believe that the fiscal year 
2008 FAA budget request falls short in several respects. 
Facilities and equipment, the capital program in 2003, the FAA 
requested and received from the Congress an authorization of 
approximately $30 billion per year for its capital program. Yet 
for the past three years, the Administration has requested 
roughly $2.5 billion per year for the capital program.
    For fiscal year 2008, the Administration is once again 
requesting $2.46 billion for capital spending. The 
Administration identifies a $173 million of its $2.46 billion 
request, about 7 percent, as being directly related to the Next 
Generation system.
    The Department of Transportation Inspector General has 
stated that the FAA cannot achieve its goals of technologically 
transforming the national airspace system with $2.5 billion in 
the F&E budget, and that a $2.5 billion funding level goes 
toward primarily sustaining the existing system, not new 
initiatives. Moreover, the Administration's fiscal year 2008 
capital spending request appears to be at odds with its own 
preliminary NGATS F&E cost estimates of a little more than $3 
billion.
    The airport improvement program. The fiscal year 2008 
budget request provides $2.75 billion for the airport 
improvement program, $950 million less than the level 
authorized by Vision 100 for fiscal year 2007 and $760 million 
less than the House passed in the 2007 continuing resolution, 
H.J. Res. 20. Under the current formula for distributing AIP 
entitlement funding, virtually every airport that currently 
receives AIP entitlement in funding will have its entitlement 
reduced. Additionally, small airports might particularly be 
hard hit by the Administration's proposed AIP cuts, because AIP 
grants are a larger source of funding for smaller airports.
    Essential air service. Although it is not an FAA program, 
the fiscal year 2008 budget provides only $50 million for the 
essential air service, $77 million less than authorized by 
Congress, almost $60 million less tan provide in the House-
passed continuing resolution. As a result of this dramatic cut, 
almost half the communities that received EAS funding, 73 out 
of 147, would be dropped from the program.
    Staffing. In addition, I am very concerned about future 
staffing levels for the FAA controllers and safety inspector 
work forces. In particular, over the next 10 years, 
approximately 70 percent of the FAA's nearly 15,000 air traffic 
controllers will be eligible for retirement. The FAA estimates 
that it could lose more than 10,300 air traffic controllers by 
the year 2015. The FAA will need to hire approximately 11,800 
controllers over the next 10 years to have enough recruits in 
the pipeline to meet the positions lost.
    Although the FAA hired 1,116 controllers in fiscal year 
2006, the total loss of controllers was higher than the FAA 
projected. The increase in retirements could be directly 
attributable to the imposition of the FAA contract on the 
controllers. In fiscal year 2007, the FAA plans to hire more 
than 1,386 controllers and the fiscal year 2008 request 
provides for another 1,420 air traffic controllers. However, 
hiring new controllers is a complex process and task. 
Controllers are highly skilled professionals and it takes 
several years to train a controller.
    According to the FAA, the failure rate for controller 
trainees in both the FAA academy and in the ATC facilities is 
approximately 5 percent and 8 percent respectively. Replacing a 
controller who retires must begin several years in advance. In 
addition, the Department of Transportation Inspector General 
will testify today that the FAA controllers workforce plan 
still has some major shortcomings, including a lack of facility 
level staffing standards and associated cost implementation. It 
is imperative that the FAA have a feasible plan to hire and 
train new controllers today. Otherwise, we will be left with a 
system that is woefully short-staffed and unable to accommodate 
the future demands for air transportation. I look forward to 
hearing more from the Department of Transportation IG in this 
regard.
    I am also concerned about the potential attrition in the 
FAA safety inspector work force. It is my understanding that 
over one-third of the FAA safety inspectors will be eligible to 
retire by the year 2010. While the FAA's fiscal year 2008 
request provides for hiring an additional 177 safety inspectors 
over the next two years, I am concerned that the FAA does not 
have an accurate assessment of its staffing needs.
    Last year, the National Research Council reported that the 
FAA lacked staffing standards for inspectors and recommended 
that the FAA undertake a holistic approach to determine its 
staffing needs. In addition, the Department of Transportation 
IG has noted in the past that the rapidly changing aviation 
environment, from the increased use of outside maintenance 
vendors to new classes of air space users, such as unmanned 
aerial vehicles and very light jets, will place greater demand 
on the FAA inspector workforce.
    It is imperative that we make these investments in the 
FAA's workforce now so that they can meet the new challenges 
for maintaining the highest level of safety in this ever-
changing aviation environment.
    With that, I want to again welcome our witnesses here 
today. I look forward to hearing their testimony. And I would 
recognize the Ranking Member, Mr. Petri, now for his opening 
statement or any remarks he would like to make.
    Mr. Petri. Thank you very much, Chairman Costello. Let me 
begin also by congratulating you on your new assignment. It is 
a big one. This Subcommittee, as I think all the members are 
aware, has a very full plate this Congress. We are determined 
to work with you to make it as productive a session as we 
possibly can, knowing that the Senate also may have something 
to say about it as well as the Administration.
    I would like to thank you for calling this important 
hearing to start off the year. The budget request from the FAA 
before us sets on the course for reauthorization, in which we 
will examine the request in depth. While we await the details 
that will help us flesh out the agency's proposal, today we 
will address the issues raised by the President's budget 
request for this budget year.
    Among the most complex is the proposal to shift the FAA's 
revenue sources from the current assortment of excise taxes to 
a combination of general aviation fuel taxes and cost-based 
user fees for commercial users intended to better align system 
cost with system usage. With the current tax structure's 
expiration date set for September 30th of this year, we have to 
carefully consider the funding options available to best 
provide for the safety and efficiency of the Nation's airspace 
system.
    Modernization of the national airspace system will be of 
critical importance over the next 10 or 20 years as demand on 
the system grows. For modernization to be successful, 
development and deployment of cutting edge technologies and 
performance standards must not be delayed. I am interested in 
hearing about what specific modernization initiatives the 
Administration proposes for budget year 2008 and subsequent 
years.
    To keep pace with rising demand, the FAA must also continue 
to support airport capacity capital projects with the 
continuation of a robust airport improvement program. The 
President's budget request of $2.750 billion for the airport 
improvement program and although this request is some $950 
million less than what was authorized for last budget year, I 
hope you are going to try to figure out how to stretch it as 
best we can. Nonetheless, I am concerned about the impact that 
reduced funding will have on our airports' ability to keep up 
with capital project needs, particularly at small and medium 
size airports that are unable to rely on sizeable passenger 
facility charge receipts to complete the needed projects.
    The aviation industry's safety and efficiency is not only 
achieved by technology and funding, but also by the highly 
trained safety inspectors and air traffic controllers. As we 
move forward with the budget and with reauthorization, we must 
be sure to provide adequate funding for these critical elements 
of the FAA's safety oversight mission. I am pleased that its 
budget proposal addresses the coming wave of workforce 
retirements and supports a hiring plan that will keep pace with 
expected attrition.
    I would like to thank Administrator Blakey for being with 
us today, as well as the other witnesses from the GAO and 
Inspector General's office, and look forward to your testimony.
    Mr. Costello. I thank the Ranking Member for his opening 
statement and comments. At this time, under the five minute 
rule, we would recognize the gentleman from Colorado, Mr. 
Salazar.
    Mr. Salazar. Thank you, Mr. Chairman. I want to thank the 
witnesses for coming here today, and thank you for holding this 
important hearing.
    I want to associate my comments with yours, Mr. Chairman, 
as well. And I will keep my comments brief. I will submit my 
full statement for the record.
    But there are several things that are of concern to me. 
One, of course, is the user fee issue, and how it would 
basically cut the receipts down to $11.5 billion. I would like 
the FAA, or the Administrator, to actually give us a 
justification for this net loss of $600 million, if there is a 
great need for funding today, why should we want to go to a new 
structure that basically reduces the investment in our Nation's 
air transportation system?
    And of course, something that is very near and dear to my 
heart, in Colorado there are three essential air service 
airports. All three of them are in the Third Congressional 
District, my district in Colorado. I would like to understand 
or have an explanation made to me as to what justification is 
being used, what formula are you using to cut almost half of 
the funding for the EAS program. Is it going to be cut? Is it 
going to be straight across the board, or are there going to be 
certain airports that are going to be cut out of the program?
    Many of us are from rural communities. And the EAS program 
is vital to economic opportunities in rural communities.
    So with that, Mr. Chairman, I will yield back and I look 
forward to the witnesses' testimony today. Thank you.
    Mr. Costello. I thank the gentleman.
    At this time I will recognize, first let me congratulate, 
it is my first opportunity publicly to congratulate the former 
chairman of this Subcommittee, who is now the Ranking Member of 
the full Committee. We worked very closely together in our 
prior positions and I remember at one of our last hearings, one 
of the witnesses said something, and you said, well, I hope as 
we come back next year, and I said, Mr. Chairman, I hope you're 
sitting in my chair and I am sitting in your chair. Well, I am 
sitting in your chair, but you are elevated now to be the 
Ranking Member of the full Committee. And I congratulate you 
and recognize you at this time.
    Mr. Mica. Thank you, Mr. Costello. There are a lot of new 
faces in Congress, but you never know where you are going to 
end up in the system, in this great institution. I came here as 
a freshman member and Mr. Oberstar was the chairman of Aviation 
some 14 years ago. And then for six years I did get to chair 
that, and several of the past years, of course I had DeFazio 
for several years, God gave me him for a while.
    [Laughter.]
    Mr. Mica. Then I was blessed--is he here? OK, there he is. 
Any time you can withstand that long with Mr. DeFazio, you have 
a special elevation to sainthood in the next life.
    [Laughter.]
    Mr. Mica. A great working relationship with Peter, just 
kidding. And of course, you couldn't ask for anyone better to 
have as a friend. I have known our new Chairman and his wife, 
Georgia, since I think first coming here. So we are very proud 
of you and know you will do a great job.
    I had a few comments, though, that I did want to make. 
Because this is a very important hearing, and again, we have 
spent a lot of time on aviation in the past with some of these 
members, as I said. We do have a bit of a challenge ahead of 
us. As you know, the fees and taxes that fund FAA expire on 
September 30th, 2007. And I think it is critical to sustaining 
our current system, which has had a great safety record. But it 
is starting to get stretched a bit at the seams. We look for 
reauthorization, we look for a good way to finance that system, 
keeping it safe and keep us in business and our economy and 
aviation industry on the move.
    I do want to say first of all, I support the attempts of 
the Administration and FAA to revisit the whole way we are 
financing the aviation system. To move to a hybrid system I 
think is important, with some reliance on fuel taxes for 
general aviation and a cost based user fee system for 
commercial aviation users. One of the challenges we have, and I 
brought my little model today, I always have to have a model, 
but we have to look too at how we are now funding the system. 
Most of you know 7.5 percent ticket tax is really the way we 
fund this.
    So this airplane, commercial passenger aircraft, actually 
contributes, and our flying public today, contributes most of 
the money to fund the system. And is that truly fair? We have 
to ask some questions. Because I think we have about 7,000 of 
these aircraft, then we have about 16,000 jets and other craft 
that only carry maybe a few folks, but take up the same time 
and space. And how they pay their fair share is very important 
to the system.
    So we have to find the fairest way possible. I think the 
hybrid approach is very good.
    I do have some questions about the Administration's budget 
request, it provides $2.7 billion for the AIP, the airport 
improvement program in 2008. That is $950 million less than the 
level authorized in Vision 100. I have some concerns there.
    I do support also, some of you know me, I am a right wing, 
no-tax kind of guy. I do support, however, increasing the PFC 
and providing our airports with some flexibility with which to 
use those funds. The airlines, commercial airlines, have 
increased their fares over about a 12 month period about 16 
times, is what I am told. But we need to find a way to increase 
the money to support the infrastructure that also supports 
these passenger aircraft.
    So the final thing I will close on is, I commented at the 
beginning, we have a safe system and we need to keep it that 
way. I want assurance from FAA that in this new funding that we 
don't divert any of the funds necessary to keep the system 
safe, that we have safety inspectors and that we start moving 
to the next generation of air traffic control. We go from human 
to human, to data to data systems, which is expensive. They 
have, I think, a multi-billion dollar bonding proposal in here, 
which I look favorably upon, and other means of paying for that 
next generation system. But we have to make certain that again, 
we do not compromise safety.
    Thank you, Mr. Chairman.
    Mr. Costello. Thank you.
    We now recognize for five minutes the gentleman from 
Arizona, Mr. Mitchell.
    Mr. Mitchell. Thank you, Mr. Chairman.
    As we examine the President's FAA budget proposal, I want 
to express my concern about a couple of issues. First and 
foremost, I want to express my concern about safety. According 
to the FAA, over the next 10 years, 70 percent of its air 
traffic controllers will become eligible to retire. We need to 
make sure that FAA has the resources it takes to recruit, train 
and maintain controllers to replace those retirees and to keep 
the public flying safely.
    Second, I want to express my concern about efficiency. Last 
week's Washington Post reported some sobering statistics. 
According to the paper, airlines' on-time performance dropped 
for the fifth year in a row in 2006, with one in four flights 
arriving late or not at all, according to the data released 
yesterday by the Bureau of Transportation Statistics. It goes 
on to say, the airlines also mishandled a massive amount of 
luggage, 4 million bags, or 6.7 for every 1,000 passengers, and 
it is the industry's worst rating since 1990. We can do better.
    Lastly, I am concerned about airport maintenance and 
growth. The President's budget seeks a 21.7 percent cut in the 
airport improvement program, which funds capital improvements 
at commercial airports. This program funds everything from 
runway and taxiway improvements to noise abatement projects. 
Noise abatement is critically important to communities that 
surround Sky Harbor Airport in my district, an airport which 
serves as a hub for its Tempe-based U.S. Airways. Sky Harbor 
has requested more than $10 million for noise abatement 
projects in fiscal year 2008. A drastic cut to the airport 
improvement program could put this funding at risk.
    I encourage my colleagues to keep this issues in mind as 
they consider the FAA's budget request. I thank you, Mr. 
Chairman, and I yield back my time.
    Mr. Costello. I thank you.
    At this time, we recognize Mr. Hayes for five minutes.
    Mr. Hayes. Thank you, Mr. Chairman. Thank you and welcome, 
Mr. Dillingham, Mr. Scovel. We have been friends for years.
    I have looked at the proposal. There is no way that I can 
come to the conclusion that this user fee approach to funding 
the next generation is fair, equitable or is going to work. I 
would simply ask that the FAA and others sit down with those of 
us, and a number of have spoken already, who are pilots, who 
have some concept of what the proposals are going to do. At the 
same table I would love to see the controllers and folks from 
the FAA sit down and really look at hands-on, nuts and bolts, 
here is the good stuff, here is where you can save money, we 
need this, we don't need that, and really come up with 
something other than absolutely deadly user fee, huge tax on 
gas.
    So with all due respect, I again welcome you here, and look 
forward to that opportunity. I think Sam and Mr. Salazar and 
others, Leonard, can bring some wisdom to the table. And let's 
bring NATCA to the table and hear what they are saying as well.
    Thank you very much. I yield back.
    Mr. Costello. I thank the gentleman. And at this time for 
five minutes we recognize Mr. Lampson from Texas.
    Mr. Lampson. Thank you, Mr. Chairman. I appreciate the 
opportunity for just a minute or so. First let me say thanks to 
you and to Ranking Member Petri for the leadership on this 
particular hearing. I am looking forward to the comments that 
are being made.
    Our Nation's aviation system faces some daunting 
challenges. This Committee and this Congress must rise to the 
occasion in helping to craft policy that will deliver a 
sustainable aviation infrastructure. Southeast Texas faces many 
of the same challenges other major cities and areas of the 
United States face. We are rapidly changing, rapidly increasing 
the volume of passengers and commercial aviation. I am 
concerned that the current level of infrastructure will not be 
sufficient to sustain the growth if we don't act preemptively.
    I am pleased that Congress and our Federal agencies have 
continued to explore solutions to both near-term and long-term 
issues, bringing public and private organizations together in 
forums such as the Next Generation Air Transportation System. 
As we move closer to the Federal Aviation Administration 
reauthorization, which this Committee will soon consider, we 
must focus on smart growth, planning for future congestion 
mitigation, ensuring that our air traffic control systems 
remain viable and providing sufficient resources to grow our 
aviation infrastructure to the necessary levels.
    I firmly believe that a congested and inefficient system 
hampers economic prosperity and productivity. I look forward to 
working with the Chairman and the Ranking Member as well as the 
Administration to ensure we are both crafting policies that 
make sense and providing adequate funding to secure the 
viability of our aviation infrastructure.
    I thank you, Mr. Chairman, and I yield back the balance of 
my time.
    Mr. Costello. I thank the gentleman.
    Mr. Coble.
    Mr. Coble. Thank you, Mr. Chairman. I will not consume five 
minutes. I just want to echo what the distinguished Ranking 
Member said about you and Mr. Petri being in leadership roles 
on this very important subcommittee. I have two other meetings 
simultaneously, so I may have to leave. I want to welcome the 
witnesses here.
    But I want to mention, Mr. Chairman, I came in late, but I 
know that we are blessed with the presence of at least two very 
adept aviators, the distinguished gentleman from Iowa, Mr. 
Boswell, the distinguished gentleman from North Carolina, Mr. 
Hayes. At least they tell me they are adept aviators, Mr. 
Chairman, I can't refute that. But I think it is good to have 
some expertise on the Subcommittee, and I look forward to 
working with you and Mr. Petri this session. I yield back.
    Mr. Costello. Thank you.
    At this time we recognize the gentleman from Iowa, Mr. 
Boswell.
    Mr. Boswell. Thank you, Mr. Chairman.
    I would like to associate myself with the remarks of Mr. 
Hayes and save a little bit of time for witnesses. Ms. Blakey, 
I too appreciate very much, in spite of the fact that we are 
not in agreement with what you are proposing, we think you are 
sincere in what you are trying to do and we appreciate your 
doing it. But I think you have heard a very sincere plea, let's 
sit down together. I want to join with that, I think it must be 
done. I think we would get a lot more done if we work together 
than if we just bump heads.
    So we respect you and ask that you might respect us, and 
let's see if we can work it out. I am pleased that we are this 
session and process. I just don't see how we can't continue the 
functions that we have to do with our present funding 
mechanism, we can do it. So as has been stated, I am a user of 
the system, not as much as some, but I do use it and appreciate 
it and I feel comfortable using it. We have some real pros 
sitting behind those screens and safely moving us across some 
very busy skies at times.
    So I would hope that you do that, I again associate myself 
with Mr. Hayes and others. I think this is an unfair approach 
and an unwise approach, and I don't think we have to do it. So 
I would hope that this discussion would open the door and take 
us to a point where we can figure out what we can do and we all 
understand it and work at it together. With that, Mr. Chairman, 
I yield back.
    Mr. Costello. Thank you.
    At this time the Chair would recognize for five minutes Mr. 
Dent.
    Mr. Dent. Thank you, Mr. Chairman.
    I have some questions about a specific issue in my district 
that I will submit for the record, with your approval. With 
that, I will yield back the balance of my time.
    [Mr. Dent's letter to Administrator Blakey follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Costello. I thank the gentleman.
    At this time I would recognize Ms. Norton for five minutes.
    Ms. Norton. I thank you very much, Mr. Chairman, and I 
thank the Administrator and her staff for appearing.
    I note that you have heard from Mr. Boswell, who uses this 
airport. There are a number of members who fly. This Committee 
had to take quite extraordinary action in order to open small 
plane and charter service at Ronald Reagan National Airport. It 
was a disgrace that although the Committee was clear, for about 
three years, that with small plane service up everywhere, 
including almost immediately in New York after 9/11, there was 
no excuse for the Government and the Administration, 
recognizing that there were other parts of the Administration 
involved, to ignore the clear wishes of this Committee that 
service be resumed as well at Ronald Reagan National Airport.
    It took a specific piece of legislation, passed by this 
Subcommittee, and only when Chairman Young threatened to hold 
officials in contempt did a plan come forward that finally 
opened the service at Ronald Reagan for small planes. This 
Committee could not be more cognizant of what the 
responsibility was and how difficult it was. But it certainly 
made the greatest power in the United States look small, that 
we could not open part of the airport for our own capital.
    And when it was opened, and here is my complaint, Madam 
Administrator, the trappings that surround the ability to fly 
into this airport are unworthy of the United States, where 
people had to come armed on small planes, and a whole set of 
paraphernalia and extra expense that in effect dis-invited such 
planes to land in the capital of the United States. Because I 
will not be here for the entire testimony, I want to go on 
record again to say that I hope that you will work with others 
in the Administration to normalize service for small planes in 
the Nation's capital, so that it does not become almost 
impossible to travel to the Nation's capital, not only a major 
region because our capital is located here, but because this is 
one of the great economic engines of our Country.
    So I ask you to give your concerted attention to relieving 
the burdens that attach to flying in with small plane service 
to Ronald Reagan National Airport.
    Thank you, Mr. Chairman.
    Mr. Hayes. Will the gentlelady yield?
    Ms. Norton. I will be pleased to yield.
    Mr. Hayes. I appreciate your remarks, you are absolutely on 
target. I would be happy, along with Mr. Graves, Mr. Boswell 
and others, it is not the FAA's fault alone. I have asked the 
Secret Service to revisit, TSA needs to revisit. I am sure you 
will, and Ms. Blakey will help us get the folks back to the 
table and get away from ``it's not us, it's them,'' make sure 
they all come to the meeting.
    But Ronald Reagan, except in a technical sense, is not open 
to general aviation this day. On paper, yes, but try to do it, 
you won't. Thank you.
    Ms. Norton. I thank the gentleman for his remarks, and I 
yield back the balance of my time.
    Mr. Costello. I thank you.
    The Chair would propose that we recognize one more member 
on this side of the aisle and then move to the witnesses, if 
there are no objections. At this time, we would recognize Mr. 
Graves for five minutes.
    Mr. Graves. Thank you, Mr. Chairman, add thank you, 
Administrator Blakey, for coming in. You have always been a 
pleasure to work with and easy to work with. You are always 
responsive whenever we call.
    I have to tell you, I am terribly disturbed by this 
proposal. I kind of went through the process and figured up, 
and I know we are depleting the aviation trust fund. But 
revenues into the aviation trust fund are actually increasing. 
We are trying to fund a system, I know it is a next generation 
system, we are going to make the skies safer.
    So I kind of put all this into perspective, and I realize, 
too, that we haven't figured out what that system is yet and we 
don't know when we are going to implement it. We don't know how 
much it is going to cost. So I think, well, we are going to 
build up the fund, we are going to try to build it up in 
advance of that point.
    So I am sitting here, and we first got word of the proposal 
two weeks ago, I think, or last week. My staff person walks 
into my office, and I know there is going to be a gas tax hike, 
so I am bracing myself. I know it is 21 cents, just a little 
less than 21 cents now. I am thinking, maybe it is going to go 
up a nickel, you know, 29 cents. And my gosh, I hear 70 cents 
and it just floors me. I don't even know where to begin. I 
don't even know where to talk about that, and I can't even tell 
my pilots back home about this, because I am going to get 
pelted the minute I say it.
    And then to know that the fact that this is open-ended, and 
it is indexed for inflation, and there are so many other broad 
proposals out there that we are not even sure about that are to 
be determined later, it really, really disturbs me. Then I have 
to ask, and I have talked to a couple of my pilots about this, 
and the question they have is, what do I get for that? 
Obviously, I know the airport improvement program is a part of 
this. The proposal is to eliminate the standard rate for the 
States that do use that.
    But again, the airport improvement program is in there, so 
they are getting something for that. But next generation air 
traffic control system, these guys are out there flying in 
Class D air space and Class E air space and whatever the case 
may be, they are just not a burden on the system, they are not 
using the system, and they want to know what they are getting 
for this incredible increase.
    Then I had another pilot tell me, and he was exactly right, 
this is going to make the skies safer because nobody is going 
to be able to fly any more except the commercial carriers. They 
can't afford it. It is a 300 percent increase in aviation fuel.
    I know everybody has to do their part and be a part of 
this. But I am truly at a loss. I don't know where to start. I 
understand that we come in with the negotiation process and we 
start at one end and the other side starts at the other end and 
we try to find our way to the middle. But even the middle is 
unheard of, at least in my opinion.
    I don't know what to do. I am truly at a loss. I am 
bothered. I am flustered. I don't even know where to begin.
    I vented in the full Committee last week, and now, since I 
have seen the proposal, I am venting even more. I have a lot of 
pilots out there that I have to represent, and a lot of folks 
out there that depend on aviation, they have small businesses 
that cater to general aviation, they relate indirectly--there 
is just a lot of people out there that their livelihood hangs 
on this proposal. I don't see anything but bad news for 
everybody. I don't see how anybody can afford to fly with that 
kind of an increase. It is not going to stop there, it will be 
indexed and it will go up. And we all know it is going to go 
up.
    Mr. Ehlers. Will the gentleman yield?
    Mr. Graves. Yes.
    Mr. Ehlers. Thank you very much.
    First of all, I want to comment, you are also an adept 
pilot, and we have to add you to the list of adept pilots here, 
and we appreciate your input. But in terms of your question, 
where do we start, I have a suggestion. I think the proposal 
that has been formed is dead on arrival. We can all save a lot 
of time, instead of arguing about that, getting a working group 
together from this Committee, a working group together from the 
FAA and explore the possibilities. I don't think there is any 
other branch of the Federal Government that is in such need of 
coherent, long-term planning as the aviation sector. They 
simply cannot make moves quickly. As you well know, the 
Congress doesn't make moves quickly.
    But we have to sit down and talk about the next 20 years of 
aviation sector and the only way to do it is to get some people 
from the Congress, some people from the FAA sitting down and 
trying to work on the long-range picture, rather than having 
the FAA come up with proposals we shoot down, they come up with 
others we shoot down, I think this is so important to the 
Nation that we really have to sit down and thresh it out 
together in some informal manner and come up with some ideas.
    I appreciate the comments that you made, and I yield back.
    Mr. Graves. Thank you, Mr. Chairman.
    I am glad it is you, Administrator, because I would have 
lost my temper if it hadn't been you. I hope you understand 
what I am saying. Thank you.
    Mr. Costello. I thank the gentleman, and would like to move 
on to our witnesses. Again, we welcome you here this afternoon. 
We would ask all of you to summarize your testimony in a five 
minute period if possible, so that we can move on to questions. 
The Chair would recognize the Administrator, Ms. Blakey.

  TESTIMONY OF THE HONORABLE MARION C. BLAKEY, ADMINISTRATOR, 
      FEDERAL AVIATION ADMINISTRATION, U.S. DEPARTMENT OF 
TRANSPORTATION; GERALD L. DILLINGHAM, Ph.D, DIRECTOR, PHYSICAL 
 INFRASTRUCTURE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; 
 THE HONORABLE CALVIN L. SCOVEL, III, INSPECTOR GENERAL, U.S. 
                  DEPARTMENT OF TRANSPORTATION

    Ms. Blakey. Good afternoon, and thank you, Chairman 
Costello. It is a true honor and a privilege to address you, 
Congressman Petri and the Members of this Subcommittee. This is 
the first time that I am appearing before the 110th Congress. 
Let me say that I am really looking forward to working with all 
of you, and certainly with the aviators, the pilots on this 
Committee. We are very lucky to have so many people who know 
aviation first-hand. I am very pleased about that, and do look 
forward to the discussions that we are going to have, because 
it will be a very busy year.
    I will tell you that my statement today is focused on the 
issue of the 2008 budget, as that was the topic of the hearing. 
And of course, we did not know whether the timing would be 
coincident, as it is, with the Administration submitting the 
new financing reform legislation, which we submitted to 
Congress this morning. However, I am very happy to address some 
of the concerns and issues that a number of you have raised in 
your opening statements as we go forward. My statement will 
focus on the budget.
    The final thought I might have also is that a number of 
concerns were expressed, such as concerns about essential air 
service and the security requirements for general aviation at 
Reagan, which do fall outside the FAA's purview. They fall 
outside of our authority. So I would caution about that fact as 
well, although it is helpful, certainly, to hear the concerns.
    Let me just start with noting something that I think we all 
can take a great deal of credit for, and that is that this is 
the safest period in the history of aviation. I believe the 
President's 2008 budget provides the framework to keep it that 
way. We believe strongly that the budget and the 
reauthorization proposal released this week are how we are 
going to reach the Next Generation Air Transportation System. 
We believe that the current financing structure will make it 
extremely difficult to get there.
    As you are aware, the 2008 budget is structurally very 
different from previous years. It supports changes in our 
financing and these in turn support the development and the 
launch of NextGen. In a nutshell, the new financing system will 
allow the FAA to operate in a more businesslike fashion, with 
the ability to make long-term plans and investments that won't 
be tripped up by the fluctuations in ticket prices and the 
other changes that occur in the shape of the aviation industry 
that aren't related to our workload at all. Of course, here I 
am referring to things like the increase in the number of small 
planes, the regional jets, the VLJs, and all of the various 
other changes that are happening in the system that really 
don't have to do with the change in our workload.
    Frankly, the plan to tie FAA revenues to the price of a 
ticket has long outlived its usefulness. The creators of the 
Airport and Airway Trust Fund had no way of anticipating the 
bumpy economic road ahead or that airlines would shift to 
smaller planes in an attempt to stay competitive in business. 
The new reauthorization proposal suggests a hybrid funding 
system that distributes more fairly and equitably the cost to 
operate the system. The airlines, passengers and other 
commercial users pay the lion's share of taxes today. They pay 
more than 95 percent, while accounting for less than 73 percent 
of the air traffic system's cost.
    High end general aviation aircraft impose similar costs on 
the FAA in the en route high altitude environment, but they 
currently pay far less into the system than commercial users 
for comparable flights. The new funding mechanism addresses 
this inequity.
    The Administration's proposal respects not only the 
concerns of people flying the planes, but the taxpayers flying 
in them as well. Turbine commercial flights will pay their fair 
share of the cost through user fees. But we have listened very 
closely to the general aviation community. And general aviation 
flights will pay their fair share through fuel taxes. This is a 
hybrid system, and we believe it strikes the right balance.
    The general fund will finance the cost of services provided 
to the public and programs that are in the public's interest, 
such as safety regulation, air traffic costs driven by the 
military and air ambulances, and flight service stations. And 
we are going to replace the ticket tax and four other aviation 
excise taxes, which further tie our costs to our revenue. That 
equals fewer taxes added on the cost of a passenger's ticket.
    This is all crucial to the success of NextGen. But let me 
turn quickly to the 2008 budget because the 2008 budget fully 
funds the next step in technology, ADS-B. This satellite-based 
aviation system is designed to increase safety, capacity and 
efficiency. Even as ADS-B is the future, its capabilities are 
already being demonstrated. ADS-B provides automatic broadcast 
of aircraft position, altitude and velocity, and simply put, it 
offers both pilots and controller enhanced visibility, not just 
in the air but on the ground as well.
    The budget also fully funds another innovation: System-Wide 
Information Management, SWIM. This is an aviation internet, 
essentially, with the ability to move information within the 
FAA and to other Government agencies faster, better, cheaper. 
Much like the World Wide Web revolutionized American commerce, 
SWIM lays the aviation information superhighway. It is going to 
lead to dramatic improvements in air transportation, safety, 
security and capacity.
    Let me touch quickly on two other aspects of this, because 
our budget request for the new safety and operations account is 
$1.9 billion. This level supports increasing the 2006 actual 
onboard AVS safety work force by 177 inspectors and 173 other 
safety staff. Our budget request for the new ATO account is 
$9.3 billion and calls for the hiring of 1,420 controllers. By 
year-end, we expect to have 14,951 controllers onboard, and 
4,045 inspectors as well.
    Our airports remain the primary focus in the 2008 budget, 
also a primary area of focus. The budget request of $2.75 
billion with our proposed programmatic changes for the Airport 
Improvement Program will enhance capacity, security, safety, 
and environmental mitigation. The budget also boosts capacity 
with a request of $3.6 billion. As you know, we bolstered 
capacity with Domestic Reduced Vertical Separation Minimum, 
DRVSM. This effort adds six additional lanes for flight at 
cruise altitudes, increasing capacity by exponential factors. 
It is going to save the airlines $5.3 billion in fuel. And we 
see that just going up as the cost of fuel, the price of a 
barrel of oil goes up as well.
    We are also enhancing our air traffic control over the 
ocean with ATOP, Advanced Technologies in Oceanic Procedures. 
This covers the Atlantic, 24 million square miles of air space. 
And we see the airlines again saving 6.5 million pounds of 
fuel, that is about $8 million a year.
    I could talk a bit more about other important aspects of 
this. RNP, Required Navigation Performance, which allows pilots 
to take advantage of satellite technology to fly a much more 
precise flight path into an airport, and tell you that we are 
going to be advancing this rapidly with this budget. We plan to 
publish at least 25 RNP approaches this year, including 10 in 
Atlanta in May. These are huge advances.
    What is without doubt, though, is that NextGen is a 
necessary step that we have to take without delay. As the 
system continues to experience an influx of smaller, newer 
jets, microjets, air taxis, it becomes more and more clear that 
we can no longer rely on yesterday's technology to keep things 
moving. Without the Next Generation Air Transportation System, 
we will all be looking back at the summers of 2000 and 2006 as 
the good old days. The tarmac is where you are supposed to get 
ready to take off. It is not supposed to be a holding tank.
    Our 2008 budget and the new reform proposal ensures a 
smooth takeoff and a terrific trajectory to the NextGen. Thank 
you very much.
    Mr. Costello. Thank you, Administrator Blakey.
    At this time we would recognize Dr. Dillingham.
    Mr. Dillingham. Thank you, Chairman Costello, Mr. Petri, 
Mr. Duncan, members of the Subcommittee.
    I believe that we all here agree that the U.S. has one of 
the safest air transportation systems in the world. It is, 
however, a system under strain. In 2006, one in four flights 
arrived late, matching the record delays of 2000. And in the 
next ten years, demand for air travel is expected to increase 
by over 300 million passengers. Furthermore, the consensus of 
opinion is that the current ATC system cannot be expanded to 
meet the forecasted traffic demands.
    Mr. Chairman, my testimony today will identify some of the 
progress FAA has made in two broad areas as it attempts to 
address this growing capacity problem, as well as some of the 
challenges that will need to be addressed in the 2008 budget 
year and beyond. I will focus specifically on FAA's progress 
and challenges related to ensuring the continued safe and 
efficient operations within the national airspace system and 
FAA's progress and challenges in managing the development of 
the current ATC system, while leading the transition to the 
next generation.
    I will also briefly discuss the importance of a timely 
reauthorization.
    First, with regard to system safety. In the current system, 
and certainly as the system has expanded to meet demand, it is 
unlikely that FAA will have enough resources to directly 
oversee every aspect of aviation safety. FAA has determined 
that it can best achieve its safety mission by using risk-
based, data-driven safety programs. GAO agrees that this is a 
rational approach for monitoring safety.
    However, for this approach to be effective, FAA must have 
accurate and complete safety related data. FAA has made 
progress in this area, but as examples in our written testimony 
show, problems with the quality and availability of data 
continue to negatively affect its ability to achieve its safety 
program goals.
    Another challenge to meeting this goal is FAA's ability to 
hire, train and deploy its primary safety workforce of 
inspectors and air traffic controllers. For example, FAA plans 
to more than double the number of air carriers in its risk-
based air carrier safety oversight program. This will result in 
significant workload shifts for its inspector workforce. 
Actions such as these make it critical that FAA improve its 
safety inspector staffing process, including the development of 
a staffing model.
    In addition, FAA's ability to replace as many as 10,000 air 
traffic controllers or about 70 percent of its controller 
workforce over the next 10 years, will also need to be 
monitored closely. In recent years, controllers have been 
retiring faster than FAA anticipated, thereby exacerbating this 
hiring challenge.
    With regard to the management of the current ATC 
modernization program and transitioning to NextGen, the 
implementation of several GAO recommendations and best 
practices from the private sector has led to significant 
improvements in the outcome of FAA's acquisition and oversight 
processes for major ATC acquisitions. As a result, for the 
first time, FAA has reported meeting its acquisition cost and 
schedule goals for major systems in each of the last three 
years.
    Another outcome in this area was the establishment of an 
agency-wide cost savings and cost avoidance initiative, which 
resulted in a total of nearly $100 million in cost savings for 
the last two fiscal years.
    In regard to the transition to NextGen, FAA and JPDO are 
working toward a single plan for modernizing the air traffic 
system under its operational evolution partnership. The 
principal challenges for FAA in this area are 
institutionalization and integration. By institutionalization, 
it means doing what is necessary to maintain and improve on the 
culture transformation that has been initiated at the agency. 
Research shows that this kind of cultural change takes about 
five to seven years, and requires sustained leadership to take 
a firm hold in the organization.
    ATO has been in place a little over three years. And the 
tenure of FAA's principal cultural change leaders, 
Administrator Blakey and the COO of the air traffic 
organization, are drawing to a close. FAA will also be 
challenged to obtain Congressional support for controversial 
cost savings and efficiency measures, such as additional 
facility closings and consolidations.
    The integration challenge is the effort that will be 
necessary for an efficient and cost-effective transition of the 
current ATC program with JPDO and NextGen. Some key elements of 
this challenge include working with JPDO, airlines and Congress 
to complete a valid consensus cost estimate and funding method 
for NextGen. A time-critical part of the funding challenge is 
how to replace funds for research and development that were 
previously thought to be coming from NASA. Another element of 
this challenge is that FAA will need to determine whether it 
has the technical and contract management expertise that will 
be required to implement NextGen. The next generation air 
transportation system must also include adequate airport 
infrastructure to meet the forecasted air traffic demands.
    In the 2008 budget proposal, the Administration has 
proposed reducing funding for the airport improvement program 
and changing the allocation formula. Other changes being 
considered by FAA, such as adjustments to the passenger 
facility charges, could increase available funds for airport 
development. The net effect of all these changes on the amount 
of funding available for airport development is uncertain.
    Mr. Chairman and members of the Subcommittee, my final 
point this afternoon is with regard to the completion of FAA 
and trust fund reauthorization. As you know, 80 percent of 
FAA's budget is funded from the Aviation and Airway Trust Fund. 
That authorization expires September 30th, 2007. FAA estimates 
that the tax lapses in 1996-1997 cost the trust fund about $5 
billion in revenues. Additionally, since the uncommitted 
balance of the trust fund is at one of its lowest points, there 
is very little cushion to absorb any lapse. It is very critical 
that the reauthorization take place in a timely fashion.
    Thank you, Mr. Chairman.
    Mr. Costello. Thank you, Dr. Dillingham.
    Inspector General Scovel.
    Mr. Scovel. Chairman Costello, Ranking Member Petri, 
members of the Subcommittee, I appreciate the opportunity to 
testify this afternoon regarding FAA's fiscal year 2008 budget 
request.
    The U.S. operates the safest and most complex air 
transportation system in the world. In 2006, FAA facilities 
that manage high altitude traffic handled 46 million 
operations. This level of activity approximates levels in 2000, 
when air travel was at its peak. Safety is and must remain 
FAA's number one priority. Notwithstanding a very impressive 
safety record, the August 2006 ComAir flight 5191 accident 
serves as a reminder that we all must work together to make a 
safe system even safer.
    Our testimony today will focus on the key issues that will 
frame FAA's financial requirements over the next several years. 
Clarifying those requirements early this session is important, 
as Vision 100 and the current ticket taxes expire and Congress 
and the Administration begin deliberations regarding the next 
FAA reauthorization. FAA's $14.1 billion budget request is 
presented in a new format and structure that mirror its plans 
to reform how FAA is financed. Currently, FAA is financed by 
excise taxes and the general fund. We understand that FAA's 
reauthorization proposal will be the subject of another series 
of hearings.
    An important message of our testimony, Mr. Chairman, is 
that regardless of the funding mechanism ultimately decided by 
Congress, a number of front and center issues require attention 
and will shape FAA's requirements over the next several years. 
These include the following. One, addressing the expected surge 
in air traffic controller retirements. Last Friday, we issued 
the results of our review of FAA's progress in implementing its 
controller workforce plan as directed by Congress. The plan 
details FAA's strategy for hiring approximately 11,800 new 
controllers to replace those expected to leave over the next 10 
years.
    Overall, we found that FAA continues to make progress in 
implementing a comprehensive staffing plan. For example, FAA 
has made significant improvements in its hiring process and in 
reducing the time and cost to train new controllers. Further 
progress, however, is needed in several key areas. First, FAA 
is in the process of developing accurate, facility-level 
staffing standards, which is a foremost necessity in 
effectively placing newly hired controllers where they will be 
most needed. Planning by location is critical, because FAA has 
over 300 terminal and en route air traffic control facilities, 
with significant differences in the types of users they serve, 
the complexity of air space they manage, and the levels of air 
traffic they handle. We recommended, and the agency agreed, 
that FAA report in its next annual update to the plan, progress 
in validating standards, including the number of facilities 
completed.
    Second, FAA has not identified the estimated total costs 
associated with the plan. We recommended that FAA develop 
detailed cost estimates so that the agency's stakeholders 
clearly understand the resources required to execute the plan. 
This is particularly important, as deliberations begin over 
FAA's next reauthorization.
    Two, having sufficient safety inspectors to provide 
oversight of a dynamic aviation industry. While controller 
staffing represents a significant challenge, FAA must not lose 
sight of safety. Potential attrition in its inspector 
workforce, along with a rapidly changing aviation industry, 
presents FAA with substantial challenges in its safety 
oversight.
    FAA currently has 3,865 inspectors. Over one-third of these 
inspectors will be eligible to retire by 2010. FAA is 
requesting $71 million more than last year's request to fund 
safety-related functions. With this additional funding, FAA 
plans to hire 203 inspectors. Sir, I will note that yesterday 
FAA advised us that in view of anticipated funding in H.R. 20, 
it expects to be able to hire an additional 87 inspectors, for 
a total of 290 new hires in fiscal year 2008.
    FAA will never have an inspection workforce that is large 
enough to oversee all aspects of aviation operations. But it is 
critical for the agency to ensure that its inspectors are 
located in areas where they are most needed.
    The National Research Council recently completed its study 
of FAA's current methods for allocating inspector resources, 
and concluded that the agency's current method is ineffective. 
FAA must develop a reliable staffing model to ensure it has the 
right number of inspectors at the right locations. This is an 
important watch item for this Committee.
    Three, keeping existing modernization efforts on track and 
reducing risks associated with the Next Generation Air 
Transportation System, or NGATS. FAA is requesting $2.4 billion 
for capital efforts in 2008. The majority of these funds are 
for the air traffic organization. FAA is requesting funds for 
key next generation initiatives, such as automatic dependent 
surveillance broadcast, commonly referred to as ADSB. At the 
request of this Subcommittee, we are reviewing progress on 18 
projects worth about $17 billion.
    Mr. Chairman, I see I have exceeded my time. If I might ask 
for a couple more minutes, I should be able to wrap this up.
    Mr. Costello. Please proceed.
    Mr. Scovel. Thank you.
    At the request of this Subcommittee, we are reviewing 
progress on 18 projects worth about $17 billion. We are not 
seeing the massive cost growth and schedule slips with FAA's 
major acquisitions that we did in the past. However, several 
projects, such as FAA's telecommunications infrastructure 
program, are at risk of not achieving expected cost savings 
because of schedule slips and diminishing benefits.
    The overarching question facing FAA's capital account is 
how to transition to the Next Generation Air Traffic Management 
System. This is one of the most complex efforts that FAA has 
ever undertaken. We have seen cost estimates suggesting that 
FAA would need $500 million to $1 billion annually over 
existing planned funding levels for the Next Generation system. 
However, there are significant unknowns with respect to 
requirements for new software, intensive automation systems and 
data communications. Also considerable development will be 
required to refine concepts.
    In a report done at the request of this Subcommittee, we 
made recommendations aimed at reducing risk with this 
extraordinarily complex effort. These include developing 
realistic cost estimates, quantifying expected benefits and 
establishing a road map for industry to follow; reviewing 
ongoing modernization projects and making necessary cost, 
schedule and performance adjustments; and developing approaches 
for risk mitigation and systems integration. FAA agreed with 
our recommendations and we will continue to monitor this 
important effort.
    Finally, using the agency's cost accounting system to 
improve operations. Regardless of the financing system Congress 
decides upon, FAA must have an effective cost accounting 
system. A multi-billion dollar operation like FAA must have 
such a system in order to shape decisions and establish 
priorities. Since 1996, FAA has spent over $66 million to 
implement a cost accounting system which now covers all lines 
of business and captures the annual labor costs of 
substantially all its personnel, the single largest cost item 
for FAA.
    Overall, FAA's cost accounting system is properly designed 
to assign costs to the agency's lines of business and can be 
used for measuring performance. However, FAA must ensure the 
accuracy of financial data in the cost accounting system.
    That concludes my statement, Mr. Chairman. I would be 
pleased to answer any questions you may have.
    Mr. Costello. Thank you very much.
    Administrator Blakey, I have a few questions. Obviously we 
have a number of members still that have questions as well, so 
if we can be as brief as possible in our questions and answers, 
so that we can get as many as possible in the time that we 
have.
    In my opening statement, I mentioned and will say again 
that in our review of the Administration's 2008 budget request, 
the financing proposal would hypothetically yield about $600 
million less in fiscal year 2008 than maintaining the current 
tax structure. Over the period of 2009 to 2012, it would be 
about $900 million less than the current tax structure. Is that 
an accurate statement? Would you agree that is correct?
    Ms. Blakey. That is correct under the figures in the 
President's budget. I am very grateful to you though for 
raising this, because I think it is a matter of some confusion 
and has been raised by a number of Members. I think what is 
important to understand is that the hybrid financing system 
that we are proposing is cost based. The cost that the Congress 
determines in terms of the appropriations for the various 
categories of our expenses are what will then drive the 
mechanism to recover those costs.
    The proposal that we put forward has AIP at $2.75 billion. 
As we know, the Congress has chosen historically to set AIP 
levels at a very different figure. The costs that AIP drives 
will, of course, cause us to adjust that figure. And if in fact 
Congress should choose to support AIP at a different level, 
then the costs will exactly match that.
    Mr. Costello. But aren't you saying in your cost estimates 
that you need less revenue?
    Ms. Blakey. No, we are saying we need the revenue that is 
proposed in the President's budget. The President's budget, of 
course, is addressing the deficit. It is looking at the 
tremendous demands we have on the Federal budget overall. We 
are trying to be very careful, therefore, in the requests we 
are making. But the proposal we have made for the new financing 
system matches that request.
    Mr. Costello. Well, let me ask another question, then, 
maybe in a different way. If the user fees and excise taxes 
under your financing proposal would yield less than the current 
tax structure, isn't it possible, possible that we could 
finance the next generation system under the existing tax 
structure? Are you unequivocally saying that it is not 
possible?
    Ms. Blakey. No, I am not unequivocally saying it is not 
possible. I think we can limp along and at some point get 
there.
    What I do fear, though, and I think there is a tremendous 
liability in this, that if we continue with the current 
financing system, which has tremendous variations in the 
revenue coming in, and which has caused real problems in the 
FAA's ability to make capital investments over the years, we 
will hit that point where there are a billion passengers 
somewhere around the year 2014. We will be attempting to fund 
the NextGen, and we will be getting there.
    But unfortunately what will happen is we will hit that wall 
of operators and passengers when we are way too late at that 
point. That is the real problem here. We need the ability to 
have a cost-based system that can match the needs, the revenue, 
with the costs, so that we can, on a dynamic basis, support 
those capital investments. And they are significant to get to 
the NextGen on the time frame we need to get there.
    Mr. Costello. So I take that as saying that it is possible 
to get there?
    Ms. Blakey. If you don't, if you are not concerned about 
delays and tremendous congestion in the system, and possibly 
real gridlock when you get out into another five years plus, 
that is where you really hit the problem. I think at that 
point, those who are trying to fly then will be looking at us 
and wondering why it was that we could not come up with a 
system for financing what is clearly a new and very different 
system.
    Mr. Costello. Thank you.
    Mr. Scovel, you state in your testimony and your office has 
repeatedly said that at $2.5 billion in the F&E budget, that 
there is no way to achieve the next generation system, that you 
would basically be maintaining the current system. Do you still 
believe that?
    Mr. Scovel. Yes, sir, we do. We note that in the fiscal 
2008 budget request, FAA's request, $2.46 billion for 
modernization. Of that, however, about $2.3 billion is 
dedicated toward sustainment. We think FAA will be hard pressed 
to sustain the existing system and develop NGATS within a $2.4 
billion to $2.5 billion capital budget. An investment level of 
$2.5 billion will provide funding for ADSB, SWIM and 
demonstration projects, as FAA has requested for the coming 
fiscal year. But it will not address the automation, 
communication, integration and development efforts as 
envisioned for NGATS by FAA in the JPDO.
    The numbers we have seen suggest that FAA would need $500 
million to $1 billion over the existing capital funding levels 
of $2.5 billion beginning in 2009 and for several years 
thereafter. These estimates are not too far removed, as you 
know, from the authorized levels called for in Vision 100.
    I offer the following cautionary notes, however. First, FAA 
requirements for new NGATS automation systems are not yet well 
defined. Second, we don't know the extent to which FAA can 
successfully leverage R&D efforts from other Government 
agencies, such as NASA and DOD, particularly when some of the 
information that we have received from NASA indicates that they 
seem to be looking more to basic research in the future, rather 
than applied.
    As we have stated in our testimony, there are significant 
adjustments needed for existing programs, such as ERAM and FTI. 
These are existing programs, Mr. Chairman, that must fit within 
the Next General Air Traffic Management System. They will need 
adjustments; those adjustments may be costly. They serve as 
platforms for the next generation systems.
    Mr. Costello. Mr. Scovel, if I can ask another question. 
Your office reported that last year, the FAA prepared a 
preliminary F&E cost estimate for NextGen and shared it with 
the industry. How did the preliminary cost estimates compare to 
the level of funding that the Administration is requesting for 
fiscal year 2008?
    Mr. Scovel. Yes, sir. FAA's F&E funding request for fiscal 
year 2008 is consistent with estimates for currently funded 
programs that we have seen, and includes funds for NGATS 
demonstration projects. However, there is some difference with 
respect to when the increase in funds would be needed. The most 
recent estimates we have seen suggest that FAA will need a $500 
million to $1 billion annual plus-up annually for fiscal year 
2009 through fiscal year 2012 to fund NGATs over the current 
capital investment, as I mentioned.
    Earlier estimates shared with industry in the April 2006 
time frame are in the same range, but suggested that 
significant increases would begin in 2008. Critical decisions 
are needed in the near future that will impact how quickly 
those new capabilities may be deployed. These decisions include 
establishing requirements for ERAM software releases, 
investment decisions on sustaining existing radars and 
incorporation of weather information.
    Mr. Costello. Thank you.
    Dr. Dillingham, I have a few questions for you as well and 
a couple of other questions concerning your work with the air 
traffic controllers and other things. I will come back to that 
in a second round. I want to be able to get to other members.
    Let me recognize the Ranking Member, Mr. Petri, at this 
time.
    Mr. Petri. Thank you, Mr. Chairman. I have a couple of 
questions for this round, too.
    Administrator Blakey, could you discuss the 
Administration's cost allocation study some, particularly in 
relationship to its assessment of whether commercial aviation 
is paying its full share, more than its share or less than its 
full share of the existing trust fund? Could you explain the 
situation?
    Ms. Blakey. Certainly, I would be happy to. The FAA of 
course at this point does have, as our other witnesses have 
noted, a very sophisticated cost accounting system. We have 
worked with this Congress for a number of years to put that in 
place, and it is one of the finest anywhere. It certainly is 
one of the finest in Government.
    So we are very acutely aware, therefore, of the costs in 
the system, and we have very accurate activity data. We have 
worked with Price-Waterhouse Coopers and other consultants on 
the cost allocation study, which looks at over 600 different 
factors in terms of the air traffic control system, and looks 
at the various levels of facilities and the kinds of costs that 
are imposed there, and also, of course, takes into account the 
various type of aircraft and the activity that is there.
    What we have seen is that the commercial aviation arena is 
paying over 95 percent of the costs currently. Under the 
current cost allocation study that we have just issued today, 
they are paying about 95 percent, a bit over that, when 73 
percent is what their actual use of the system would cost.
    In contrast, the general aviation community is paying 
between 3 and 4 percent of the cost, and they are imposing 16 
percent of the cost. Now, we have very detailed breakdown, and 
there is a great deal of background behind the cost allocation 
methodology and study. We do intend to brief Committee staff 
and Members as they would find helpful on this, because again, 
obviously it is a very detailed activity.
    Mr. Petri. Did the different communities or their 
associations have an opportunity to review and comment on the 
study? In particular, one point I am interested in getting your 
take on, and that is the argument that there is a kind of a, 
that partly this situation exists because there is, with the 
hub-spoke system, there is peak demand and intensive use of the 
system, and there is congestion pricing in effect, that because 
of the fixed schedules, there is less flexibility and therefore 
more cost from commercial aviation than from some of the other 
users. Could you discuss those factors, rather than just 
movements of planes and this kind of thing, the marginal cost, 
if you have to have a system that is robust at certain times of 
the day, rather than being able to spread it out, would it 
presumably fairly on those who are less flexible in causing 
that increase in use at that particular time?
    Ms. Blakey. I would be happy to. To your first point, we 
have been working on this proposal, the Administration's 
proposal, for more than 18 months and have done a lot of 
consulting with the various aviation stakeholder groups. Now 
that we have brought forth our proposal and the newest cost 
allocation study, we are certainly briefing all of the groups 
involved and will be working with them in great detail on this. 
But we have also taken into account their views and 
methodology, which goes to the second part of your question, 
which is no, the cost allocation study does not consider a blip 
on the radar screen to be a blip, and all activity is even. In 
fact, we do accept the premise that the general aviation 
community has presented that there is a difference in the use 
of the system in terms of peaks, the hub system, demand, and 
congestion_all those issues, they are costs that the commercial 
aviation arena poses that the general aviation doesn't.
    There is also the argument that the system was not 
initially built entirely around the demands of general 
aviation. That is all quite true. So is there an argument to be 
made that they are more marginal users of the system? We think 
that there is a significant difference there. And therefore, at 
every point in the cost allocation study where you could go to 
the side of saying, if it is general aviation it is more 
marginal use, and therefore you do not account for as great a 
cost, we have done so. I think it is fair to say that the cost 
allocation study we have done leans very heavily to the 
arguments of the general aviation community that they are more 
marginal users.
    Mr. Costello. Thank you, Mr. Petri.
    Mr. DaFazio is recognized for five minutes.
    Mr. DeFazio. Thank you, Mr. Chairman.
    Administrator, good to see you again. You have such 
southern gentility to say what a pleasure it was to be before 
the Committee today. I am sure you have had more pleasurable 
days. But as you can see, there is tremendous concern about 
this new proposal.
    I haven't seen the allocation study, I have been arguing 
over this issue for the 20 years or so I have been on the 
Committee. It obviously depends on certain assumptions. You say 
you consulted with the stakeholders. I mean, tell me, what was 
the consultation with GA like? Was it as warm and friendly as 
today's hearing? And did they ultimately accede to your 
conclusions, or are you just registering their objections and 
moving forward?
    Ms. Blakey. You know, I think at the heart of this, of 
course, is no one wants to pay more. And I do understand that. 
But what I would say is this: that we have worked very hard to 
listen to the concerns of general aviation. That is why we are 
proposing a hybrid system. Most systems around the world, as 
you know, go to a straight user fee system. And we are 
proposing to you that there be a fuel tax for general aviation, 
because we accept that the burden that they are concerned about 
with a fee system would be greater than they should bear.
    We have also, as I said, in the cost allocation, listened 
very much to the concerns of general aviation. And at any point 
where we felt that we could move to that in terms of specific 
costs, we have done so. Some parts of the stakeholder community 
have done a very sophisticated analysis of ways to approach 
cost allocation. And frankly, they have argued against certain 
earlier forms of cost allocation. Ramsey pricing, for example, 
which again, we accept, and we have moved very strongly to one 
which is very transparent, is entirely cost-based and frankly, 
makes us extremely accountable for the costs involved.
    Mr. DeFazio. I guess the question would be, why would we go 
through an extraordinary battle, reallocate costs to raise less 
money?
    Ms. Blakey. In the long run, you will not be raising less 
money. You will be enabling us to make the kinds of--------
    Mr. DeFazio. Well, in the short run, we are raising less 
money. You must be making some assumptions about future 
enplanements or costs of tickets. Tickets are going up, 
enplanements are going up. So I am puzzled as to why you think 
that this other system would raise more money, unless you are 
intending to raise the tax even further and you don't think a 
gas tax of 50 cents a gallon, 56.4 cents for general, plus the 
13.6, 70 cents a gallon, is going to have a depressive effect 
on the GA community. Supply and demand, I would assume that a 
lot of people are going to choose to fly less, so I would 
assume that you are not taking current levels of GA, but you 
must be projecting some downturn in GA. I don't know what you 
are projecting in commercial, but if we maintain the current 
system from the projections I see, we would raise more money 
every year for the indefinite future.
    Ms. Blakey. When you look at the history of revenue coming 
into the Trust Fund, you will see wild fluctuations in the 
revenue coming in. It has not been predictable, and it has been 
a problem from the standpoint of the balance in the Trust Fund. 
Right now, the Trust Fund balance, an uncommitted balance, is 
at an historic low. I don't think that is arguable. It has been 
a decade since it has been this low.
    Mr. DeFazio. In part because Congress mandated, because 
were concerned a number of bills ago, about there being too big 
of a balance and we mandated that it be spent down. So if we 
want to have an objective of having a large reserve or trust 
fund, we can say, no, we want to build the trust fund again and 
sort of redirect your efforts in that area. And if you could 
really raise $500 million or $600 million more with the current 
structure, and you can live on $500 million or $600 million 
less, then we could say, well, let's put that $500 million or 
$600 million in here, if we think we need a larger reserve, 
which I am not convinced we do. But we would be open to that 
argument. I certainly want to have a prudent reserve for 
potential downturns.
    Ms. Blakey. I think the problem we are dealing with is 
there is no relationship between the price of a passenger 
airline ticket and the cost of running the system.
    Mr. DeFazio. If I could, madam, there is very little 
relationship between anything known to mortals and the price of 
an airline ticket, the way the system works.
    [Laughter.]
    Ms. Blakey. I couldn't agree with you more, Congressman, 
having paid a few of those myself and been mystified.
    So I think that is right. While I would agree with you that 
currently, right now, ticket prices are going up, the long-term 
forecasts and projects that we and others in the airline 
industry and the manufacturing industry are that ticket prices 
are going down. So again, this is one of those things that we 
could probably debate, but you could look at the fluctuations 
on revenue and it is very erratic. And there is no 
relationship. Every business in America wants to tie its costs 
to its revenue. It is a very basic principle that we are 
adhering to here. We want it to be stable, we want it to be 
predictable. And as the costs of the NextGen go up, and we, the 
Congress and the user community believe--------
    Mr. DeFazio. I am out of time.
    Ms. Blakey.--you should, that you have to reduce the costs.
    Mr. DeFazio. And I won't be quite as blunt as my colleague, 
Dr. Ehlers, but I will say, I agree with his sentiment, but 
express it more delicately. I think we probably are belaboring 
it.
    Let me ask one other question very quickly. PFC, I was sort 
of the father on the Democratic side of PFC many, many years 
ago. My idea for that was in particular, since I saw two 
airports in my State, one being in my home town, where one city 
had to raise all the revenue to build a new terminal and I live 
in the other city, so hey, I didn't have to pay the taxes. 
Wasn't that great. Well, I didn't think that was quite fair, 
because I use it a lot.
    And then Portland, where we had people coming over from a 
neighboring State to use the airport. So I fostered this idea, 
and I think it has worked relatively well. I am concerned about 
both the increase proposed, and I assume that if you are 
increasing the segment, are you going to increase the total? I 
mean, right now it can't be more than $18 per round trip at 
$4.50 a segment. So if it is going to $6 a segment, are you 
proposing $24 per round trip? Because we are about to eat up 
all the money that you might save the airlines over here. They 
consider that a tax, you know, and they consider it to be their 
money. You are about to eat up all the money you might save 
over here in your new fee structure over here in higher PFCs.
    Ms. Blakey. PFCs, yes, we are proposing that they go from 
$4.50 to $6 and there would be the same structure there as 
currently.
    Mr. DeFazio. Twenty-four dollars?
    Ms. Blakey. Yes. I would say that, of course, they are 
locally determined and project-based, and they have been very 
successful, frankly, in advancing infrastructure.
    Mr. DeFazio. One last quick question. I am concerned that 
you are proposing to expand eligibility. In particular, I would 
look at, one of the expansions, I understand, is parking. Now, 
if I fly Eugene-Denver-Dulles and I pay a fee at PFC, I agree, 
I should pay a PFC to contribute to the terminal and other 
related activities. I never, ever have walked out of the Denver 
airport, probably never will, never parked a car there. Why 
should all of those people transiting that airport pay for a 
parking project? I am very concerned about any expansion in the 
scope.
    We had to fight mass transit proposals that really weren't 
related, I mean, we had to fight a whole host of things when we 
started this program. We really have it fairly narrow, I think 
acceptable to the public. We are not seeing revenue diversion, 
which is the original reason PFCs were killed off 25 years ago 
or 30 years ago. I really am concerned about any expansion. I 
just would leave that with you. Thank you.
    Thank you, Mr. Chairman.
    Mr. Costello. I thank you.
    Mr. Graves is recognized for five minutes.
    Mr. Graves. Thank you, Mr. Chairman.
    I have gotten indications, I know we keep talking about the 
trust fund is at the lowest point it has ever been. And it was 
just pointed out so eloquently, that we move to draw down the 
trust fund. But revenues into the trust fund are increasing, 
isn't that correct?
    Ms. Blakey. Currently revenues are increasing, that is 
correct.
    Mr. Graves. So revenues into the fund are increasing, but 
the trust fund is being drawn down, I am trying to get some 
things figured out here.
    Mr. Scovel, you said that this next generation system is 
going to be anywhere from $500 million to a billion? That is a 
pretty broad anywhere between.
    Mr. Scovel. Yes, sir, it is. That is what we estimated 
based on what we anticipated funding needs to be from 2009 to 
the next several, over the next several years.
    Mr. Graves. And in the funding proposal, Administrator, we 
are going to pay for 25 activities related to, in terms of 
fees, some aircraft are going to pay 25 activities related to 
the FAA's regulation and certification activities, which only 
12 of these have been defined. We don't know what the rest of 
them are, or at least they are not in the proposal, right? So 
we don't know, we are not sure which fees are going to be out 
there for certification and some of those other areas.
    Ms. Blakey. I am sorry, I am not following you. We are 
going to work with the stakeholder community to actually set 
those. It is permissive and allows us to do it in that form. 
Not all of them were dollar set. The ones that are dollar set 
are the ones that are very specific to customers, individual 
customers.
    Mr. Graves. And then we have, the FAA is going to then be 
able to adjust costs for inflation or whatever their allocation 
formula dictates. And I know you have an elaborate allocation. 
What I am getting at, the big picture here is, we don't know 
what this thing is going to cost, we don't know what it is 
going to be, we don't know when it is going to be put in place, 
we don't know what all the fees are going to be. There are so 
many things we don't know, Mr. Chairman. I would venture to say 
that, I have a hard time talking about funding anything when we 
don't know, we don't know what it is. We don't know what any 
part of it is. We have a great idea. It really sounds good.
    Ms. Blakey. No, it is much more than an idea. It is much 
more than an idea. I can be much more specific about costs if 
that would be helpful to the Committee.
    We are projecting, in fact, for NextGen costs, over the 
next five years, a cost of $4.6 billion for infrastructure. 
That is approximately running at a billion dollars a year. I 
can also give you figures that will go out to the year 2025, 
which is when we are hoping to complete the entire plan for the 
NextGen.
    Now, I don't think the fact that we cannot tell you 
precisely what the capital investments will be all the way out 
to 2025 is unreasonable, because there is not a corporation in 
America that could tell you what their capital investments are 
going to be that far out. There are changes in technology. But 
we do have out the concept of operations now, and we will be 
presenting this spring the enterprise architecture, which does 
give you the blueprint. And we have a number of demonstration 
programs, which are the backbone of the NextGen going right 
now.
    Mr. Graves. Well, let's talk about the airports. If we are 
going to talk about, and we keep talking about congestion and 
all these delays in the system. Really, the fact of the matter 
is, congestion comes from just a few airports. It really does. 
I have been flying now every single week back and forth from 
DCA to Kansas City and then various places in between. Those 
are two airports that probably are under-utilized airports, 
Kansas City Center in the midwest probably doesn't have nearly 
as much traffic, because if I ask for a flight following I can 
get it. They don't have to tell me to wait.
    But I know that there is congestion in some areas. And I 
would venture to say it is more a function of those runways and 
the amount of activity at that airport than it is necessarily 
the air traffic control system. I think we ought to be talking 
about fixing those areas specifically, instead of overhauling 
the whole system based on congestion in some of these under-
utilized places.
    I do have a little bit of problem too, Mr. Scovel, when you 
mention things like ComAir crashes meaning the backdrop for why 
we need to do this. That had nothing to do with the air traffic 
control system, absolutely nothing to do with it. And I resent 
the fact that we are using things like that to try to further a 
system like this and justify a system like this.
    I am still extremely frustrated, Mr. Chairman. I apologize. 
But I am, this has really got me in a wad, it really does, for 
the entire aviation community. I know what to do about it, I 
don't think we ought to be talking about it if we don't know 
what it is we are talking about.
    Mr. Costello. I appreciate the gentleman's comments. Let me 
make two comments quickly before we recognize the next member. 
And actually, ask a point of clarification from the 
Administrator. When you mentioned the $4.6 billion over the 
next five years, is our assumption correct, then, that in your 
budget projections under the user fee system, that $4.6 billion 
is included?
    Ms. Blakey. Yes, in fact, if you look at the out years in 
our projections, the investment in NextGen ramps up 
significantly. I think it is very accurate to say that, as with 
a system of this type, an approach of this type, you have the 
beginning, R&D stages and demonstration projects, and then you 
move into the implementation stage, when significant 
infrastructure investments have to be made.
    Mr. Costello. Your revenue requirements and projections 
meet that?
    Ms. Blakey. They do.
    Mr. Costello. OK. And then the second point, if I can, Mr. 
Graves, to respond to the point that you made about ComAir, and 
it wasn't an air traffic control issue, the only thing I would 
point out is that it was very clear that two controllers should 
have been on duty and only one was. I understand the cause. I 
understand. But the report clearly pointed out that it may not 
have had anything to do with the accident, but there should 
have been two controllers on duty and there was only one.
    Let me recognize the gentleman from Illinois, Mr. Lipinski, 
for five minutes.
    Mr. Lipinski. Thank you, Mr. Chairman. I want to start out 
by congratulating you on becoming chairman of the Subcommittee. 
I know you are going to do a great job. Certainly your wisdom 
was shown by one of the first things you did, I know, was come 
out to Midway Airport in my district. It shows your great 
wisdom in coming out there. I also want to congratulate Ranking 
Member Petri and I look forward to working together with you in 
this Congress.
    I also want to thank Administrator Blakey for coming out 
there to Midway Airport. I appreciate your coming there and 
viewing the safety improvements and appreciate the cooperation 
and the help that you have given in helping to put in the EMAS 
system in there and make Midway Airport more safe. I just want 
to also take this opportunity to reiterate a point I made to 
you there in a letter in January, that I will oppose any 
expansion of Midway Airport, it is a very important issue back 
in the district. I think with the safety improvements there, we 
see things really looking up at Midway Airport.
    I wanted to briefly mention, I know Chairman Costello is 
going to come back to this. I am concerned about the number of 
air traffic controllers and the impact that it is going to have 
on the system. I know Mr. Costello is going to come back to 
that in a second round.
    So I just wanted to mention and ask a question, my concern 
here with the proposed budget is cutting the AIP. And with the 
capital improvements going on at Midway Airport and the program 
going on, the O'Hare modernization program, its tremendous 
impact, and not only locally in the Chicago area, but for the 
entire Nation, it would seem that by cutting the AIP funds that 
it would have a detrimental impact on this program. So I wanted 
to know what the impact is going to be and if you tell me it is 
not going to have a detrimental impact.
    Ms. Blakey. Congressman, I appreciate your bringing up 
O'Hare, because I know we both share the commitment to making 
certain that we do everything possible to keep that project on 
track. O'Hare is the nerve center in terms of our 
transcontinental traffic all across the U.S., as we know. When 
O'Hare sneezes, all the rest of us get a cold, and right now, 
it has a pretty big cold. I was looking at it this morning in 
terms of delays and cancellations because of the weather.
    Mr. Lipinski. I don't know if we can do anything about the 
snow in Chicago.
    [Laughter.]
    Ms. Blakey. That is beyond me, I will tell you that.
    The level of AIP that we are proposing will absolutely keep 
our commitments, such as those to O'Hare, on track. Our letters 
of intent, our investments that are required there, will 
absolutely remain intact. In fact, the $2.75 billion will allow 
us to cover all of the high priority safety, capacity, 
environmental and standard-setting work that we are committed 
to right now.
    Mr. Lipinski. Thank you. I will yield back the balance of 
my time.
    Mr. Costello. The Chair would recognize Ms. Fallin for five 
minutes.
    Ms. Fallin. Thank you, Mr. Chair. Administrator Blakey, it 
is always good to see you.
    Oklahoma is a very rural State, and we have over 100 
federally-designated airports in our State. Our small airports 
depend upon the stability of funding for the AIP program. I 
know the Administration has proposed to cut the funding for 
that program by almost a billion dollars, almost in half. And 
Oklahoma estimates that it would lose a substantial amount of 
money for our smaller airports. In Oklahoma, we attract a lot 
of companies and jobs by expanding our airports in the rural 
communities, and have a lot of commercial and private aviation 
that goes in and out of our rural airports that helps bring in 
companies and jobs.
    I also understand from our people in Oklahoma that the 
Essential Air Service grants program, which helps fund some of 
our commercial locations, airports, could also possibly be at 
risk of losing funding if the AIP programs are cut. So in light 
of us believing that there is a direct relationship between 
helping expand our airport service in our rural communities and 
economic development, the people of Oklahoma in the aviation 
industry have asked, what do you recommend or what do you think 
would happen if we do slash these funds and these programs to 
the rural communities who depend upon these programs, 
especially in light of economic development?
    Ms. Blakey. I appreciate your question, because I certainly 
do recognize that rural airports in Oklahoma and in a lot of 
States are very critical, and they are part of the engine of 
expansion for the economy. I would highly recommend that we 
look together at greater length at the Administration's new 
reform proposal, because there is a tremendous amount of 
advantage for small airports in the way we are proposing to 
change the approach we take to AIP. What we have seen is that 
AIP is particularly critical to small airports. The larger 
airports are able to raise money through PFCs, bonding and 
other things, and do not rely on it as much of a critical 
source as do small airports.
    So what we have done, therefore, is look at the formulas 
that are inherent in the current system, and they are very 
outdated, and look at the fact that we do need to support our 
smaller airports with more of the kind of funding that they can 
count on from AIP, on an entitlement basis, and we are able to 
do that, we think, much better and with much more targeting 
under a new system we are proposing than what we have before.
    So I would point you to that, because there is a good bit 
of detail there, and I would like very much to talk with you 
about it.
    Ms. Fallin. OK. Thank you, Mr. Chairman. I yield back my 
time.
    Mr. Costello. Thank you. At this time, the Chair recognizes 
the gentleman from New York, Mr. Hall.
    Mr. Hall. Thank you, Mr. Chairman, and thank you to our 
distinguished panel.
    Administrator Blakey, I was wondering, and looking at the 
staffing numbers for air traffic controllers, which are low 
around the Nation, it seems to me that the FAA should have seen 
its controller crisis coming some time ago. When you have 
controllers who were hired between 1981 and 1984, and they are 
eligible to retire at age 50, anyone could have seen this 
retirement trend coming down the pike decades in advance. Yet 
the FAA only hired 13 controllers in 2004.
    This year, the FAA is going to hire 1,420 after the FAA 
self-imposed work rules for controllers took effect. It would 
appear as though the FAA waited to handle the staffing crisis 
until after a new, disadvantageous pay structure was put in 
place in order to cut labor costs. Was this the motivation 
behind FAA's staffing strategy?
    Ms. Blakey. No, not at all. In fact, of course the FAA has 
known for many years that because controllers retire at age 56_
it is the mandatory age_we knew that we were going to have a 
large wave of controller retirements coming, and we had to 
prepare for it. That is the reason we have a very detailed 
controller staffing plan that we will be providing you an 
update on about the first of March.
    In fact, the number of controllers that were hired back in 
2004, that 13 figure, was because we were under real 
constraints in the budget that Congress was aware of_we were 
all aware of it_and it did not allow us to ramp up as much as 
we would have liked. Since then, however, we have been 
addressing that. And you will see in the controller hiring plan 
that we are going to be steadily doing this so that we will 
have a net increase each year as we need to to staff to the 
projected retirements as well as to the growth in traffic and 
to the fluctuations that we will see in various parts of the 
Country.
    In response to the Inspector General's concern, and I think 
we agree with this, that we provide facility by facility 
estimates of what staffing should be, that will also be a part 
of that plan, which I think will be helpful to you. Because as 
you look at it, you will see that in parts of the Country we 
have significant requirements coming up, and in other parts we 
don't. There are parts of the Country where we have 
overstaffing, just like we have understaffing. On average, 
throughout the Country, we are hitting our staffing 
requirements.
    It is frequent that the controllers union will be using 
figures that go back to 1998. They are very old figures that 
they call authorized figures. They were set as a part of a 
contract negotiation, not because of current staffing and 
retirement levels.
    Mr. Hall. Well, that raises a question. Do you anticipate 
continuing forward with a rule that is imposed, or do you see 
the FAA at some point going to binding arbitration? Do you 
think that the work rule or the pay structure has anything to 
do with the retirements?
    Ms. Blakey. Let me go to the first part of your question, 
then I will address the second. The FAA did just as the 
statutory requirement set by Congress mandated, which was that 
when we entered into contract negotiations_and the FAA has a 
very unusual requirement that is not true of most parts of 
Government_and that is that we negotiate for pay. It is an 
extraordinarily difficult thing to do. But we went through a 
long period of negotiations with NATCA, with our controllers 
union, attempting to get a voluntary agreement. When we were 
unable to do so, and there were several key parts of the 
contract negotiation that were outstanding, all of which had to 
do with pay and various forms of compensation, as well as 
several key work rules, we then did as the statute requires and 
presented it to Congress. we presented our proposal, they were 
able to present theirs. And this was reviewed for 60 days by 
Congress.
    Should Congress have wanted to step in and increase the 
amount of the contract, that was a possibility that could have 
happened. It did not happen and we moved forward with the 
current contract. We do not anticipate reopening the contract.
    Mr. Hall. Thank you for that explanation.
    Ms. Blakey. But I would suggest to you this, that I think 
there has been a phenomenon that we saw in the latter part of 
the year in terms of controller retirements. We saw 116 more 
controllers retire in the latter part of the fiscal year than 
we anticipated. It is not a big percentage, it is less than 1 
percent of the workforce, but nevertheless, we have adjusted 
our retirement projections up, because we want to be certain 
that if the contract is having an effect on some controllers 
who choose to leave early, and remember that our veteran 
workforce was held harmless financially, but if they do, we 
have adjusted the numbers up on retirements.
    Mr. Hall. Thank you.
    Just one more quick question if I may. It looks as though 
the President wants to cut the airport improvement program, 
looking at this budget. How can the FAA meet current needs, 
like for instance at Stewart, the airport in my district, which 
is looking at hopefully expansion and infrastructure that needs 
to be added? I am just curious how those things can happen at 
the same time.
    Ms. Blakey. Well, as you know, we have had a lively 
interest in Stewart, because, of course, it is a former 
military base. We have been very interested in the recent 
phenomenon of the Port Authority then moving back there, 
because we too see that Stewart has tremendous potential.
    I don't think there is any doubt about the fact that we 
will continue to be financially available to Stewart and the 
needs there, as the plans for the airport develops and 
specifics are put forward by, I expect at this point it will 
probably be, by the Port Authority. Is that correct?
    Mr. Hall. I think so, yes.
    Ms. Blakey. But we will be looking forward to working with 
you on that, because again, we know in the New York area that 
Stewart has an increasingly important role to play.
    Mr. Hall. Thank you very much.
    Ms. Blakey. You are welcome.
    Mr. Hall. Thank you, Mr. Chairman.
    Mr. Costello. Let me mention, as the gentleman knows, we 
have discussed the issue of the contract between the FAA or the 
lack thereof and NATCA, and we intend to address that in this 
Congress.
    Let me recognize at this time the gentleman from Michigan, 
my friend Mr. Ehlers, for five minutes.
    Mr. Ehlers. Thank you, Mr. Chairman. I have a question for 
each of the inspector generals. First of all, for Mr. Scovel, 
some comments about ADSB. How do you see ADSB changing the 
current system, and what do you see as the likely time frame 
for adoption and implementation of ADSB?
    Mr. Scovel. Thank you, sir. ADSB represents a tremendous 
step forward in terms of the technology available for both 
aircraft and ground control to understand where aircraft are, 
and frankly, to reduce separation between aircraft when it is 
fully implemented. There are two types of ADSB, as you may well 
know, ADSB in and ADSB out. They will be implemented at 
different time frames. But when it is fully operational, it 
will permit, under NGATS, significant improvements in capacity. 
I think that is the primary goal, certainly of FAA, in 
presenting that forward.
    ADSB, we estimate, is a system that is on target, it is 
properly funded for the current fiscal year, in order to move 
it forward. I don't know what the current timetable is for its 
full implementation. I would defer to Administrator Blakey for 
that information. Perhaps she can respond to your question on 
that score, sir.
    Mr. Ehlers. I am concerned about the financial aspects. 
Will that save our system money, compared to our current 
system, and if so, do you have any estimates of how much it 
would save?
    Mr. Scovel. I don't have estimates on that, sir. It would 
be difficult for me to say at this point, will it save the 
system money. When we talk about improvements in capacity, 
arguably improvements in safety as well, it is hard to put a 
price tag on those achievements, should they come to pass, as 
we hope that they will.
    We think, as I said, that ADSB, at least for the coming 
fiscal year, is properly funded. I don't have estimates going 
forward as to how much it will cost and whether it represents 
an improvement over the current system.
    Mr. Ehlers. Long term, would you expect it to reduce the 
number of controllers needed?
    Mr. Scovel. Possibly, yes, sir.
    Mr. Ehlers. But you are not sure?
    Mr. Scovel. I am not sure.
    Mr. Ehlers. All right, thank you.
    Mr. Dillingham, your comments about the NASA gap in your 
testimony, I am very concerned about that. Because the 10 to 20 
year future of aviation is going to depend tremendously on 
resurface and development. There are so many things coming down 
the pike. That could affect us, could affect the system, 
certainly could affect the economic aspects of the industry 
itself. But right now I am just thinking about our role in 
this. If NASA is not keeping up with it, we don't really have 
enough money scheduled for FAA to do all the research, do we?
    Mr. Dillingham. I think the 2008 budget does call for an 
increase in the monies that would be available to do early 
demonstration work in NGATS, both in the research and 
engineering and development part of it, as well as in the F&E 
account. Whether it is going to be enough or not, I couldn't 
say. But it has been recognized that there is that gap in terms 
of technology and demonstration. It also has been recognized 
that this is something that has to be addressed very soon.
    Mr. Ehlers. OK, I appreciate it, because I totally agree 
with that, and it is very frustrating that so much of the NASA 
budget is being devoted to space programs that some of these 
other programs are being shortchanged.
    Finally, Ms. Blakey, I continue to admire your work. I hope 
you are not offended by my comment earlier about the proposal 
being dead on arrival. But I do know the Congress.
    And I am very sincere about an offer to try to work with 
you and try to work out--I think it is entirely too easy for us 
in the Congress to sit here and fire away at proposals that the 
Administration brings here. I would like to lay some of the 
burden on the Congress itself to come up with ideas to address 
the problems. There is no question the problems are there, no 
question they have to be addressed. And if we just fire salvos 
at you all the time, we are not going to solve the problems. So 
I hope you understand, my suggestion was offered in the spirit 
of trying to reach some agreement with a good result.
    With that I will yield back.
    Mr. Costello. I thank the gentleman.
    The gentleman from Tennessee, Mr. Cohen, is recognized for 
five minutes.
    Mr. Cohen. Thank you, Mr. Chairman.
    Ms. Blakey, I am a freshman, so I don't know where you are 
from. It is obvious you are from a garden spot, but which one?
    Ms. Blakey. Tupelo, Mississippi and Montgomery, Alabama. I 
claim both.
    Mr. Cohen. Well, Tupelo is more like greater Memphis, so 
that is a garden spot.
    [Laughter.]
    Mr. Cohen. And being from Memphis, I was a little concerned 
about this information here that the accident rate for cargo 
carriers is over six times higher than commercial passengers. 
Being that I am a commercial passenger, I was kind of happy. 
But being that I am from Memphis, I am absolutely, positively 
concerned about the cargo rate. Why is that rate six times what 
it is for passenger traffic?
    Ms. Blakey. I think you have to start with the fact that 
the accident rate and commercial fatal accident rate is at a 
remarkably low level. It is such a tiny, tiny percentage, that 
you are backed up against that, would be one point.
    But secondarily, of course, cargo as you well know flies at 
night, and flies under difficult IFR conditions. You often have 
flights from small airports from where you are picking up cargo 
and flying back into the hubs. There are a number of challenges 
involved in the cargo arena. We have been working on this 
within the FAA and with not only the big cargo carriers, FedEx, 
UPS, et cetera, but a number of the smaller ones, and with 
their association, looking at good ways that we can help in 
terms of both pilot awareness, as well as the physical issues 
that go with the overnight delivery system. Some of it, of 
course, is day as well, but a lot of it does go to, as I say, 
more challenging circumstances and environment.
    Mr. Cohen. So it is not due to maintenance of the aircraft, 
it is more with the circumstances of the flights?
    Ms. Blakey. I think on the whole, you have a very safe 
maintenance record there. There are probably differences, 
again, among specific carriers.
    Mr. Cohen. You mention in your remarks that the tarmac 
should be a takeoff area and not a holding tank. And that 
caused me a little concern there, because some folks have been 
kept on airplanes for like a long time, as if they are on a 
holding tank. I discussed with Representative DeFazio a bill he 
had some years ago, a passenger bill of rights that I think I 
am considering introducing this session. What do you think is a 
reasonable amount of time to be crammed in as cargo in a 
passenger plane on a tarmac as if you are in a holding tank, 
before the Government would want you to get off and be able to 
use the facilities?
    Ms. Blakey. Well, I will tell you, as far as the FAA is 
concerned, we are striving to have on-time performance hit 
above almost 90 percent of the time.
    Mr. Cohen. Yes, but this is when you are not having on-time 
performance.
    Ms. Blakey. I understand. It is not, of course, the role of 
the FAA to tell the airlines what their customer service should 
be. But we do believe that the delays that we are experiencing 
right now in the system are a terrific problem. There is no 
question about it. We also understand that the airlines at this 
point need to step up to address some of the circumstances that 
have occurred recently that have really made headlines and I 
think have caused some genuine, legitimate concern and outcry 
from passengers.
    Mr. Cohen. And since passengers pay most of the fees, it is 
the passengers who pay the fees, don't you think maybe three 
hours is beyond a reasonable time that somebody should be a 
hostage?
    Ms. Blakey. As a passenger, I can tell you, three hours is 
way too long for me.
    Mr. Cohen. I would like to thank you. Let me ask you this, 
too, about cell phones. I had lunch with Senator Alexander 
today. He is a friend and he also shares the idea that cell 
phones could be a cacophonous connection there. What can you 
assure us, your concerns about not seeing that there are 90 
different people carrying on conversations at the same time?
    Ms. Blakey. There is a lot of concern about that. It is 
surprising to me the amount of over the transom traffic I get 
on that particular point. Let me just tell you that where 
things stand right now is that whether or not there will be a 
move toward the possibility of cell phones on aircraft 
additionally is a call of the FCC. It goes to spectrum issues 
and other things.
    After that, then it is the FAA's considered judgment that 
safety comes first before anything else. And any carrier that 
would propose to us that they wanted to allow cell phone usage 
on board the aircraft after the doors are shut would have to 
demonstrate that it would have no effect on the avionics and no 
effect on safety. That would be something that we would require 
as a threshold issue before we went any further.
    Mr. Cohen. Thank you. I would suggest just from my own 
sensitivities, maybe, that if you allow that, you are going to 
have a lot more air marshals and air deputies.
    [Laughter.]
    Mr. Cohen. They will just take up too many seats, and you 
won't have those fees, those 750 fees, because I guess they fly 
for free. Do you have any proposals for consumer issues on 
passenger aircraft? Is that something you consider, things 
where maybe those people that pay all those fees get a little 
bit better peanuts or potato chip or something?
    Ms. Blakey. I will tell you, as much as I am a passenger 
and am very, very concerned about the kinds of issues that are 
behind your question here, the FAA is a regulator. We have as 
our mission primarily the safety and the running of the NAS, 
and the system and capacity is our focus. When it comes to 
those kinds of consumer and significantly economic issues, we 
are prohibited from getting involved. The Department of 
Transportation and others do address some of those issues but 
they are not ones that we can address.
    Mr. Cohen. Who prohibits you? It is not law, is it?
    Ms. Blakey. If you have the regulatory enforcement role, 
that also has an economic sway and economic decision making, it 
really does run into points where you do have a conflict 
between those potentially. I think many, many years ago, the 
determination was made that others should have the authority, 
for example, on questions on consumer concerns, routes, what 
routes are warranted internationally, and a number of economic 
issues.
    Mr. DeFazio. Will the gentleman yield for a moment?
    Mr. Cohen. Yes.
    Mr. DeFazio. Thank you.
    Madam Administrator, until the ValueJet crash, despite my 
best efforts, the FAA was charged with promoting and regulating 
the industry, something which I always pointed to as an 
inherent conflict. The amendment was never accepted until after 
ValueJet, when Secretary Pena was very embarrassed after he had 
said how great the airline was, and the next day he grounded 
it, because in fact neglect and outsourcing of mechanical had 
caused death.
    So people came to me and said, well, how about that 
amendment, where do you want it in the bill? So we stripped 
away that, but there is nothing to say that Congress could not 
charge the FAA with protecting the public, the traveling 
public, and charge you with that duty. There is no prohibition. 
If we were to say that we think it is a safety issue when you 
keep people on a plane for five hours on the tarmac or other 
issues that relate to that, smoking, historically, those sorts 
of things, those are regulatory issues that could fall within 
the purview of your agency.
    Ms. Blakey. I have long since learned not to duel with 
Congressman DeFazio or Chairman Oberstar when it comes to the 
history and development of the FAA, because believe me, they 
can reach back into a lot of this, and certainly do. I would 
suggest this, that right now we have our hands pretty full. But 
if you all see fit to give us additional responsibilities, 
obviously we will step up.
    Mr. DeFazio. Then we would have to give you a little more 
staff. Thank you, Madam Administrator.
    Mr. Cohen. Thank you, Mr. Chairman. If I could just have 
one more minute, I would like to encourage the Committee to 
consider something about consumers--------
    Mr. Costello. Can I just point you are already three 
minutes over your five. But please.
    Mr. Cohen. That was it, just I think there should be some 
consumer concern. That is who pays the fees. I would like to 
make the observation that Elvis went from Tupelo to Memphis and 
I am surprised you went the other direction.
    Ms. Blakey. I will keep that in mind.
    Mr. Costello. The Chair recognizes Mr. Dent for five 
minutes.
    Mr. Dent. Thank you, Mr. Chairman.
    Administrator Blakey, great to be with you. As you know, 
the Lehigh Valley International Airport is located in my 
district, LVIA. The Lehigh-Northampton Airport Authority, which 
owns and operates the airport, has recently updated its master 
plan. One of the major projects identified on that authority's 
airport layout plan is in response to the FAA's runway safety 
area program.
    In order to achieve the current RSA standards for each 
runway, one of the airport's runways must be reconfigured at 
considerable expense. The use of the engineered materials 
arresting system, the EMAS, in this case, is not practical. So 
the scope involves bridging across a State road, placing 
overhead utilities underground and acquiring homes in the 
relocated runway protection zone and noise exposure area.
    Even more, there are potential impacts to a nearby 
elementary school. The airport authority is in the process of 
completing an environmental assessment for the project, and all 
indications are that with the mitigation measures included, 
that the project is feasible to construct.
    The primary concern that I have relates to the considerable 
funding that a project of this magnitude requires. It is 
possible that this work could require in excess of $40 million 
of Federal funding from the Agency's airport improvement 
program. That is on top of other AIP grant funding needs at 
LVIA.
    At a time when the Administration is requesting a 
considerably lower amount of funding for the airport 
improvement program than has been typically authorized by 
Congress, how can my local airport authority and others 
throughout the Country, with deficient RSAs, reasonably expect 
to fund projects of this scale? That is my principal concern. 
We go through this whole process, the community gets alarmed, 
all the mitigation is done, the environmental assessment is 
complete, and then we get to the point of doing something and 
there is really not funding to deal with the issues.
    So how would you respond? How should I respond to my 
airport on this issue?
    Ms. Blakey. I would have to look in much greater detail at 
the specifics there to be more specifically helpful. But I 
would say this, that runway safety areas are a very high 
priority for us. We are striving around the country, wherever 
possible, to see that those meet the current standards that we 
have set, because we do believe that this is an important 
aspect of safety at our airports.
    I am disappointed to learn that the EMAS system may not be 
feasible for Lehigh, because what we have found is that as 
airports are continuing to evaluate that, it has proven to be 
quite a good alternative. For example, Midway, for a number of 
years, did not feel that that was the direction that they could 
go. And recently, just as Congressman Lipinski was noting and 
applauding, we have worked with them to install EMAS at Midway 
and it is working out quite well.
    So I don't know, again, the specifics, but what I can tell 
you is we work very hard to fully fund the requests for RSAs, 
because we do see them as being important, and at the same 
time, trying to address the capital needs that airports may 
have for expansion and other kinds of enhancements.
    Mr. Dent. I appreciate your willingness to work with the 
airport on this issue. Because quite understandably, the 
community does become quite alarmed when they hear about runway 
expansions or relocations or improvements. We raise quite a 
public disturbance. Then when the funding is not available, the 
question becomes, why are we going through the process.
    Ms. Blakey. Well, again, RSAs are a very high priority. So 
we would certainly want to work with you to see what we can do 
to address the specifics there.
    Mr. Dent. Thank you, and I will take you up on that offer.
    Mr. Costello. The Chair recognizes the gentleman from 
Missouri, Mr. Carnahan, for five minutes.
    Mr. Carnahan. Thank you, Mr. Chairman, and welcome to the 
panel. It looks like we have had a good discussion here today.
    I really want to focus on the issue, as you mentioned, 
numerous times, that safety was a primary concern, as it should 
be. I think we all agree with that.
    But there is an issue, I think, with regard to our air 
traffic controllers that is really a vital part of that safety 
mission. In my home State of Missouri, we have 163 air traffic 
controllers, 38 of those at St. Louis TRACON. They are 
essential to me, my family, all of us that fly, the flying 
public. They have had a long history and service to aviation, 
with new technologies. Their training and retention is going to 
be even more important.
    But I have a serious concern that many of us here on the 
Committee do of a lack of a contract, the high rate of 
retirements, and really their poor treatment and work 
environment. I think that all those things combined are a 
safety concern.
    With regard to retention and recruitment, my question is 
really, what can you do, what do you plan to do to improve the 
work environment, the morale, the professional treatment of our 
air traffic controllers to be sure that we can retain and 
recruit and train those that we need for the future?
    Ms. Blakey. Congressman Carnahan, I could not agree with 
you more that our air traffic controllers are an absolutely 
vital aspect of the safety of our system. They are consummate 
professionals and they do a terrific job every day. We are 
working very hard to ensure that the work environment, the 
circumstances in which they are trained and recruited, are all 
such that we will have the best and the brightest coming into 
the system, as well as holding onto the veterans that we have. 
That is why we did not change the compensation for our veteran 
workforce in terms of reducing what is a very generous salary 
structure right now. On average, with salary and benefits, our 
current controller workforce makes over $170,000 a year.
    Let me talk to you a moment about new recruits, because I 
am sure you are concerned about how they come into the system. 
We have over 2,000 people who have volunteered and qualify that 
on the list, wanting to come in to become air traffic 
controllers, right now. At the end of the first year, on 
average, their compensation, cash compensation, and I am not in 
this case including the retirement benefits, will be on average 
$50,000. That is after the first year. After five years, they 
are going to hit just short of $95,000, cash compensation.
    Now, as you can imagine, because I am sure looking at your 
overall constituents' workforce, it is not difficult to recruit 
people with that compensation. But I do want to assure you that 
in terms of work rules, in terms of basic fairness, in terms of 
the best technology for training and the best technology for 
them to work with, that is one of the great reasons we are so 
concerned about moving to the Next Generation system. Because 
we do see that the constraints in the system and the 
requirements that are going to be placed on controllers, we 
have to move to the new technologies and provide them with all 
the tools they are going to need to do the job that is really 
vital to all of us.
    Mr. Carnahan. And do you see that anything additional can 
be done or should be done to really help to improve that 
overall environment?
    Ms. Blakey. Well, certainly. I can tell you this: when I go 
into a brand new facility and our controllers are in a brand 
new tower and they have all of the best equipment, that is 
obviously a terrific boon to them. And we are working very hard 
to address those kinds of capital investments as we go along.
    We also are making significant changes to training, so that 
we actually have simulators, just like pilots use, in some of 
our terminal facilities now. And we are making a much greater 
use of simulators in Oklahoma City, which is where our recruits 
and our Academy is. There are a number of things we are trying 
to do from that standpoint.
    But I will also assure you of this: we will be working with 
NATCA because we see the controllers union having a very 
important role to play in terms of advising us. We can make 
changes that improve the work environment and improve morale. 
We are going to be working closely with them in the weeks and 
months and years to come. That is a commitment that is there 
and Pat Forrey and I have met on a number of occasions to 
discuss concerns that they have with the new contract and 
things we might do to again make improvements that will make a 
real benefit and a different style workforce. We are very 
interested, believe me.
    Mr. Carnahan. Well, I would encourage that dialogue. Again, 
I think it is in all of our interests, and certainly the flying 
public to maintain that confidence, to maintain that work 
environment. Because they do need to make those kinds of split 
second decisions in their work that we all depend on. So thank 
you very much.
    Mr. Costello. I thank the gentleman.
    At this time, Mr. Petri, I have a few remaining questions 
and then we will ask you if you have questions. There are no 
other members requesting time.
    Dr. Dillingham, in your testimony, and we all have clearly 
documented, and I think the FAA has acknowledged that they 
experienced a higher rate of retirements from the air traffic 
controllers than expected. In your work, have you identified 
any factors that might have contributed to that situation, 
specifically the lack of a contract or the contract that has 
been imposed by the FAA or any other factors?
    Mr. Dillingham. Mr. Chairman, I think the discussion that 
was just completed supports the information that we have, as we 
looked into why the retirement sort of popped up the last 
couple of years, and that is, there was some dissatisfaction 
with the agreement, as well as the work rules that are being 
implemented at this point in time.
    Mr. Costello. Any other factors that you would want to 
point to?
    Mr. Dillingham. No, that was the main factor that was 
pointed to.
    Mr. Costello. So that was the major factor. Very good. The 
next question, on the Administration's proposal of $2.75 
billion for the AIP program, I wonder if you might talk about 
the implications of if the Congress adopted $2.7 billion for 
the AIP, what are the implications for the small airports in 
this Country?
    Mr. Dillingham. Mr. Chairman, we are at sort of a 
disadvantage, because we have not been able to see the proposal 
that was submitted earlier this morning. But generally, from 
what we understand, the large and medium hubs will do all 
right. They will be able to find support for their 
infrastructure development through the private sector. It will 
be the smaller airports that would be most affected by it.
    But again I say, we don't have the full picture in terms of 
the other elements that are in the proposal that might mitigate 
some of those effects on small airports. I want to point out 
though that small airports are really going to be important in 
the coming years, because as we look toward bringing in VLJs or 
very light jets, as we look toward making better use of the 
airports that we have, those small airports and regional 
airports are going to assume increasing importance.
    Mr. Costello. Very good. Thank you.
    Administrator Blakey, this is the last question I have. 
This is on the 2008 financing part of the budget proposal. But 
I want to ask one more question, because you had talked about 
going to the hybrid user fee financing proposal. You mentioned 
about flexibility. I wonder if you might talk about, you have 
said a couple of times that revenue versus cost, you have to 
generate the revenue to meet your costs. And then you also 
talked about flexibility. I wonder if you might define what you 
mean, the flexibility in the hybrid system.
    Ms. Blakey. The intent we had in creating the system, and 
this is from working very closely with this Committee and with 
the Congress, as well as the stakeholder community, is to put 
forward an annual budget that will cover the costs of the 
operation of the system, very precisely, and will also cover 
the costs of making the capital investments that are needed as 
we ramp up to the NextGen system. We see the stakeholder 
community having a huge involvement there, and there is a new 
stakeholder board that has real responsibility in all of this. 
And again, Congress has the exact same oversight that they do 
now, and we would be working very closely together through the 
appropriations process, as well as through the authorizing 
process, to ensure that we are sensitive to the kinds of 
concerns that have been expressed today.
    But the cost in the revenue, therefore, can be tied on a 
fee system on an annual basis. You simply adjust those, using 
the cost allocation. If they don't need to be adjusted, fine. 
If the unit costs go down, that is great. If they have to go 
up, they have to go up. The tax system, the fuel tax system is 
not quite as flexible as a fee system. But what we are 
proposing is on an every two year basis to be able to make 
adjustments to that, to match as closely as possible, again, 
the costs that that portion of the community is imposing on the 
system. That is the kind of flexibility I am referring to.
    Mr. Costello. You mentioned about the users being involved 
and you mentioned about Congressional oversight. I think that 
there are some people who are very concerned about who will 
have the final say in increasing fees. In other words, if the 
next generation costs are not contained and they continue to go 
up, does that mean that the FAA continues to raise fees for the 
users to meet those costs?
    Ms. Blakey. I don't think there is any way you get to 
NextGen without it being a collaborative engagement with the 
stakeholder community. There is too much of it, frankly, that 
involves their own decisions, equipage and other things. For 
example, on ADS-B, we will be proposing a rulemaking this fall, 
an NPRM, that will go to how fast do you all feel that you can 
equip and how quickly should we require the capability to fly 
with ADS-B.
    Those are collaborative decisions that have to be made 
together. And they have to be made with the full work and 
analysis that this Committee and others will apply. So there is 
no way to make this an arbitrary decision on the part of 
bureaucracy at 800 Independence Avenue. We have established, 
and I think really grown in, a cooperative engagement with the 
aviation community in a way that really is making a tremendous 
partnership there. That is what the NextGen is going to 
require, and that will determine how fast you make those 
investments.
    I will tell you this, though_I think we also need to 
recognize the international environment in which we are 
engaged. U.S. leadership, U.S. technology has always been at 
the forefront in aviation. Europe is moving out smartly on 
their generation of the NextGen, SESAR. They are proposing very 
similar costs to the kind that we are projecting ourselves. 
Others around the world, Australia is already moving to ADS-B. 
We can't really sit back and sort of dither and say, well, we 
are not able to figure this out and we can't get our financing 
together, because we will be left behind and those technologies 
and those standards and those approaches will begin to really 
drive it. That is an environment that we cannot change, and 
that is happening.
    So it is not just the tremendous congestion that we are 
facing, that billion passengers by 2015, but it is also the 
world in which we are living.
    Mr. Costello. I guess the point that I am making, that 
everyone is concerned about that I have heard from about user 
fees is the flexibility to raise those user fees and the 
incentive to control costs, if in fact you increase the user 
fees to match whatever your costs are. So that is a point that 
I wanted to make for the record, and that I have heard from 
many people who are concerned about turning this system over to 
a user fee system and giving the agency and others the ability 
to increase user fees at any time to match the costs.
    At this time, I would recognize the Ranking Member, Mr. 
Petri for any questions or comments he may have.
    Mr. Petri. Thank you, Mr. Chairman. I have just a couple 
quick questions. The first is for Inspector General Scovel. We 
have been talking about cost-based user fees. My question is, 
does the FAA have a cost accounting system and a cost 
allocation system capable of supporting the development of 
cost-based user fees currently?
    Mr. Scovel. Sir, as I noted in my opening statement, FAA 
does have a cost accounting system. It is designed primarily to 
support management decisions regarding performance. We believe 
that in its present configuration, this cost accounting system 
may not meet all user fee requirements. We can cite, I can cite 
one example for you, sir, and that is that FAA is proposing to 
charge airlines for services provided at the 30 largest 
airports, for instance. Some of those airports house both the 
air traffic control tower and the associated TRACON, the 
terminal radar approach control facility. In that case, the 
cost accounting system assigns costs to the joint facility 
without distinguishing, as I understand it currently, without 
distinguishing tower services from TRACON services, even though 
that TRACON may support several airports.
    If deemed to have a significant impact on user fee 
calculations, we would recommend that FAA revise that aspect of 
the cost accounting system. There may well be other instances 
which my staff and I have not yet had an opportunity to 
address. But we would be happy to work on that for the 
Committee's benefit, sir.
    Mr. Petri. I would be interested in, perhaps, if you have 
some recommendations or concerns that we can get. What 
resources are available and geared up to go ahead and get 
things in place? Because we are going to be arguing a lot, and 
then we will put something in effect, and it may be stuff that 
won't really--you know what I am saying, we will be getting 
ahead of ourselves.
    Mr. Scovel. And I don't mean to say that it cannot be done. 
I am simply saying that in its current configuration and 
certain specific aspects, it may not support user fee 
calculations. So looking ahead, and as FAA fine tunes its 
proposal, we would expect that the agency would be able to 
address those points.
    Mr. Petri. And then I guess my last question is for Dr. 
Dillingham. I just would be interested if you could give us 
your own, if you have done it, your projection as to the growth 
of corporate aviation, where you have an assessment or a figure 
as to what you expect that growth to be. There are new 
companies out there with new planes.
    Mr. Dillingham. We have not looked specifically at the 
growth of corporate aviation. However, linked to your last 
question, we are right now conducting an analysis of the cost 
allocation system that FAA is using with regard to the user fee 
proposal. As a part of that, we are examining part of the basis 
of that cost allocation system, which includes the number of 
different types of GA aircraft that traverse the system, the 
corporate aircraft as well as the turbine. So to that extent, 
we will have some information reporting to this Subcommittee 
shortly about the point you just asked.
    Mr. Petri. Very good. Thank you.
    Mr. Costello. I thank the Ranking Member. And I thank our 
witnesses today for appearing before us.
    I will give you a last opportunity to make a comment. I see 
the Administrator is about to come over the table. She has 
something to say. So I will give you the opportunity to make a 
brief statement if you would like.
    Ms. Blakey. Well, I wish I had the energy at this point to 
come over the table. I am not quite sure that I could manage 
that.
    But I did just want to add one thought. We are looking 
forward to briefing you all, briefing the staff at length on 
the cost accounting methodology and all the details there. And 
certainly, there may be some fine tuning that should be 
required before we move forward.
    What I would say, though, is that our last audit did say 
that the cost accounting system that we have is suitable for 
use in terms of a user fee system. We do believe that when you 
get down to 600 different units that we are analyzing that 
there is a tremendous amount of granularity and accuracy here 
that we believe can be relied on. So we will be working very 
carefully with you all to make certain that that is all 
transparent.
    The final point I would make, Mr. Chairman, is that in 
terms of the flexibility that you mentioned, I think it is 
important to note that we are talking about a system which 
requires the FAA to be very transparent, very accountable for 
its costs in a way we don't have to be now. So there is 
downward pressure on costs, and there is real accountability. 
That is one of the great advantages in a system where we are 
cost-based and fees are at stake. And every year we have to, as 
you say, open our books and be accountable. And if people don't 
want to pay for the services that we are providing at the cost 
we are providing, then we have got to really work with that 
concern on the part of the customer stakeholders. So it is a 
two-way street.
    Mr. Costello. I did not intend to comment, but I think I 
have to at this point. I won't go into some of my past 
experiences, but frankly, the users have no place else to go. 
It is not like they can shop around. They either get the 
services from you or they stay on the ground. But I appreciate 
your comments.
    Dr. Dillingham?
    Mr. Dillingham. Just a couple of things, Mr. Chairman. I 
think it certainly is important to recognize that regardless of 
the funding mechanism that the Congress eventually approves, it 
is very important that some kind of reauthorization take place 
within a timely manner. We certainly, we don't have that 
cushion to fall back on as we have in the past. I think it is 
important to recognize that the way FAA has been able to manage 
its acquisitions over the last three years is important as we 
move forward into the next generation. Because that is going to 
have a lot of acquisitions as well. The linkage there is the 
leadership or the cultural change agents, that have brought FAA 
to this point have a very short time left. The Administrator's 
tenure is short, and we know that Mr. Chew is leaving very 
soon. And that kind of leadership gap can definitely have an 
effect on the ability of the agency to keep moving forward and 
not sort of fall back to where it was in past decades. So I 
think it is important from both of those perspectives.
    Mr. Costello. Thank you. Mr. Scovel?
    Mr. Scovel. Thank you, sir. If I may make tow points, and I 
will make them brief. To respond to Mr. Graves, sir, I regret 
if my opening statement left the impression with Mr. Graves or 
with any other member of the Committee that I cited the ComAir 
accident, that unfortunate event, as a commentary on the 
controllers' performance on that morning. I did not intend 
that. I think you were correct, sir, when you interpreted my 
remarks, sir, simply as highlighting the importance of safety, 
in the fact that that event was a reminder to all of us of the 
importance of that.
    I should say that NTSB, of course, has the primary 
responsibility for investigating that accident, not my office. 
Although we have undertaken an examination of FAA's policy 
regarding two controllers in the tower rule and how it was 
implemented at Lexington and other facilities during the time 
period in question.
    My second point, sir, refers back again to the cost 
accounting system. And to clarify a point attempted to be made 
by both me and Ms. Blakey concerning the audit, as the officer 
in the department responsible for the department's audits, it 
is my understanding that the audit supports the conclusion that 
the cost accounting system is sufficient to assign costs within 
or to service delivery points. It is rather a fine point, but 
it is one that I think needs to be made. Because when we are 
talking about user fees, that is really the next step down the 
line. Once we have assigned costs to service delivery points, 
then how are those costs to be allocated among users. And the 
audit itself did not address that question.
    My earlier comments regarding the cost accounting system 
had to do with its present configuration, how it might support 
user fees and my opinion as stated, sir, was that while there 
may be some points that need fine tuning, as Ms. Blakey said, 
it is largely sufficient to do that. But we would urge the 
agency and the Committee, of course, to examine that question 
carefully.
    Mr. Costello. There is an advantage to going last.
    [Laughter.]
    Mr. Costello. I thank the witnesses for being here today 
and there is no further business before the Subcommittee, so 
the hearing is adjourned. Thank you.
    [Whereupon, at 4:30 p.m., the subcommittee was adjourned.]
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