[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
FEDERAL AVIATION ADMINISTRATION REAUTHORIZATION
=======================================================================
(110-17)
HEARING
BEFORE THE
SUBCOMMITTEE ON
AVIATION
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
MARCH 14, 21, 22, and 28, 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........................................ ix
Proceedings of:
March 14, 2007................................................. 1
March 21, 2007................................................. 120
March 22, 2007................................................. 340
March 28, 2007................................................. 744
THE ADMINISTRATION'S FAA REAUTHORIZATION PROPOSAL
MARCH 14, 2007
TESTIMONY
Blakey, Hon. Marion C., Administrator, Federal Aviation
Administration, U.S. Department of Transportation.............. 8
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Carnahan, Hon. Russ, of Missouri................................. 37
Costello, Hon. Jerry F., of Illinois............................. 39
Johnson, Hon. Eddie Bernice, of Texas............................ 42
Larsen, Hon. Rick, of Washington................................. 47
Mica, Hon. John L., of Florida................................... 48
Mitchell, Hon. Harry E., of Arizona.............................. 53
Oberstar, Hon. James L., of Minnesota............................ 59
Petri, Hon. Thomas E., of Wisconsin.............................. 63
Rahall, Hon. Nick J., of West Virginia........................... 67
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Blakey, Marion C................................................. 69
SUBMISSIONS FOR THE RECORD
Blakey, Hon. Marion C., Administrator, Federal Aviation
Administration, U.S. Department of Transportation, ``Making the
NextGen Vision a Reality,'' 2006 Progress Report to the Next
Generation Air Transportation System Integrated Plan........... 84
Federal Aviation Administration, response to questions from Rep.
Sestak and Rep. Andrews........................................ 110
ADDITIONS TO THE RECORD
American Federation of State, County and Municipal Employees,
written statement.............................................. 117
FAA's FINANCING PROPOSAL
MARCH 21, 2007
TESTIMONY
Alterman, Stephen A., President, Cargo Airline Association....... 158
Barrow, Hon. John, a Representative in Congress from the State of
Georgia........................................................ 00
Bolen, Ed, President and CEO, National Business Aviation
Association.................................................... 158
Boyer, Phil, President, Aircraft Owners and Pilots Association... 158
Cohen, Roger, President, Regional Airline Association............ 158
Dillingham, Dr. Gerald, Director, Physical Infrastructure Issues,
U.S. Government Accountability Office.......................... 129
Elwell, Daniel K., Assistant Administrator, Aviation Policy,
Planning and Environment, Federal Aviation Administration...... 129
Faberman, Edward P., Executive Director, Air Carrier Association
of America..................................................... 158
May, James C., President and CEO, Air Transport Association of
America........................................................ 158
Scovel, III, Hon. Calvin L., Inspector General, U.S. Department
of Transportation.............................................. 129
Tiahrt, Hon. Todd, a Representative in Congress from the State of
Kansas......................................................... 122
Zuccaro, Matthew, President, Helicopter Association International 158
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Barrow, Hon. John, of Georgia.................................... 185
Costello, Hon. Jerry F., of Illinois............................. 196
Matsui, Hon. Doris O., of California............................. 199
Mitchell, Hon. Harry E., of Arizona.............................. 200
Oberstar, Hon. James L., of Minnesota............................ 207
Petri, Hon. Thomas E., of Wisconsin.............................. 211
Salazar, Hon. John T., of Colorado............................... 215
Tiahrt, Hon. Todd, of Kansas..................................... 217
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Alterman, Stephen A.............................................. 224
Bolen, Ed........................................................ 231
Boyer, Phil...................................................... 244
Cohen, Roger..................................................... 253
Dillingham, Gerald L............................................. 259
Faberman, Edward P............................................... 287
May, James C..................................................... 297
Scovel, Calvin L................................................. 315
Zuccaro, Matthew................................................. 335
SUBMISSIONS FOR THE RECORD
Dillingham, Dr. Gerald, Director, Physical Infrastructure Issues,
U.S. Government Accountability Office, reponse to questions
from Rep. Costello............................................. 283
FAA OPERATIONAL AND SAFETY PROGRAMS
MARCH 22, 2007
TESTIMONY
Baker, Steve, President, FAA Managers Association................ 382
Brantley, Tom, President, Professional Airways Systems
Specialists (AFL-CIO).......................................... 343
Dillingham, Dr. Gerald, Director, Physical Infrastructure Issues,
U.S. Government Accountability Office.......................... 382
Forrey, Pat, President, National Air Traffic Controllers
Association.................................................... 343
Friend, Patricia, International President, Association of Flight
Attendants-CWA................................................. 371
Kroeppel, Warren, General Manager of Laguardia Airport, The Port
Authority of New York and New Jersey........................... 382
McVenes, Captain Terry, Executive Air Safety Chairman, Air Line
Pilots Association............................................. 371
Renninger, James B., Director, Aviation Center of Excellence,
Florida Community College of Jacksonville...................... 382
Roach, Jr., Robert, General Vice President, International
Association of Machinists...................................... 371
Sliwa, Steve, CEO and President, The Insitu Group, Inc........... 382
Waters, Tom, President, American Federation of State, County and
Municipal Employees (AFSCME) Local 3290........................ 343
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Costello, Hon. Jerry F., of Illinois............................. 395
LoBiondo, Hon. Frank A., of New Jersey........................... 397
Matsui, Hon. Doris O., of California............................. 400
Mitchell, Hon. Harry E., of Arizona.............................. 402
Oberstar, Hon. James L., of Minnesota............................ 406
Petri, Hon. Thomas E., of Wisconsin.............................. 409
Rahall, Hon. Nick J., of West Virginia........................... 411
Salazar, Hon. John T., of Colorado............................... 412
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Baker, Steve..................................................... 414
Brantley, Tom.................................................... 421
Dillingham, Gerald L............................................. 435
Forrey, Patrick.................................................. 465
Friend, Patricia A............................................... 497
Kroeppel, Warren D............................................... 523
McVenes, Captain Terry........................................... 544
Renninger, James B............................................... 687
Roach, Robert Jr................................................. 693
Sliwa, Steven M.................................................. 704
Waters, J. Tom................................................... 712
SUBMISSIONS FOR THE RECORD
Forrey, Pat, President, National Air Traffic Controllers
Association, letters to Rep. Mica.............................. 492
McVenes, Captain Terry, Executive Air Safety Chairman, Air Line
Pilots Association:
``The Current State of the Cargo Industry_an Alpha
Perspective''................................................ 568
``Concept of Safety Management System Embraced by Many
Countries''.................................................. 599
``Background and Fundamentals of the Safety Management System
(SMS) for Aviation Operations''.............................. 604
ADDITIONS TO THE RECORD
Association of Air Medical Services, written statement........... 717
Air Transport Association of America, Inc., written statement.... 724
FAA's AIRPORT IMPROVEMENT PROGRAM
MARCH 28, 2007
TESTIMONY
Barclay, Charles, President, American Association of Airport
Executives..................................................... 747
Bennett, James E., President and CEO, Metropolitan Washington
Airports Authority............................................. 781
Bogan, Robert L., Deputy Director, Morristown Municipal Airport,
on behalf of The Sound Initiative.............................. 798
Clark, John, Executive Director, Jacksonville Aviation Authority. 781
Dillingham, Dr. Gerald, Director, Physical Infrastructure Issues,
U.S. Government Accountability Office.......................... 747
Fernandez, Hon. Nuria I., Commissioner of Aviation, City of
Chicago........................................................ 781
Healy, Hon. James D., County Board Member, DuPage County, Il, on
behalf of National Association of Counties..................... 798
Kimmel, Douglas, Airport Manager, Williamson County Regional
Airport........................................................ 781
LeTellier, Gary W., Airport Manager, Southwest Oregon Regional
Airport........................................................ 781
Piccolo, Frederick J., President and Chief Executive Officer,
Sarasota Manatee Airport Authority............................. 781
Principato, Greg, President, Airports Council International-North
America........................................................ 747
Ramsdell, Karen, Airport Director, Santa Barbara Municipal
Airport........................................................ 781
Roberts, Elaine, A.A.E., President and CEO, Columbus Regional
Airport Authority.............................................. 781
Shaffer, D. Kirk, Associate Administrator for Airports, Federal
Aviation Administration........................................ 747
Vallin, Travis, Director, Division of Aeronautics, Colorado
Department of Transportation, on behalf of The National
Association of State Aviation Officials........................ 798
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Cohen, Hon. Steve, of Tennessee.................................. 807
Costello, Hon. Jerry F., of Illinois............................. 808
Frelingkhuysen, Hon. Rodney P., of New Jersey.................... 810
Johnson, Hon. Eddie Bernice, of Texas............................ 812
Kagen, M.D., Hon. Steve, of Wisconsin............................ 816
Matsui, Hon. Doris O., of California............................. 817
Mitchell, Hon. Harry E., of Arizona.............................. 818
Oberstar, Hon. James L., of Minnesota............................ 826
Salazar, Hon. John T., of Colorado............................... 830
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Barclay, Charles M............................................... 832
Bennett, James E................................................. 853
Bogan, Robert L.................................................. 859
Clark, John...................................................... 868
Dillingham, Gerald L............................................. 876
Fernandez, Nuria I............................................... 903
Healy, James D................................................... 907
Kimmel, Douglas S................................................ 912
LeTellier, Gary W................................................ 923
Principato, Greg................................................. 928
Ramsdell, Karen S................................................ 940
Roberts, Elaine.................................................. 947
Shaffer, D. Kirk................................................. 954
Vallin, Travis L................................................. 968
ADDITIONS TO THE RECORD
American Road and Transportation Builders Association, written
statement...................................................... 977
Arlene J. Mulder, Mayor, Arlington Heights, Illinois, written
statement...................................................... 981
Illinois Department of Transportation, Division of Aeronautics,
Susan R. Shea, Director, letter to Rep. Mica................... 985
American Council of Engineering Companies, Airport Consultants
Council, American Road & Transportation Builders Association,
American Institute of Architects, and American Society of Civil
Engineers, joint letter to Rep. Oberstar and Rep. Costello..... 988
American Society of Civil Engineers, written statement........... 991
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
HEARING ON THE ADMINISTRATION'S FEDERAL AVIATION ADMINISTRATION
REAUTHORIZATION PROPOSAL
----------
Wednesday, March 14, 2007
House of Representatives,
Committee on Transportation and Infrastructure,
Subcommittee on Aviation
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2167, Rayburn House Office Building, the Honorable Jerry
F. Costello [Chairman of the Subcommittee] presiding.
Mr. Costello. The Subcommittee will come to order.
The Subcommittee is meeting today to hear testimony on the
President's fiscal year 2008, actually, the Federal Aviation
Reauthorization Proposal submitted by the Administration and by
the Administrator.
I would ask all Members, staff and everyone in the room to
turn off their electronic devices or to put them on vibrate.
I will give an opening statement and call on the Ranking
Member, Mr. Petri, to give his opening statement as well.
I welcome everyone to our first of a number of hearings on
the FAA Reauthorization. In particular, I would like to welcome
the FAA Administrator, Administrator Blakey, here today to
present the Administration's FAA Reauthorization Proposal to
the Subcommittee.
Following this hearing, the Subcommittee will give detailed
consideration to specific aspects of the FAA reauthorization
proposal in upcoming hearings in the month of March. On March
21st, we will examine the FAA's financing proposal. March 22nd,
we will examine the FAA's Operational and Safety Programs, and
March 28th, the FAA's Airport Improvement Program. The
Subcommittee will look at the Essential Air Service Program and
small community air service issues in a hearing in the month of
April.
On February 14th, the FAA submitted its reauthorization
proposal to the Congress. The FAA's proposal includes a new
financing plan to transform the FAA's current excise tax
financing system to a hybrid cost-based user fee system as well
as major changes to the Airport Improvement Program. In
addition, the reauthorization proposal includes provisions on
the environment, airport congestion, war risk insurance as well
as other items affecting the aviation community.
At the outset, I would like to make a few observations
about the FAA's reauthorization proposal.
As I noted in our hearing on February 14th, when we
received the President's budget proposal, the FAA's new
proposal would hypothetically yield approximately $600 million
less in fiscal year 2008 than maintaining the current tax
structure and over $900 million less from fiscal year 2009 to
fiscal year 2012. This is partially because the FAA's estimated
cost requirements for its major capital programs are actually
lower than what they were four years ago.
For example, the FAA's estimated total requirement for
facilities and equipment in this new three year proposal is
approximately $380 million less than what it requested for the
first three years of its last reauthorization proposal, the
Centennial of Flight Aviation Authorization Act. This is
despite the fact that the FAA has cited the need to finance a
major new air traffic control modernization initiative as
reason for reforming the current tax structure.
At the same time, I have major reservations about
implementing a user fee for which there does not appear to be a
hard ceiling and for which FAA would have broad authority to
raise fees to match whatever costs were incurred. Air traffic
control modernization is a technologically intensive and
financially high risk endeavor. In the past, the FAA has
incurred major cost overruns in its modernization program.
While the FAA believes that its user fee system would be more
transparent, I am concerned that the airline passengers and the
other air space users could end up paying hidden costs for
future problems and delays with the FAA's modernization
program.
Therefore, it is imperative that the FAA give Congress a
straightforward assessment of its cost requirements for the
Next Generation system and for Congress to consider whether to
authorize its request.
In terms of capacity, airport runways may provide an even
greater benefit than the air traffic modernization and, in
fact, the FAA's operational evolution plan states that new
runways and runway extensions provide the most significant
capacity increases. However, the FAA has requested
approximately $1.5 billion less for the AIP, the Airport
Improvement Program, in its new three year proposal than what
it requested for the first three years of its last
reauthorization proposal. Given the fact that the FAA
acknowledges that the airport capital requirements have
increased, I believe that this funding request is extremely
shortsighted.
The FAA's proposal to increase the cap on Passenger
Facilities Charges, the PFCs, from $4.50 to $6.00 is worthy of
consideration. The PFC cap has not been raised since 2000, and
inflation and construction cost increases have eroded the PFC's
values. However, I have some concerns with expanding the
eligibility for PFC projects. Expanding PFC eligibility and the
proposed cuts to the AIP could result in moving funding away
from capacity-enhancing air side projects.
The FAA has also proposed to restructure the Non-Primary
Entitlement Program into a tiered system of apportioning AIP
entitlements so that the larger general aviation airports get
more funding. The FAA believes that its proposal would meet the
demands of emerging markets, such as very light jets, air taxis
and fractional ownership which land primarily at general
aviation airports. We need to examine this proposal carefully
to determine the impacts on these smaller general aviation
airports.
I welcome and look forward to hearing the testimony of the
Administrator, Administrator Blakey, this morning.
I will call on the Ranking Member of the Committee, but
before I do, I would ask unanimous consent to allow two weeks
for all Members to revise and extend their remarks and to
permit the submission of additional statements and materials by
Members and witnesses.
Hearing no objection, so ordered.
At this time, I would recognize the Ranking Member of the
Committee, Mr. Petri, for any opening statement or remarks that
he may have.
Mr. Petri. Thank you very much, Mr. Chairman.
I would like to join you in welcoming the Administrator of
the Federal Aviation Administration, Marion Blakey, to the
witness stand and, at that same time, thank her for the years
of strong leadership that she has provided to the organization.
I have some not too extensive remarks that I would like to
include in the record.
I will just say that many of the concerns that you
expressed, I think are shared by all Members of the Committee
about certain aspects of this program, but the important thing
is that we get on about the business of reauthorizing these
programs so that we can facilitate the deployment of Next Gen.
It is absolutely essential to accommodate the needed growth in
aviation services. If we don't modernize and expand the
capacity of the system, it will start constraining our economy
and will have lots of ripple effects.
Plus, getting this system deployed will help provide a
renewal of leadership for the world aviation community, for
American aviation interests and a platform for them to compete
around the world, and that is important as well.
This is very important business, and I am hoping that while
there will be differences, that at the end of the day, we can
agree on the importance of the task at hand and find reasonable
accommodation for these differences so as to get the main job
done.
With that, I yield back.
Mr. Costello. I thank the Ranking Member and at this time
would recognize the Ranking Member of the Full Committee for
any opening statement or comments that he may have. Mr. Mica is
recognized.
Mr. Mica. Thank you, Mr. Costello, and I want to thank you
for convening this hearing this morning.
This is a very important topic. We are about six months and
a few days away from the September expiration of our current
authorization. Really, the basic fundamental question of the
authorization process for FAA is how we fund the new system.
Now I know I am beginning to sound like the lone stranger
supporting the Administration's proposal, but I think people
are going to have to sober up and see that we are not going to
be able to fund what the Ranking Member of the Subcommittee
said, Next Generation air traffic control system, without a
method to fairly finance it.
The Administration has proposed a hybrid system. It
involves several areas of raising revenue, some from general
aviation, some from user fees, some from the current tax that
we have on passenger tickets. It is going to take all of the
above plus the Administration's proposed increasing of the
PFCs, which I also support in giving airports additional
flexibility to utilize those funds.
I don't have one of the pictures here, but all you have got
to do is look at the traffic in the air today, the air traffic
in the day, and we have returned to congested skies. General
aviation isn't going to be able to move the new generation of
ultra light jets. They might just as well keep those parked in
other general aviation if we don't find a way to fund this
system and improve its operations because there will be total
gridlock and total meltdown.
So it is a very serious subject. We have got to stop
playing the games, get behind some meat and potato proposals to
fund this.
The other thing too that the Administration has proposed
and I have recommended, a lot of games are being played with
FAA and trying to modernize it. I have great concern with the
departure of Russell Chew, our COO, who brought some of the
bureaucracy under control. He instituted a businesslike
structure and plan for FAA which has been partially
implemented. We have seen the difficulty in consolidating,
modernizing, replacing human to human activity with high tech
and data to data operations. But the BRAC-like provision that I
recommend, that has been included by the Administration, I
strongly advocate because we have got to do a better job both
with technology and with funding this critical system to our
future.
With that, those comments, I thank you for this very
important beginning of finding a way to make all that happen.
Mr. Costello. Thank you.
The Chair recognizes Mr. DeFazio.
The Chair recognizes Mr. Lampson for an opening statement.
Mr. Lampson. Thank you, Mr. Chairman.
I will submit my comments for the record but make just a
very short statement to thank you and the Ranking Members for
conducting this hearing and for Administrator Blakey to come
over. We are anxious to hear her comments.
Aviation is one of the most important modes of
transportation in the United States, and it is also an issue of
great importance in my district in Houston where we have some
serious issues regarding capacity. It is always important to be
able to sit down and hear from key witnesses with regard to the
Administration's proposal for the FAA reauthorization.
I look forward to hearing from Administrator Blakey
concerning the new cost-based user fees that will be used to
fund some FAA services as well as the discrepancy of congestion
fees among major airports using the same facilities and air
space in many instances.
I am anxious to hear about the crisis facing the FAA with
regard to the retiring air traffic controllers. It is my
understanding that FAA estimates that over 70 percent of its
controller workforce will be eligible to retire in 10 years. It
is vitally important that we have as many well qualified
controllers as possible ready to replace these retiring workers
so that in no way is the safety of passengers compromised.
Again, I look forward to hearing from the speakers, and I
thank you, Mr. Chairman, for calling this meeting.
Mr. Costello. Thank you.
The Chair recognizes Mr. Ehlers for an opening statement or
remarks.
Mr. Ehlers. Thank you, Mr. Chairman. I appreciate this, and
I appreciate the hearing.
I want to begin by publicly apologizing to the
Administrator. At the last hearing we had, there was
considerable frustration and anger among Members of the
Committee about the huge increase in the gas tax. As everyone
in the Congress knows, if we try to raise the gas tax on
automobiles by one cent, there is an incredible reaction from
the public, and the huge increase in the gas tax that was being
discussed triggered a strong reaction. I see Mr. Boswell
smiling. I think he was part of the reaction.
I was impolite enough to say that that proposal was dead on
arrival. I apologize to the Administrator for implying somehow
that everything she said was dead on arrival. It was only the
tripling of the gas tax.
I do appreciate your work and the incredible amount of
effort it takes to try to run the FAA and modernize it.
In terms of what is on the table today, I think the NextGen
air traffic control system is the key factor in increasing
safety and decreasing costs in the future, and I will be
watching that very closely in the next few years because I have
great interest in it.
Also, I am very interested in how ADS-B is going to impact
on the air traffic control system. Will it, in fact, improve
the situation, reduce costs of air traffic control or not? So I
am eager to see what the developments are on that, what the
long term plans are and what the timeframe is.
With that, and we have others who want to make comments, so
I will yield back the remainder of my time, Mr. Chairman.
Mr. Costello. I thank the gentleman.
The Chair recognizes, for an opening statement or comments,
the gentlelady from California, Ms. Matsui.
Ms. Matsui. Thank you, Mr. Chairman. Thank you and Ranking
Member Petri for holding this important hearing and to
Administrator Blakey for providing testimony.
It is the duty of this Committee to craft the best possible
policy for the future of the Nation's aviation system. Air
travel is more important than ever to America's commerce and
our way of life.
In and around my district, I have a large commercial
airport and the reliever report. I fly back and forth to
Sacramento and to D.C. a lot, and so I am personally very
dependent on the system.
It is clear that our aviation system faces tremendous
challenges. We have an aging infrastructure that needs to be
modernized, and we need to expand capacity to meet future
demand. So we have to look at this situation strategically in
the near, medium, and long term.
I know there are many different objections voiced about
this proposal. For example, the airports have been very clear
that they think the increase to a $6.00 PFC is not sufficient
to meet their infrastructure demands. In Sacramento, we are
constructing a new terminal, so this is something that really
affects my constituents.
In general, there is going to be a lot of debate about how
we allocate the burden of maintaining, modernizing and
expanding the aviation system. It is this Committee's job to
make sure the allocation is fair and that it yields sufficient
resources to support future demands. This is certainly not an
easy task, but it is essential for the long term success of the
Nation's aviation system and for its economy.
I appreciate the thought and effort that Administrator
Blakey and her colleagues have put into this reauthorization
proposal and look forward to working with all of you as we
continue this debate this month. Thank you very much.
Mr. Costello. The Chair recognizes Mr. Salazar for an
opening statement or comments.
Mr. Salazar. Thank you, Mr. Chairman.
Administrator Blakey, thank you so much for being here
today. I think I speak for most of my colleagues on the
Committee when I say I look forward to working with you and
your staff in the coming months on this very important issue. I
appreciate that we will be having several hearings on various
aspects of the Administration's FAA reauthorization proposal.
As I have indicated before, I am concerned about the
specific issue of user fees. I am still concerned, and I
associate my remarks with Mr. Mica's remarks about the meat and
potatoes way of funding this reauthorization and the NGATS. I
am still unconvinced that the current system of aviation excise
taxes, which has provided a stable and ample trust fund, needs
to be changed so drastically, and I am very concerned about its
impact on general aviation.
We keep hearing about the cost of modernization and NGATS.
While we agree that updating our aviation industry will require
a substantial amount of money, CBO has already indicated that
both the modernization and NGATS can be accomplished under the
existing FAA financial structure.
In the coming weeks and months, we will be focusing on the
aviation needs of rural communities. Often times, these small
communities get overlooked and sidelined, and I want to ensure
that the Administration's proposal adequately addresses the
needs of such communities.
I believe that we are working toward the same goal, to
ensure that the United States continues to have the safest and
most efficient transportation system in the world, and the
purpose of these hearings is to decide how to best get there.
I look forward to your testimony today, Ms. Blakey, and I
am confident that we will address the issues I raised.
Thank you, Mr. Chairman, and I yield back.
Mr. Costello. I thank the gentleman.
Mr. Boswell is recognized for an opening statement or brief
remarks.
Mr. Boswell. Thank you, Mr. Chairman, and I appreciate
again your having this continuing dialogue.
I guess I would join Mr. Ehlers, Ms. Blakey, in saying that
I said, yes, almost internally as he said what he did the other
day. I wasn't quite ready to use DOA, but we have got to talk.
We have to talk.
I would say this: You have got your job to do. We respect
your job, and you have to perceive it as you see it, and we
respect that. However, we do too, and I think you respect that.
I believe that for the moment at least. You just nodded. I
thank you. So we will endeavor to respect your position and
talk as you see it, and hopefully you will appreciate our
responsibility to do oversight and to stand strongly for that
which we believe and seek your willingness to work with us for
solutions.
I am not into games. I don't think any of us are. We must
engage in solutions.
Of course, you know that many of us advocate for general
aviation. We are not making any secret about that and for many
reasons. Yes, we use it. We greatly appreciate the impact of
general aviation on the National economy, jobs, manufacturing,
moving people, moving people with tight schedules, moving
priority goods, et cetera, et cetera, et cetera. I personally
believe that GA is at the table and willing to pay their or our
part through current resources.
Let us see if we can't find a solution. It is not we, they,
you, us. It is a solution. That is what we need. I think you
have got the wherewithal to come a little further than you have
come so far, so we will just have to work on it together. But
stand your ground. We will stand ours. But at the end of the
day, if we have just argued and no solution, what have we
accomplished?
General aviation is at the table. I hope you are talking to
them and talking to them openly, and I seek that very much.
Thank you, Mr. Chairman. Let us carry on.
Mr. Costello. I thank the gentleman.
The Chair recognizes Mr. Hayes for an opening statement or
brief remarks.
Mr. Hayes. Thank you, Mr. Chairman.
Welcome, Ms. Blakey.
I would like to reflect what Chairman Boswell--he is
Chairman on the Agriculture Committee--has already said, just
briefly. This is a terrible imposition on a segment of the
marketplace which will have incredible impact on that industry.
We are all friends here.
I would like to follow up on what I said in an earlier
hearing. I would like to have some way to sit down with some of
the potential providers of air traffic control upgrades and
look and see what they are saying.
But as I look, and you all have some wonderful numbers.
There are some number crunchers out there that can give you
numbers that will dazzle you, but they just don't, I think,
accurately reflect. I am not that well prepared. We will talk
about it in questions later, to go over that, but when you look
at the percentage increase, the guy flying a 747, it is an 18
percent cut for a guy flying a Bonanza. It is a 275 percent
increase.
Again, we welcome the debate and welcome your interest and
activity and commitment to the job, but let us keep all the
doors and dialogues open going forward so that we don't lose a
vital and dynamic part of the U.S economy which is suppliers
and everything else that are providing. We don't want the
impact of the luxury tax that took place a few years ago. The
airlines are critically important. We have given them billions
of dollars in subsidies. Let us just be careful going forward
that we don't do the wrong thing.
Again, thanks for being here.
Thanks, Mr. Chairman, for having the hearing.
Mr. Costello. I thank the gentleman.
The Chair recognizes the gentleman from Wisconsin, Mr.
Kagen, for an opening statement or brief remarks.
Mr. Kagen. Thank you, Mr. Chairman. I am very pleased to be
here today, and I want to thank Administrator Blakey for being
here and joining us as well.
I would also like to thank Chairman Costello, Chairman
Oberstar, Ranking Member Mica and my good friend and colleague
from Wisconsin, Tom Petri, because by working together, these
hearings on FAA will help us to reauthorize something that will
be proud for everyone to stand by.
I believe that everyone here today will agree that by
examining and understanding all the complexities surrounding
this issue, we will ensure that the future trust fund will be
successful, and it is immensely important to us all.
As our Nation's infrastructure continues to grow and to
expand, the need to address the problems associated with such
growth become apparent. Nowhere is this clearer than in our
aviation infrastructure and operations. With the numbers of air
passengers increasing every year, delays growing longer, not
just for passengers but for everyone in this room and Members
of this Congress, the air traffic congestion is increasing.
Fuel prices are rising, and the air personnel shortages are
obvious to everyone. They are becoming a reality.
I believe we must look at this as a real opportunity, a
unique opportunity to create a better and more efficient
technologically advanced system that will serve our citizens
with the best service possible. I am particularly interested in
hearing Administrator Blakey's thoughts on the Small Community
Air Service Development Program which could greatly benefit my
constituents in northeast Wisconsin and bring in economic
development to our area.
During this hearing, it is my hope that we can start to
work towards putting together reauthorization legislation that
will successfully address the financial, the developmental and
modernization demands to design an aviation system that will
serve all of its users.
Thank you, Mr. Chairman. I yield back.
Mr. Costello. I thank the gentleman.
At this time, the Chair recognizes the Administrator of the
FAA, Administrator Blakey, for her statement, and we welcome
you here today.
I want to let the Members know that we had a long
conversation yesterday and talked about some of the issues that
we will be addressing here today.
Administrator Blakey?
TESTIMONY OF THE HONORABLE MARION C. BLAKEY, ADMINISTRATOR,
FEDERAL AVIATION ADMINISTRATION, U.S. DEPARTMENT OF
TRANSPORTATION
Ms. Blakey. Good morning, Chairman Costello. It is a
pleasure to appear before you and Congressman Petri and all the
Members of this dedicated Subcommittee. I appreciate your focus
on FAA's move toward financial reform.
In my view, the future of this system and this bill are
inextricably linked. As plainly as I can say it, without the
funding provided for the Next Generation financed through the
Next Generation Financing Reform Act of 2007, there will be no
NextGen system in time to prevent gridlock in the skies.
Without the program flexibility, financial stability and
beneficial budget treatment that this bill brings, our plan for
the Next Generation air transportation system is likely to limp
along far behind the traffic.
The act provides for financing through fuel taxes and user
fees. Significantly, the user fees will be treated as
offsetting collections that ensure that aviation revenues are
used for aviation purposes. The act allows for borrowing
authority, an important tool in any financial tool box.
Without a firm foundation of financial stability, the year
to year uncertainties of budgets and revenues will neutralize
the impact of our having a long term plan. Instead, NextGen
will be the solution to a problem that we anticipated and
studied but failed to really address, a legacy of starts and
stops, very much too little too late. It is my firm belief that
our status quo financing structure cannot deliver the NextGen
system we need when and where we need it.
Remember, this is a system that uses the latest satellite
technology to expand capacity, reduce delays, lower unit cost,
provide major environmental benefits and substantially improve
safety. Satellite technology has revolutionized everything in
America, from cars on the highway to GPS embedded in our
toddlers' sneakers. Isn't it time that we brought it into
aviation?
Make no mistake, NextGen is not about pie in the sky. We
have a clear vision and a plan to execute it. Both were
developed in partnership with stakeholders from across the
spectrum of aviation, from pilots and airlines to the GA
community at every level to mechanics to Wall Street and
beyond. They agree. We agree. NextGen will get us where
aviation needs to go. But we do need to act quickly if we hope
to avoid the aviation system resembling the L.A. freeway on a
hot Friday afternoon.
A cost-based system, such as we advocate, will be much more
transparent and accountable for the FAA, the passengers and the
users, and significantly, it will give Congress more insight
into our costs, helping you conduct much more detailed and
effective oversight.
Yes, changing our financing structure is hard. I
acknowledge that. But if we fail to create a direct link
between FAA costs and revenues, if we just circle the runway,
waiting for the weather to clear, aviation users across the
spectrum will suffer. To put it mildly, and I think many of you
noted this here today, the system is in trouble. While it is
the safest system in the world, it is grossly inefficient and
everyone who flies it, knows it. It is built on a series of
fixed way points from the days of flying the mail in the
twenties and thirties. We have squeezed every ounce of capacity
out of the current air traffic system.
Even so, in the future, congestion will rule the day. The
undeniable fact is that we face a billion passengers by 2015.
An ever increasing number of very light business jets is going
to be fueling that. Traffic levels will double, perhaps in some
areas, even triple in the not too far distant future. We have
to plan for this.
I am here today to say that the band-aid solutions of the
past will not be enough. We can't keep trying to scale up an
air traffic control system that is based largely on 1960s
technology. We need to take bold action, and with taxes and
user fees expiring in September, we have to get it right this
first time. We really have to take action now. The next six
months are pivotal. If we let this once in a lifetime
opportunity pass, we will begin to watch world leadership slip
through America's grasp, in aviation.
The challenges I just described aren't limited to our air
space. The problems of crowded skies and airports are
worldwide. Europe is already moving ahead with Sesar, their
version of NextGen, and they have got the funding to do it.
My assessment, the rest of the world already knows how
critical this is, but they aren't waiting around for the United
States. They like our help and leadership, but they also know
how to do it. We may have been the birthplace of aviation, but
success at Kitty Hawk is not going to be enough to keep us out
front now. Someone else's technologies and someone else's
standards will pave the way if we don't.
While the rest of the world has their action plan in high
gear, we risk getting bogged down in a debate over who is going
to pick up the tab. Truth be told, right now, the passenger in
the middle seat is footing the lion's share of the bill for
operating the system. The folks back home, buying airline
tickets, pay 95 percent of the cost, but they are imposing only
73 percent of the requirements. That is not right.
Imagine a restaurant that required you to pick up the tab
for the people sitting at the next table. It is not as far
fetched as it sounds because it is what happens in our skies
every day. A seat on a commercial jet liner is the most heavily
taxed spot in all of aviation.
General aviation represents 16 percent of the cost to
operate the system, yet it currently only pays 3 percent.
Everyday passengers shouldn't have to pick up the tab for a CEO
flying across the Country in a private jet.
This year represents a rare opportunity to leave an
important legacy for our children, but to successfully develop
that NextGen system, we need a revenue stream that is tied to
the actual cost of our operations. We need a revenue stream
that is reliable and equitable where all users pay their fair
share. The hybrid financing scheme that we have put on the
table last month is balanced, it is fair and it delivers on all
these counts. We can indeed alter the future of aviation by
creating a NextGen system that keeps America, number one.
If we fail to act on the NextGen financing reform, we will
be headed overseas to ask world leaders of aviation to help us
catch up.
Thank you very much.
Mr. Costello. I thank you.
I have a few questions, and then I will reserve some time
and come back and have a few more later.
I wonder, Administrator Blakey, concerning the user fee
proposal by the Administration, I think there is a lot of
questions and confusion as to how this system would operate. So
I wonder if you would take the time to walk us through from an
administrative standpoint, how the fees would be assessed, how
they would be collected, how the system would work.
Ms. Blakey. Certainly. As you all may have observed from
looking at our proposal, the taxes and fees expire in September
of this year. We would take fiscal year 2008 to continue the
current system of taxes and fees while we put together the
administrative apparatus that is necessary to then begin
setting the new system, turning the new system on for 2009.
What you would expect is this: The GA community continues
to pay exactly as they do today. This has been their
preference. So when we talk about increasing a fuel tax, it was
their preference that they pay at the pump through a fuel tax,
and that will continue just as it does now.
For those who will be paying user fees, and this is largely
commercial aviation, they will be paying as they pay all of
their other bills. For the most part, these are significant
companies. They pay vouchers just like everyone else. There are
only about 500 of them that we expect to be issuing on a
monthly basis. So it is not a particularly complicated system.
Remember that we charge overflight fees right now on a monthly
basis to air carriers all over the world. We do it efficiently
and well and no complaints.
But I would expect under the new system, that what we will
do is put out a request for proposals and find out who can most
efficiently do the billing, and we will issue a contract so it
will not be an increase in bureaucracy for the FAA. Those fees,
the charges for those fees would begin going out after the
services are rendered, and we would expect payment within two
months of when the service was rendered.
Mr. Costello. You know you have heard from Members of the
Subcommittee concerning how user fees would impact general
aviation for the recreational person or for the person who does
not fly commercially or does not charter. How do you see the
user fees impacting that type of person or that sector of the
people who will be affected by the user fees?
Ms. Blakey. I don't see them affected at all. That is one
of the great myths in all of this. There was a great fear on
the part of general aviation pilots that they would suddenly be
charged user fees, and for two years, there were magazine
articles and in the press, there were questions about how a
user fee would affect general aviation.
The only circumstance in which the recreation flyer would
pay any form of fee, and this is something that is
discretionary under our proposal. All of this has not been
determined that it will actually occur this way, but it would
be if the recreational flyer decided to fly into one of the 30
most congested airports in the Country. There, we would expect
that we would be charging a terminal fee.
But let me give you an example of what we are talking about
in fees because, again, I think this is something that is
looming much larger than is in any way, shape or form likely.
If you are talking, for example, about a small plane like a
Cessna 182 flying into a large hub, the fee for landing there
would be $3.86 if you use the kind of weight measure that is
used around the world. Let me repeat that, $3.86. Now whoever
flew that plane is going to pay a lot more than that to park in
the parking garage.
But I can go up. A Beech Bonanza would pay $5.07. Now, is
this an onerous fee to fly into the most congested airports in
America?
Even going into the jets, a Cessna Citation, now here, we
are over $10 million in aircraft so presumably there is some
wherewithal there, but you are talking $15.93. Again, I don't
think we have got a parking garage in Washington where you are
going to be able to park for 24 hours for that.
So I ask you, does this look to you like this is an onerous
burden? I think when people look at the actual facts, they will
realize that general aviation, 99 percent of the time, the
recreational flyers pay no user fees, and if they should want
to fly into O'Hare, those are the kinds of fees we are talking
about.
Mr. Costello. I have several other questions, but I will go
to other Members now and come back later to ask my questions.
At this time, the Chair recognizes the Ranking Member.
Mr. Petri. I think many of the Members will have questions.
I wonder if you could outline for us, the best you can, the
projected cost, additional cost of what is expected to be
deployed of the new system during the reauthorization period
before us. Do you have an idea of what we are talking about,
what we are going to be buying during those five years and what
it would cost?
Ms. Blakey. Absolutely, absolutely. In fact, I think we
have a very detailed plan for the NextGen system for the next
five years. You will look in the out years in the budget, and
you will see there that the Administration is proposing a total
of $4.6 billion additional over five years for deployment of
next year. Now that is very significantly for ADS-B which I
have heard a number of the pilots here already speak about.
ADS-B is the backbone of the new system. It is an
absolutely critical technology that is becoming deployed
worldwide. We are not the only Country moving toward it. It is
because it provides great precision in terms of surveillance,
knowing exactly where aircraft are, and giving pilots and
controllers the same picture on a screen of where they are in
relation to all the traffic around. It updates every second
versus the best of our radar, the very best, is every six
seconds. So you can see the potential in that kind of precision
as you go down the road for all sorts of efficiencies and
safety that is involved.
We will put a lot of money into ADS-B during that period.
We also will be putting money into what is called SWIM, and
this is essentially the internet for aviation. This is the
ability to move data and to provide from a number of key
databases for both security, defense as well as critical
information for us, a network of information that can be called
on.
There are a number of other demonstration programs in there
as well. Data link, the concept that you do not want to
continue to rely solely on voice communication, one controller
talking to one pilot, but rather use data as we do in every
other form of life, email, if you will, to communicate so that
you can do so much, much more efficiently.
There is tremendous safety in all of this as well. One of
the big errors that you have in aviation now is what are called
hear back, read back errors, when a pilot does not hear
correctly what the controller said or vice versa. The precision
of data, having it right there in front of you in black and
white, is huge.
So that is the kind of investment. That is what we are
looking for over the next five years. As we move into the out
years, there are spikes. Some of the investments get higher
because, as you would appreciate, when you are moving into full
deployment on all of this, it gets to be increased in the
years, in the early teens, if you will. Then as you go down
toward 2025, the investments begin to decline. We are
projecting for infrastructure for the entire NextGen, a range
of between $15 to $22 billion out to 2025.
Mr. Petri. Could you describe at all the impact of a delay
in the reauthorization on this? Would it be possible to begin
contracting and deploying this system? You are already probably
studying and doing some pieces of it even as we speak.
Are there ways we could, if the reauthorization should,
heaven forbid, be delayed for some reason, accommodate the
needed financing and steps that would be required to
nonetheless begin with this new system?
Ms. Blakey. One of the most important aspects of the new
system is it provides certainty. It provides predictability,
stability in the financing, so that all who are out there
contracting, bidding and providing, know what to count on. That
has been one of the most enormous problems in the FAA's capital
investments up until this point, the ups and downs in the
funding streams that have often put contracts at risks, have
sometimes caused them to stop, change course. As that went on,
they were prolonged. The costs went up, and on it went.
We don't want to see that happen with this. The stakes are
too high to get in front of the congestion, and frankly the
costs will go up if we do it that way.
Now if we miss the 30th of September as a date, what is
likely to happen? I can't tell you. We only have two months
left in the trust fund to operate the FAA. We are having to let
a major ADS-B contract this summer. We have all of these
airport projects that you all referenced that are critical to
stay on track. If the Congress lets the taxes and fees lapse,
there will be no money for any of that.
If, on the other hand, Congress decides to do what was done
with the Highway Bill, and I know a number of the Members of
this Committee remember the agony that you all went through on
that, that is a series of short term extensions. That doesn't
work in aviation. These projects are too big. Once you start
saying, well, we are going to authorize for two months, three
months, construction on runways doesn't work that way. People
can't operate without having the knowledge that they are going
to be able to get through a construction season and through a
critical phase of a project.
We have dollar figures, and they are pretty staggering, and
I would be happy to provide the Committee, based on the
scenario that might be likely. So if you all would like to
discuss it further, if you think that is becoming a likelihood,
but I would certainly beg you, please, do not miss the
deadline. This is very critical.
Mr. Costello. The Chair recognizes Mr. DeFazio.
Mr. DeFazio. Thank you, Mr. Chairman.
Madam Administrator, great to see you here again. You
received such a warm reception last time. I bet you were
looking forward to coming back. You are doing a great job of
defending the indefensible so far, but I do have a few
questions.
Since this is a supposed to be cost-based system, there is
a certain percentage contributed by the general fund which I
have always felt was inadequate. As I look at the
Administration's projections, you apparently project you will
continue at approximately that percentage into the future or
that amount of contribution which would become a smaller
percentage into the future, is that correct?
Ms. Blakey. It is about 19 percent.
Mr. DeFazio. Right, but I think the numbers for the general
fund are fairly stable and we are expecting costs to increase,
so it would become a smaller percent.
Ms. Blakey. That is probably true.
Mr. DeFazio. But then I look at another portion that really
puzzles me about your user fee. Now that is paid for by
taxpayers in the United States, correct?
Ms. Blakey. And let me know one thing about the general
fund. As you see for the first time, what we are doing is
putting certain kinds of costs that the general fund should
cover, categories of costs, which we think is a good and fair
thing to do because we see them either supporting the smallest
of GA in a way that GA cannot support for their safety
functions, that we believe it is appropriate.
Mr. DeFazio. No, and I saw that, and those things are all
eminently justifiable. I would say that given the role aviation
plays in our National economy, that you could easily justify a
larger contribution, but we won't debate that here. That is
probably not your choice to make with this Administration.
Here is a concern since this is supposed to assess the
costs where they lie. We have an international arrival and
departure tax. A very large proportion of people arriving and
departing are foreign citizens. Foreign citizens do not pay
taxes in the United States. Yet, you are proposing to reduce
their contribution by 60 percent which would be about $1.1
billion in 2008 and up to $1.6 billion in 2012. Yet, at the
same time, we are levying taxes on the people of the United
States and asking them to contribute to aviation, but now we
are saying foreigners should contribute less. I am curious why
we would walk away from $1.1 billion up to $1.6 billion in part
paid for by foreign travelers.
Ms. Blakey. Well, as you can appreciate, there are several
ways that people pay under this system. We felt a hybrid system
was the most flexible way to accommodate people. They will pay
user fees, and that is where that money is made up.
Mr. DeFazio. No, these are not fees paid by airlines. These
are paid by individual citizens of other nations when they
arrive or depart the United States. I know the industry likes
to think that every fee paid by everybody is paid by them. It
isn't. It is paid by people who arrive on their planes, and
they are now going to contribute $1.6 billion less toward the
system in 2012.
Since we are trying to do something which is impossible,
and that is assess where the costs lay, I am just puzzled
because I doubt that any foreign country is going to
dramatically drop their arrival and departure tax. It is a big
source of revenue for a lot of countries, but the U.S. would
unilaterally drop ours. It just seems to me a very puzzling
thing, and I am not certain why we are doing that.
Let me go to another conjecture we make. I did have the
misfortunate of studying economics as a young man. You reach a
certain point where you have to add capacity at a margin, but
before that margin, you don't have to add capacity.
In your statement, where you talk about two identical
aircraft flying from Boston to Miami, you are saying one is
full of passengers and the other is half full, and then you are
talking about that or you talk about flying two planes and how
that adds cost. If someone flew two planes, that adds cost to
the system. Well, actually it doesn't. The air traffic
controller is there. It may add to their workload, but until
you reach the point where you have to add another air traffic
controller, they aren't increasing cost to the system because
the air traffic controller is there.
That is part of what underlays your supposition here which
is that there isn't an underlying cost to the system to be
maintained, that actually every increment counts. Now we are
going to move to this extraordinary billing system, and I just
have got to say, how much do you expect this billing system is
going to cost? How much per unit?
There is going to be, I can't remember in here how many
billable activities. It was many millions of billable
activities on an annual basis. How much do we expect the
overhead is going to be for the private entity which is going
to administer the billing system?
Ms. Blakey. It is tiny.
Mr. DeFazio. It is tiny? It will be tiny? I mean if you
look at the insurance industry in America, their overhead is 26
to 28 percent. Medicare's is 2 to 3 percent.
You are saying, well, we are going to put this out to the
private sector. We are going to bid this out. We are going to
outsource it. It will be so much more efficient. Well, if they
follow the insurance model, we will actually lose a quarter of
what we are raising to costs for those folks. If we follow the
Medicare model, the Government model, we would lose 2 to 3
percent.
Ms. Blakey. I assume what you are talking about is the
entire administrative cost of running those programs. If it is
costing our insurance system $27, 27 percent to issue a bill,
that accounts for a lot of what is wrong with our insurance
system. I can guarantee you in aviation, that is not the case.
Mr. DeFazio. No, their overhead, but the point is have you
done an analysis?
I mean, first off, I think the billing system is going to
be impossible, and it is going to be a mess. Secondly, have you
done a study to show that it can be done cheaper by the private
sector or is that just an ideological assumption by this
Administration who wants to outsource everything?
Ms. Blakey. There is no ideology in this. It is a question
of efficiency. I do not have any preference where it is done.
Mr. DeFazio. Have you assessed then? Have you run two
models? Here is the Government model; here is the private
sector model. Have you gone out to some private sector folks
and say, what would you bid for this?
Ms. Blakey. Yes, we are doing that now.
Mr. DeFazio. And you compared to the public sector?
Ms. Blakey. We are doing that now.
Mr. DeFazio. Okay.
Ms. Blakey. I will be happy to show you the study as soon
as it is done. We have undertaken that.
Mr. DeFazio. Right, okay.
Ms. Blakey. Believe me, whatever is the most efficient. But
you have to remember, we are already billing right now for our
overflight fees, and it is minuscule. This is the assumption
that somehow it costs a lot of money to put an invoice.
Mr. DeFazio. But how many million operations is that per
year versus what you are going to bill under the new system?
Ms. Blakey. You know I can get some calculations.
Mr. DeFazio. Right.
Ms. Blakey. But the top 110 companies that are involved in
commercial aviation are going to be paying 87 percent of this.
You can't tell me it is that difficult to bill that.
Mr. DeFazio. But still, it is millions of operations, Madam
Secretary.
My time is expired, Mr. Chairman. Thank you, Mr. Chairman.
Mr. Costello. You are quite welcome.
The Chair recognizes Mr. Mica.
Mr. Mica. Thank you, Mr. Costello.
I just got some interesting news. It says the U.K. has
signaled that it is likely to approve the Open Skies Aviation
Pact between the E.U. and the United States which to me is very
good news, something I have worked for. There are some special
interests that have tried to keep this from happening, who
unfortunately maybe thwarted. For the interest of the Members
of the Committee, if you don't have international service now,
its biggest promise is to bring into our world, 27 countries
all at once, both for expansion of aviation and passenger
service. The consumer will benefit. So I think it holds some
great promises.
Now one of the things that might stand in our way is even
the capacity to deal with this new tremendous increase in air
traffic on both sides of the Atlantic. Wouldn't you agree that,
first, this is a very positive step, but secondly, if we are
going to play in this global market, see jobs increase and
aviation expand on both sides of the Atlantic, that we would
have to have a system to deal with that?
Ms. Blakey. Absolutely, absolutely, and the skies around
JFK as well as Heathrow are going to have to have the advantage
of these new technologies which Britain has committed to.
Mr. Mica. Right. A little bit was talked about who pays for
this system, and I have spent some time looking at the European
system, the Canadian system. It is my understanding that those
are pretty much paid for by the users. There is not much of a
general federal contribution in any of those instances. Is that
your knowledge?
Ms. Blakey. Yes, as a general matter.
Mr. Mica. Right now, it is about 19 or 20 percent that the
average citizen pays, and I think what you are proposing is a
little bit fairer. I would like to see the whole thing paid by
the users, not some poor guy in Iowa or North Carolina or
Hawaii who never gets on an airplane and doesn't have the
benefit of a $15 million jet with maybe six seats or a $750
plane ticket. But he, right now, is underwriting, to the tune
of 20 percent, the system and the services, is that correct?
Ms. Blakey. That is correct.
Mr. Mica. Okay. It does cost us about $14 billion, and we
take about $2 billion out of the general treasury, is that the
ballpark?
Ms. Blakey. Yes.
Mr. Mica. You have tried to put together a fair system so
everybody pays based on use. That is your basic criteria.
Ms. Blakey. Equity was one.
Mr. Mica. I see you have advocated some increases for
general aviation based on, I guess it is their fuel tax, 21 and
19 going to 54--I am sorry--56.4. Your calculations determine
that that is based on their actual cost to operate in the
system.
Ms. Blakey. It is. The way this works is this, that when we
look at general aviation across the board. This includes high
end as well as the recreational flyer. They impose about 16
percent of the cost on the system. We then took a look at what
we thought very legitimately the general fund could support.
Congressman Mica, I hear your concern on that, but our
position was that the general fund could pick up a number of
costs that benefit GA like the flight service stations, which
are an important measure of safety there, and low activity
towers where the towers really don't have a cost benefit but
they are important again to the GA community. So we took those
off, and that dropped then the percentage down to about 11
percent of the costs that have to be covered.
Out of that 11 percent, the way the weight of the fuel tax
will go is the GA community is only picking up 1 percent for
the recreational flyer. The 10 percent is picked up by the
turbine pilot, by the turbine aircraft, which is, of course,
for the most part, your business aircraft, your high end GA.
Mr. Mica. Okay. One final question, my time is about to
expire, but I made this radar screen up for you. This is a
mock-up. It is a Mica radar screen. Each of these dots indicate
either a commercial jet, a general aviation jet or general
aviation aircraft. Now, of course, a lot of general aviation
doesn't get into this range of this radar screen. Maybe some
flying lower, whatever, close to the ground. But for the most
part, what is the difference in your cost of service and can
you identify or can you tell me which is which of my dots?
Ms. Blakey. Well, not at this distance, and I am squinting.
[Laughter.]
Mr. Mica. They are all the same. These are perfectly round
symmetrical dots, all equal.
Ms. Blakey. Yes, yes. We can pull up N numbers, and we know
exactly who each one of those dots would be if it were a real
radar screen, and the cost to provide air traffic control is
essentially the same to all the dots.
Mr. Mica. Thank you. You have answered my questions.
Just for the record, I didn't have time. You mentioned
flight service stations, and you know the problem we have had
with consolidation. At some point, you might want to talk to
folks about that and the BRAC provision.
Thank you.
Mr. Costello. The Chair recognizes the gentleman from
Missouri, Mr. Carnahan.
Mr. Carnahan. Thank you, Mr. Chairman, and thank you,
Ranking Member, for this ambitious schedule to get through this
authorization.
To Administrator Blakey, thank you for being back and for
your work on this proposal. I consider this a starting point,
but there is obviously a lot of concern about many of the
provisions in this proposal.
I want to express my concern particularly about the general
aviation fees. My State, while it has several urban hubs, we
have a lot of rural area in between. General aviation is vital
to those individual recreational flyers as well as small
business. So I think it has got to be addressed in a more fair
and even way.
You mentioned the CEOs flying the corporate jets. That is
certainly one segment of general aviation, but I think we have
a whole lot of other folks flying the smaller planes. We have
got to be careful on the burden we put on them.
I also want to follow up on the prior questioning about the
privatization of the billing system that has been proposed. I
understand you are doing a study about that. I, too, would very
much like to see that comparison. To be frank, the
Administration does not have a very good track record on
privatization in general. So I have that concern.
In particular, I would like to ask would the privatization
proposals that you are discussing allow these billing
operations to be outsourced, say, to India or somewhere outside
the United States?
Ms. Blakey. Well, I will tell you. We have looked at the
issue of how you send the bills out and get the receipts in as
a purely administrative function, a very small one, which we
don't come to this with the conviction that it should be
private or public or some in between organization. I think our
view was we would like to just do it with the best, most
efficient system through good analysis, and we are using an
outside accounting firm and their expertise to look at this, to
tell us what might make the most sense. But we don't have
conviction that it has to be private any more than we do that
it needs to be public or one of the non-profit organizations
that serve aviation. For example, a lot of this is done outside
the United States by the International Air Transport
Association which is a non-profit.
So we don't know. I certainly don't have, and if Congress
has some views that there should be certain kinds of parameters
or constraints on that. I think our intent would be to consult
with the stakeholder community and you all, look at the best
method to do it and see.
No one has taken any great interest to this point in how we
collect the fees from foreign airlines, which we do on a
monthly basis, but there may be some things to learn there. It
is going very efficiently, and it is being run in house. We are
doing that ourselves.
Mr. Carnahan. Thank you. I am going to jump on to another
question.
The other thing I would like to touch on before my time is
up, we talked at the prior hearing about my concern with the
high rate of retirement among active controllers and their
treatment. I want to ask you to address the issue. Under the
NextGen proposal that was released, it details a need to hire
15,000 new controllers over the next 10 years while
simultaneously FAA is actively planning the NextGen system
which will rely heavily on satellite and network-based air
traffic control. How does your plan to hire these new
controllers mesh with the need to move to increasingly more
technology-driven systems and do you anticipate that air
traffic controller positions will be eliminated through this
process?
Ms. Blakey. No, I will tell you. The two plans mesh very
closely because obviously when you are planning 10 years out as
we are with our controller hiring plan, you want to take
advantage of all of the NextGen systems that will be coming
into place. Remember that we have known that this group of
controllers was going to be retiring at approximately the rate
they are for the last 20 years. It was a group of people that
were hired at one point 20 years ago following the PATCO
strike, and they must retire by age 56.
So this is something we have long planned for, and the plan
we have is really moving along with great precision and working
well. We are bringing in new controllers. We have got our
academy classes filled. We are committed this year to hiring
1,386 controllers which exactly meets our end of the year
totals for traffic.
The 15,000 that you mentioned for the 10 years out, we are
not seeing a need to diminish the need for controllers. In
fact, as you see, we are increasing the number of controllers
because there will be more traffic. We see that more traffic
means they will be able to take advantage of this new
technology which will make their monitoring and managing
traffic and looking at anomalies and working on the issues of
traffic flow. So it will change their jobs. Frankly, their jobs
will be less stressful.
I would love to share with you a study that was just done
by MITRE, looking at the application of NextGen technologies in
a simulation with controllers doing the traffic that we are
anticipating in 2014 without it and then what their workload is
like if they have the advantage of this technology. It is like
night and day, and they will have a tremendous advantage and a
great deal more information, a lot more automation and the
ability, as I say, to manage a broader range of traffic without
that constant pressure of talking to every single aircraft. It
is, frankly, a great improvement in the job and a big boost for
safety.
Mr. Carnahan. Thank you. I would be very interested in
seeing that.
Ms. Blakey. But there will be more controllers, not less
controllers.
Mr. Carnahan. I would be very interested in seeing the
study. Thank you.
Ms. Blakey. Sure.
Mr. Costello. I thank the gentleman.
The Chair recognizes Mr. LaTourette.
Mr. LaTourette. Thank you very much, Mr. Chairman.
Administrator, welcome. I have just a couple of
observations. Picking up on what Mr. Mica was mentioning
earlier with more and more governments going to cost-based user
fee systems, I think that you and your team should be commended
for putting forward the proposal that you have. Even though we
may not agree on all the pieces, I think it is important that
we have this dialogue.
I also want to commend you and your team for the cost
allocation study, and I think it does give us a clear picture
of who has been bearing the bulk of the costs of who has been
using the system. No matter what the outcome of this tax-based
system versus user fee discussion that we are going to be
having over the next couple of months, I do find the
information that you put together to be valuable.
There are some pieces of the proposal, though, that cause
me some concerns. While I don't expect you to have all the
answers today, maybe you could tell me what the thought process
was. First, congestion fees, I get congestion fees. I think
that is an important piece of the plan, but I am wondering why
they are assessed by airport. It seems to me that it doesn't
matter whether you are a big plane or little plane if you are
going to New York, Chicago or San Francisco, I think you should
pay a congestion fee. But why do we pick one airport in New
York, for instance, when others are served by the same TRACON?
Following some of the answers you have given to people
already on this and Mr. Mica's radar screen which I really
couldn't see from where I was seated, what does it matter if
that dot is going to the airport at White Plains versus JFK or
LaGuardia? Why is the congestion fee based by airport as
opposed to TRACON?
Ms. Blakey. Well, of course, there is a certain amount of
history in this that goes back to existing legislation. Our
current statutes actually allow for congestion fees by airport
under certain very restrictive circumstances. So it is, in a
way, an elaboration on that.
There is also, in terms of the specific airport that I
believe you are referring to and that is LaGuardia, a history
here that shows that there really is no way that we currently
area aware of to expand the footprint of LaGuardia and bring in
more aircraft. When the cap was lifted--as you know, that was
back in 2000--it was a fire sale on everyone rushing in there.
Really, not only LaGuardia gridlocked, but it really put the
whole system into vast delays.
So the issue of how do you best allot the capacity at
LaGuardia has been a subject of long debate. The proposal that
we have does give the port authority the ability to step into
this. But at the same time, we are looking at incentivizing GA
to land at other airports through this because if you put a
congestion fee on LaGuardia, if you are GA and you can use
another airport anywhere such as Teterboro, there are
incentives for that for start. We hope that it will have those
effects.
We would be very happy to come up, though, and talk to you,
Congressman LaTourette, at some length about this because there
have been a number of theories about it. As you know, this bill
also allows for auction-based allocations, et cetera of the
existing slots. So there is a lot to it, to be honest with you.
Mr. LaTourette. I get that. I would appreciate a visit, I
think, because what I am having trouble getting my head around
if we are moving to a system where you are going to pay for how
much of the system you use, it seems to me that the user that
lands at Teterboro is using the same business in the system as
the guy that lands at LaGuardia, but I understand what you say
about slots at LaGuardia. Maybe we can have a conversation
about that.
The other thing that concerns me is the PFCs. I think all
the airports would love to see the increased PFCs that you have
outlined in your proposal. What seems to be missing, though, at
least from my first review, is input from the users of the
airports in terms of having the ability to have a PFC project
altering discussion with the people that run the airport. I am
wondering if you see it the same way and whether that is
intentional or you think that we should have the users and the
commercial airlines and the people that actually use the
airport have more say as to how these PFC charges are going to
be used at those airports.
Ms. Blakey. Let me understand. By users, do you mean the
passengers, the groups in the community that are using the
terminal and facility?
Mr. LaTourette. As well as the commercial air carriers.
Ms. Blakey. You know I think the best run airports in this
Country do that and do it well, and if they don't, it is to
their peril because they often encounter real community
resistance. So I think that is a very smart thing to do.
The proposal is intended to encourage real collaboration
and dialogue between the airlines, the user community, et
cetera. Now whether we have completely covered that as well as
we should, I would be happy to look at that again because I am
very much behind the spirit of what you are saying, although we
also want to take some of the Federal restrictions and the
Federal requirements to be a little less heavy-handed with all
of this because as we watch PFCs over the years, for the most
part, the requests have been very reasonable, without
opposition. All the filings and paperwork, we probably could do
a good bit less of that and still have a very good system.
Mr. LaTourette. Thank you very much.
Thank you, Mr. Chairman.
Mr. Costello. The Chair recognizes Mr. Hall for any
questions he may have.
Mr. Hall. Thank you, Mr. Chairman.
Thank you, Administrator. Thank you for coming back again.
It is good to see you again.
I want to say I am happy to see the continuous descent
approach at the end of the lovely packet that you had prepared
for us. I am wondering how far out. Is that going to extend the
descent out to an earlier point from what it is currently for
most flights?
Obviously, if you are rolling downhill in your car, you are
using less fuel, and it is the same principle. Could it be a
matter of extending that out to the greatest safe distance from
the airport?
Ms. Blakey. Yes. I mean the concept behind CDA is that you
have a glide path that you set up as the most efficient, and it
does start higher. So it may be further out, of course, but it
also would be higher. One of the things that we are observing
on the airports where CDA is being used, such as in Louisville,
is that you have a 30 percent reduction in noise below 6,000
feet which is great for the communities there as well as a 34
percent reduction in emissions because of the less fuel burned.
But the glide path looks more like this kind of slide, if you
will, going in.
Mr. Hall. Right, that is good news. Thank you.
I wanted to ask about the President's proposal to move from
excise taxes to fees, one that, well, may put even more
budgetary constraints, from what I see, on the FAA operations.
All airports could use more funding, but I am particularly
concerned about small and growing airports that are already
scrapping for capital improvement funding.
At its height, your proposal for AIP just cracks the $3
billion mark and only provides $8.7 billion overall. I was
wondering how this proposal can fund capital improvements to
small and mid sized airports like those in my district if it
provides almost $2 billion less over the next three years than
it did over the last three years.
Ms. Blakey. I think you really have to look at the proposal
as a whole, the programmatic changes, the changes we are
suggesting in allocations as well as the dollar figures because
it was our view that the very large airports do very well in
generating their own funding through bonding sources and
through PFCs. If we give them the authority to raise the PFC to
$6.00, we can take them off our discretionary funding which
then frees up a lot of money for the smaller airports.
We also felt that all small airports are not created equal,
and the way we have been treating them up until recently in
this category of the smaller GA airports is everyone gets
$150,000 regardless of need and regardless of size. Your
Teterboro and your tiniest GA were getting the same thing. That
doesn't make sense either. So we have created a four tier
system, so that you can pump more money and keep significant
projects at those airports going, whereas at the smaller ones,
you have less.
Frankly, at the very small ones, we have taken them off of
that minimal funding, and they need to come in to us for
specific safety projects which then we can fund from
discretionary funds. One of the problems about the way we were
funding the smallest is they were getting a little bit of
money, but it wouldn't cover the cost of a project which maybe
they have a project once every six to ten years, but then they
want it funded then. So it is important for us to be able to
give them what they need when they need it, and I think that is
the other structure we are looking at.
But PFCs, frankly, enable that AIP money to go a lot
further.
Mr. Hall. Thank you.
Another question, you mentioned a couple times in answers
to other Members' questions about different studies, one on,
for instance, the effect on NextGen on controllers' work
conditions and stress level. You said you would love to share
that study with us. There was another question back here, I
believe from Mr. Carnahan on another topic, and you said you
had another study that you would love to share with us. I was
wondering if you could share both of those studies with us,
please.
Ms. Blakey. I would be happy to.
Mr. Hall. Before we have to take action on this.
Ms. Blakey. I would be delighted.
Mr. Hall. Has a contract request for proposals for the
system been sent out? I see that the contract is to be awarded
this summer which isn't that far away. So I was just wondering
what the timeframe was and who we expect to be applying for it.
Ms. Blakey. We now know. We have gone through a whole
process, as Government procurement requires, in issuing the
requirements and having the bidders come in and offer their
initial proposals. Now we are at the stage of having three
major consortia which represent a number of companies in each
case, who are proposing their solution and their proposed
contract to us, and we are evaluating those at this point. We
will expect in July to make the selection.
One of the things that I think is significant here is these
are performance-based contracts. What we are doing is putting
out the requirements that must be met and looking to them for
the kinds of innovation, cost efficiencies, added value that
they may be able to bring when you apply real creativity and
the experience of companies, many of whom candidly have worked
in the defense sector and other sectors. So they bring a lot to
this in terms of the thinking of how to get the most out of the
Government dollar in providing this service.
I am looking forward to those evaluations, and we expect it
to be complete in July.
Mr. Hall. Mr. Chairman, my time is expired, but I just
wanted to remark that I, for one, could use more specifics.
There are a lot of generalities in here and a lot of acronyms.
We heard it was a satellite-based system the last time
around. Now it appears that we are using the existing GPS
satellite system, and we are not going to be launching any new
satellites specifically for NextGen, is that the case?
Ms. Blakey. Well, I will tell you.
Mr. Hall. Those kinds of technical things are missing.
Ms. Blakey. Sure.
Mr. Hall. I feel they are missing from the information that
I have seen so far, and I would like to have a little bit more
depth in terms of the physical and scientific nature of the
program.
Ms. Blakey. I would be delighted. One just small comment on
that, yes, we are relying on the U.S. GPS system which there is
a plan to update and increase its capacity very significantly
that the Air Force has, and we have a role to play in that as
well. So we would be happy to discuss that with you.
I believe it is this Thursday, and I am looking back at
staff, that we have a briefing planned on NextGen up here for
Members and staff. What time? We will get the details. It is
Thursday, and we would love for you all to take advantage of
it.
I will tell you, in fact, we really want to give you all a
chance to touch and feel this whole thing because you can. I
mean this is reality. We are bringing up the ADS-B equipment
and displays of how it works and all of that. So if you
possibly can come by and see it, I think you would find it very
interesting.
Mr. Costello. The Chair recognizes Mr. Ehlers.
Mr. Ehlers. Thank you, Mr. Chairman.
Just to follow up on your previous comment, I encourage all
Members to participate. I look forward to that. I hope, as you
go through this project, we could have those regular sessions
here. I recall last year we hadn't heard anything, so I
requested a presentation and your staff came up and gave a very
good, a very technical presentation, and I found that extremely
helpful. Hopefully, we will have many more in the future, and I
hope other Members will participate.
Relating to that question, although your financing here is,
of course, based on your expected cost, how well do you think
you have pinned this down?
There has been a history, not so much under your
administration but under previous ones, where we had major
changes coming along, and the cost estimates were far lower
than the actual cost. Are you comfortable with the cost
projections for the systems that you are proposing?
Ms. Blakey. Yes, in fact, I am very confident of them. One
of the things that we have worked the hardest on is to bring
our capital programs in line with the way you monitor programs,
best practices across business and Government. Last year, our
major capital programs ended on schedule and on budget, 97
percent. Right now, we are 100 percent on schedule and on
budget, and we intend to keep it that way. This is doable. It
requires discipline.
I can tell you that we are working very hard, and at this
point, I have no reason to think that rigor that we are
applying there will dissipate. But it also depends, I will tell
you candidly. We have to have stable funding for the capital
investments. Otherwise when you start shortchanging them and
pulling back on those contracts, then the costs go up and the
schedule lags.
The operating costs for the FAA, again, I think are very
predictable. As you know, we have very detailed plans. It does
mean we have to control our labor costs. Labor are the single
largest cost by far, almost 75 percent of our operating costs.
So we have to stay on track in having reasonable, sustainable
operating costs from the standpoint of our personnel. I simply
stress that because in the past, that has been a wild card.
Mr. Ehlers. Yes, I understand that. I am more worried about
the NextGen system. Whenever you have research going on and you
haven't finalized, it is very easy for costs to occur.
Ms. Blakey. That is right.
Mr. Ehlers. Let me also just try to clarify something on
your proposal for fees. One thing that I think is very good,
you break out the AIP, RE&D and EAS costs and apply them
equally across the spectrum of planes, and I think that is a
step forward.
On the proposal for the air traffic control costs, the
general aviation jet fuel is the same per gallon as the
aviation gasoline, the piston engine gasoline, the 100LL. That
is where I worry about equity because just to take my own
example, and I don't mind paying for it. We have to pay to
maintain the system.
I am flying. I am taking lessons, flying out of a small
airport, no tower. I go off and practice. I fly across country,
et cetera, no use of the air traffic control system. That is
typical of most general aviation flyers. I think it is very
important to encourage that because with a reduction of the
number of pilots in the Armed Forces, I think general aviation
is going to be the feedstock for the pilots of the airlines of
the future.
I wonder how you can justify the 56.4 cent increase in
aviation fuel across the board for general aviation when a good
share of general aviation does not use the air traffic control
system. I recognize many do, but there are a lot of,
particularly the new recreational pilots of light sport
airplanes do not make use of air traffic control and, to my
knowledge, don't plan to make use of it. How can you achieve
greater equity there, recognizing those pilots who fly
regularly on business purposes and use air traffic control and
those who are simply recreational pilots who tend not to make
any use of air traffic control?
I would appreciate your response to that.
Ms. Blakey. Well, I think what we are seeing is this, that
there is a dramatic difference in the recreational flyer,
usually, who is flying as you are suggesting, in terms of the
amount of fuel they use. In other words, you are talking about
very light planes. You are not usually talking about a lot of
hours flown. I realize some people commute back and forth to
their district, and that does add up to a lot of hours over
time. But when you look at the GA community, the recreational
flyers on the whole, they are flying the planes, and many of
these planes, remember, are shared among a number of people and
are flown on average about 100 hours a year.
When you start looking at the cost over a year of that kind
of flying of our proposal, we are talking about around $500. I
guess you could debate as to whether that is affordable or not,
but when we look at it as a percentage of the overall operating
costs of owning and operating a plane, it is still less than 5
percent of the overall costs.
I realize no one wants to pay additional taxes. I mean that
is a given. I don't either. But it is small, and we were very
conscious of the fact that because fuel usage is relatively
little for small piston planes, the actual hit on the wallet is
so monumental. Those would be my thoughts about it.
Mr. Ehlers. It is bigger than you might think but also you
are charging for service that they don't use.
Ms. Blakey. Could I mention one thing about service they
don't use, though, because I appreciate that? We, of course, do
encourage everyone to file with our flight service stations. We
certainly also remember that we do a lot of monitoring of
planes up there, even if they are flying a VFR, and we
certainly provide help and support if there become problems in
the system. So all of that is there right now.
But what we also think is that GA pilots are going to be
moving increasingly to the WAAS approaches, to use of GPS and
ultimately to the use of ADS-B. Let me remind you that ADS-B
for the general aviation pilot, and these are small pilots in
Alaska, has reduced the accident rate in Alaska between 40 and
50 percent. Now how much is one's life worth? That is huge.
The ability to see aircraft around you, to have those sorts
of services in the cockpit, we believe that the GA community is
going to want to take advantage of that soon and well, and that
definitely means you are a part of the system and you are using
the services. We are going to be encouraging that, but the way
you are going to be paying is still on what I consider and just
laid out is a pretty modest basis.
Those are the big, big advantages, the overall safety and
the capacity benefits, because Congressman Ehlers when you
decide that you do want to fly into Teterboro or you want to
fly into a more congested airport, you will be able to get in
because you will be equipped and we will be providing the
service. I don't think GA wants to be closed out of a lot of
the air space because they truly are marginal in every way.
Mr. Ehlers. I doubt if the FAA will ever want me to fly
into Teterboro.
[Laughter.]
Mr. Ehlers. I yield back.
Mr. Costello. The Chair recognizes Mr. Lipinski.
Mr. Lipinski. Thank you, Mr. Chairman.
It is always good to see you, Administrator Blakey.
A couple questions, starting first with the concerns over
the air traffic controllers and the talk about maybe a 70
percent reduction of air traffic controllers because of a 70
percent turnover, that is. How does this reauthorization
address that situation in needing to hire more air traffic
controllers in the future to take care of the turnover to make
sure we have safe skies?
Ms. Blakey. Well, it provides us a stable, predictable
revenue stream that guarantees that we will not have
difficulties knowing that we have operating costs covered. It
is a cost-based system. So the cost of our controller, their
salaries, benefits and all the equipment they rely on is built
into the costs. That is a big advantage.
The 70 percent turnover between now and 2015, we are
expecting that. We have been planning for it because it is
built into the age they were when they were hired and when they
retire.
Mr. Lipinski. The funding will be there to replace air
traffic controllers then?
Ms. Blakey. On this system, it will be.
Mr. Lipinski. Another issue, in the proposal, you want to
increase, expand the program for airport privatization from the
current 5 up to 15. A question more specifically on what impact
privatization is because so much Federal funding goes for
airport capital improvements right now, airports that are
privatized, would they still be eligible for AIP funding? Would
the Federal Government be funding the private airports?
There still would be Federal money going into these
privately run, for profits of whomever has the lease on them,
those airports then.
Ms. Blakey. For the benefit of the flying community and all
of that, yes.
Mr. Lipinski. I am sure that is something that we will be
talking about more in the future on that.
One other issue I wanted to ask you about, the proposal to
expand the PFC eligibility to encompass any airport capital
projects that are eligible to be funded with airport revenue. I
am just wondering what types of projects that you cannot right
now use AIP funding for, could an airport use that for under
this proposal? How does it expand?
Ms. Blakey. The caveat we have is it could be used for a
variety of things as long as they are anti-competitive, meaning
putting one carrier that serves that airport at a disadvantage
versus another.
But it would allow for improvements in the terminals. It
would allow for new hangars. It would allow for improvements on
the fuel farms as well as building new fuel farms. All of those
kinds of things are areas where the airport would be able to
use funding, we think, very legitimately and on a broader
basis.
Those would be just thoughts and examples. I could probably
go on, as they say.
Mr. Lipinski. All right, I yield back the balance of my
time. Thank you very much.
Mr. Costello. The Chair recognizes Mr. Hayes.
Mr. Hayes. Thank you, Mr. Chairman.
Ms. Blakey, I am going to change gears just a minute and
give you a chance to catch your breath. Thank you for speaking
up about age 65 for pilots, moving the age limit up. We are
working here on H.R. 1125 to help you implement that. With ICAO
standards now being 65, we would love to see that implemented,
a tremendous cost savings to the Government by keeping those
pilots active to 65. Any suggestions you may have--you don't
have to do that today--would be very helpful.
Again, thank you for being here. As I have listened around
the room to the comments today, there seems to be a general
lack of support for the overall plan. Mr. Mica seems to have
been sipping the Kool-Aid a little bit, but we are going to try
to get him some antidote.
Just listening, and this is very, very important, and you
have handled the issue and the process with dignity and
professionalism. There just seems to be a huge emphasis on, at
this point, a very costly solution, and that is appropriate,
but it seems to me we need to back up a little bit and spend a
little bit more time on the problem. We have got a solution
that has been massaged with all these numbers.
You used an example, and my friend, Leonard, is in the $5
category. If I understand the process correctly, he comes from
Iowa to Dulles in a Commanche, and you said he is only going to
pay $5.00 in this new system, but the way I do the math, by the
time he gets home, the new fees are going to cost $285, not
just the $5 fee. It already is going to cost him $80 to land at
Dulles anyway, not counting the ramp fee. It is just a
tremendously disproportionate share.
I look at some of the figures. Airline traffic and
competition have done incredible things for commerce and the
industry. Airlines are carrying more and more people to more
and more places, and that is a good thing. The guy in the
middle seat, that is typically me on a Friday afternoon, can
fly to Los Angeles to the East Cost for $300. You talk about
the unusual value. That is an incredible value, and the
airlines are doing a good job competing among themselves. That
is where the money is coming from.
The system we have got is not that bad. Again, let us focus
some more on the problem, make sure to define it going forward.
As I said earlier, 16 percent decrease for the 747 from Tokyo
to Los Angeles and 271 percent--I am being a little bit loose
with the math--for Leonard and I to come from Iowa and back in
the Commanche.
Again, it doesn't solve the problem, but it does force
people out of the market. General aviation is a guy in Norwood,
North Carolina, making tires. He is a guy in Iowa or wherever,
making other components that are important.
GPS, pilots now, I got Sam. Sam is a stick and rudder guy.
That is the way everybody used to train. Now we have got
systems operators. The cost of GPS to the pilot and other
technological aids has gone down dramatically, so I think that
kind of savings is available.
Just to kind of wrap up and not have the red light, as we
go forward, again I welcome the dialogue and hopefully again we
will make sure that this part of the aviation industry, we call
it general aviation.
But a corporate CEO, and they seem to be bearing the brunt
of the criticism here, it is a cost item to them. They know how
much it costs. The airplane has an initial cost which a lot of
these figures are based on, but it doesn't figure in
depreciation expense, bottom line to them. So I don't think the
system can compare whatever the start-up cost is simply on its
face. It is what they are going to use. If they stop buying
those aircraft, whatever the level may be, we have hurt the
economy overall.
Do you think that general aviation is potentially going to
be harmed by this if we don't do our job of making sure that we
allocate costs accurately and properly?
Ms. Blakey. No, I don't.
Mr. Hayes. Okay.
Ms. Blakey. I would not have proposed it if we did. You
have to remember that general aviation manufacturing is on an
enormous boom, 35 percent increase in terms of sales and
deliveries this year. That is huge.
Again, the costs to the little guy are very small, but when
you look at where we are seeing a huge increase in traffic and
real cost to the system, it is in congested air space. It is at
congested airports. It is up and down the East Coast. It is
when folks want to fly in their jets down to the Super Bowl,
and they all want to be there in front of the 320 with a full
load.
Those are real costs and real problems in this system. This
is not a question of a solution looking for a problem. That
problem is there.
What I would suggest is because all of you have the vast
majority of your constituents are the guy in 22B, the guy who
is flying coach. Right now, he is paying more than 22 percent
more than he needs to for the cost of our air traffic control
system and all the infrastructure. We are asking for basic
equity here. That is important. It really isn't fair to say,
oh, well, the airlines are able to offer some cheaper fares
these days, so let us don't worry about the fact that the
passenger is paying too much of the bill.
You know this is a 10 year bill. This is the time to try to
get it right. We do believe that it is certainly possible for
everyone to step up to the requirements here and to try to be
both fair and then put in place a system that is stable and we
can all count on it.
Now, Congressman Hayes, I have said at the outset and all
the way through, I don't pretend we have a perfect bill. I
didn't say we got it all right. As I listen to the comments,
both here and otherwise, people have specific things they don't
like. I do understand that. But it is not that people are
rejecting the bill out of hand, and may I suggest it is the
only proposal out there. Change is hard, and people always find
something at the beginning that they don't want to support,
that they don't like, but let us be fair and give it a fair
shake because the principles behind this, I think, deserve real
attention.
Mr. Hayes. Absolutely, thank you very much.
Mr. Costello. I thank the gentleman.
We are going to have some recorded votes very shortly, so I
would ask you, if you would, to stay within the allotted time
and to be as brief as possible and ask the Administrator to be
as brief as possible with her answers.
At this time, the Chair recognizes the gentlelady from
Texas, Ms. Johnson.
Ms. Johnson. Thank you, Mr. Chairman.
My questions have been answered, so I pass.
Mr. Costello. I thank the gentlelady.
The Chair recognizes Ms. Fallin.
Ms. Fallin. Thank you, Mr. Chairman.
Thank you once again for coming to our Committee. We have
been seeing a lot of you. We appreciate all your explanation of
the different issues.
I was listening as you were talking about the
reauthorization and the funding coming forth, and you talked
about the ups and downs and the contracting and not having the
stability and the funding and the people involved in the system
needing to know about timing of the funding itself and about
projects and short term extensions and the different contracts
and that they don't work well and it is not good for those who
are receiving the contracts, not knowing the timing of things.
So I had a question for you.
As you know, in Oklahoma City, we have the FAA Mike
Monroney Center which trains the controllers, and we have had a
lot of discussion about the controllers who are retiring and
the need to get new controllers online, air traffic
controllers. It is my understanding that in Oklahoma on our
contract with the Mike Monroney Center, that the University of
Oklahoma has a contract with the FAA training center and has
had that since 1981 to help train the air traffic controllers.
Since that time, they have trained over 25,000 air traffic
controllers at that facility.
They had a five year contract which expired January 31st of
2006. So it is way past due on its expiration which is 14
months ago. Since that time, they have been getting short term
extensions, a six month extension, a two month extension, a one
month extension, and now it is all set to expire on July 31st
of 2007 which is coming up in a couple of months.
In listening to you talking about how hard it is with the
ups and downs of the contracting and the extensions and no
stability within the system and then also the discussion we
have had about the air traffic controllers and how important it
is that we bring more online and have them trained because of
the retirement age.
Can you give me any advice on what you think might happen
with the training that is currently going on at different
facilities and what we can expect with the contracts of those?
Maybe you are telling us that it is going to be affected by the
reauthorization bill.
Ms. Blakey. Congresswoman Fallin, I will tell you this. I
will start by saying I will get back to you with the specifics
on that contract. What you are describing sounds correct, but I
don't have the latest on it.
I can tell you broadly that what we have been trying to do
is to improve training. We do a great job in Oklahoma City, and
we are very proud of it. But like everything else, as time goes
on, we want to begin using more simulators. We want to use more
simulators in our facilities that are right there for
controllers to use. We also want to take advantage of a number
of the colleges and universities around the Country that would
like to join our CTI program. As you know, those graduates are
very successful, and when they get to the academy, they can
expedite their training at the academy because they are very
good and well trained and often come with college degrees. All
of that has gone to the idea of developing a plan for our
training for the next 10 years, and that is one of the reasons
why we have not committed to a long term contract because we
are trying to incorporate all those factors.
I am very proud to say that if you look at the controller
staffing plan, we just issued about a week ago, you will see
that the amount of time it takes to fully train and certify a
controller is diminishing. It used to be three to five years.
Now for en route, we are able to get it down to right at three,
a little less, and we are also decreasing the amount of time it
take to fully train and certify a terminal controller. So it
shows that these approaches and new technologies are all paying
off.
Ms. Fallin. Mr. Chairman, if I may just finish, what I am
hearing back from my folks at home is that when they have a two
month extension or shorter periods of time, that it is hard to
keep the workforce. It is hard to keep the people who are
involved in the system, and they get frustrated, and they leave
which hurts the quality of the system, of the training that we
are delivering because they never know from one month to the
next, if it is still going to be there. So people leave and
come and go, and it is hard to keep that consistency of quality
of service of the training.
Ms. Blakey. Let me look into it. I know we have a full
pipeline of enrollees at the academy for all our classes, so we
certainly want it stable.
Ms. Fallin. Thank you so much.
Ms. Blakey. Sure, I would be happy to.
Mr. Costello. The Chair recognizes Mr. Boswell.
Mr. Boswell. Thank you, Mr. Chairman.
In the interest of time, I have two or three things. I will
just try to be brief on those.
Ms. Blakey, I am concerned, back to what Mr. DeFazio said,
that we all, all Americans participate in the safety and the
economy and everything else of aviation. So I am curious why
you propose reducing the general fund when we all benefit.
Secondly, would you clarify the effect of the new funding
on Part 135 On Demand Air Charter Industry?
Currently, they have to get a refund from the IRS. Will
they pay 70 and get refund at 56.4? Will that be the way it
works?
If this should move forward--if this should move forward
and the trust fund, what would be your consideration of using
the method that 135 operators pay strictly through the general
aviation fuel tax? Would you comment on that?
Lastly, have you given much thought, you probably have,
about the envisage or factor of the equipment costs that will
be faced by general aviation to a lot of people like myself and
Mr. Hayes and Mr. Graves and others, the impact on the industry
that will have?
Could you address those, please?
Ms. Blakey. I hope I have kept up with all of it. The
general fund contribution, I certainly agree that there is
great public good in the aviation system for the broad
taxpayer. We have retained the general fund contribution at
about where it has been for the last several years, so we have
not diminished it. We have kept it stable.
I think the long term problem is one that this Congress has
recognized and been a party to as well as this Administration,
and that is that there are huge competing interests for the
discretionary part of the budget--health care, education, et
cetera. As time has gone on, that has squeezed the ability of
taxpayers to fund more of aviation. That is just the reality,
but it has certainly proven true historically, and it is pretty
hard to see that changing under current budget circumstances
with the pressures on the Federal budget.
Referring to your question about Part 135, I believe what
you are referring to is the question of when they are flying
paying passengers and therefore would be required to reimburse
because they would be charged differently under those
circumstances. I would like to get you a written answer on that
because it is a little technical, and I do need to give you the
precision on that, if I might.
Mr. Boswell. Okay, I appreciate that.
Ms. Blakey. I can do that.
Did that cover it or did I miss one?
Mr. Boswell. Yes, the safety factor, I think is something
that Mr. DeFazio was talking about. In the sense that I would
guess that I can think of more than a few people that would
probably avoid using the system and try to figure out how they
could do some alternative to get to where they want to go
without paying the fees. I am concerned about the safety factor
which I know you are very concerned about. We all are. Do you
have some reasonable assurance that that won't be compromised?
Ms. Blakey. Well, again, this gets back to what was an
earlier assumption that is not true of our bill. There are no
fees that general aviation is going to paying. There is no
ability to say, you know, I don't want to pay a fee, because
there is no fee. Flight service stations, which are the primary
way that we help general aviation--weather, filing flight
plans, all of that--are free. They are funded by the general
fund.
The only way that general aviation is paying a fee is if
they fly into of 30 of the most congested airports which, for
the most part, is your corporate high end aviation, not your
recreational flyer flying into O'Hare.
Mr. Boswell. I understand. Because of time, Mr. Ehlers, oh,
he is gone. If he goes into Teterboro, I want him to take Mr.
Hayes with him. I don't even want to go. So, okay, thank you
very much.
Mr. Costello. I thank the gentleman.
The Chair recognizes Mr. Poe.
Mr. Poe. Thank you, Mr. Chairman.
I have a couple of questions, of course. The area I
represent is the Houston area. The Intercontinental Airport is
real close, and then I have Beaumont Airport.
My questions basically are about the air traffic
controllers. I meet with those guys a lot, and one thing that
concerns me is that they all seem like they could qualify to be
AARP members or senior members in AARP. I am concerned about
our workforce and replenishing them with what I think are very
qualified individuals at this time.
Consolidation of TRACON facilities, specifically, the
Beaumont facility being consolidated probably with
Intercontinental Airport, a simple question, will that mean the
loss of air traffic controller jobs?
Ms. Blakey. All right, on the consolidation of Beaumont
with the Houston TRACON, it certainly will not anticipate loss
of jobs. One of the things that we are trying to do is to have
the best possible technology. I will have to get back with you
on specifics, but I believe that Houston uses the STARS system.
Am I correct about that?
Mr. Poe. Yes, ma'am.
Ms. Blakey. Of course, STARS offers tremendous advantages
in terms of its precision and reliability, 16 different sensors
and radars, and that is what then becomes available to Beaumont
by doing that. The anticipation is that you get better
technology. That is the key thing. We have been, so far, able
to accommodate these consolidations without much disruption to
the workforce or diminishment in numbers of people. Again,
traffic is going up down there.
Mr. Poe. Well, that is really my question. Will the
consolidation, whether it is in Beaumont, in Houston or other
parts of the Country, will that mean a general overall loss of
air traffic controller jobs or will they stay the same or will
they increase?
Ms. Blakey. As a general matter, it does not impact air
traffic controller jobs, but let me look at the specifics
there, and then I can get back to you and tell you with greater
precision. I don't honestly remember what kind of timeframe it
is on and all of the specifics that are involved.
But what we find as a broad matter is, because traffic is
increasing, there are good jobs for all of these controllers.
It may not be exactly the same job they were doing five years
ago, but there are good jobs. I mean after all, we are hiring
at a fast pace, so we certainly are not trying to, in any way,
diminish controllers and the jobs they have right now.
Mr. Poe. The second question has to do with the $5 billion
loan part of the proposal. What is that money going to be used
for?
Ms. Blakey. It is a good question. It is in the second half
of the 10 year period of the bill, and it is borrowing
authority for some of these capital investments that, like any
major capital program, often involve big investment spikes.
Rather than trying to pay for them in a one year basis on a
cash and carry basis, it allows the ability to smooth out that
capital cost and yet get the benefits of these programs up
front, the technology sooner than you would if you had to pay
for it every year.
I mean no one pays for any capital investment in the
private sector and in our personal lives, obviously, pay for
your house all up front. Corporations don't. We believe we need
that tool here as well, and the spikes are coming in the second
five years.
Mr. Poe. Will there any input from Congress on how that
money is going to be spent?
Ms. Blakey. Absolutely, you all will have to approve all of
those programs with all of the money that is attached.
Mr. Poe. Overall, in your opinion, what position or policy
or manner in which that $5 billion is going to be spent?
I mean just give me some ideas. I mean $5 billion here, $5
billion there. To Congress, it doesn't mean much, it seems, but
it is a lot of money, and I am just asking you where you think
generally that money is going, if you could be specific.
Ms. Blakey. Well, I think it will be going to some of the
big investment costs that we see out there. Some of the things
that we need to do go to the ability to network all of these
systems. When I was talking about SWIM, there is another system
also that goes to being able to hook up all of our security and
surveillance, et cetera. That can be quite expensive. ADS-B, in
the out years, gets to be quite expensive. And so, those are
some of the things that we would anticipate putting the $5
billion against if we need to.
Now, if we don't need to, that is another call, and that is
certainly something that we would be discussing with the
Congress well up front as well as with the stakeholder
community well up front. Does it make sense to go fast and
therefore need to incur that kind of borrowing or can we do it
on a more gradual basis so you need to borrow?
Mr. Poe. That would be three, okay. Just to follow-up, I
look forward to an answer to my earlier question about the
consolidation specifically with Beaumont and Intercontinental
Airport, what that will mean on air traffic controllers'
positions. Thank you.
Ms. Blakey. I am sorry, I didn't know the specifics. I will
get them for you.
Mr. Costello. I thank the gentleman.
At this time, the Chair recognizes the distinguished
Chairman of the Full Committee, Mr. Oberstar.
Mr. Oberstar. Thank you, Mr. Chairman.
These are very, very important hearings, the launch
hearings as we being our process of reauthorization of FAA for
the next three years. It is evident how important these
hearings are, given the number of Members who have turned out
for the hearing this morning and the questions asked.
Madam Administrator, you have immersed yourself in this
subject matter, and I applaud you for that. You have mastered
the issues, and you speak from a fount of knowledge and from
the heart and not from prepared statements, prepared guidance.
That is refreshing as we hold these hearings.
I see that the bells have rung for a vote.
I have very serious reservations about the overall proposal
from the funding aspect of the overall proposal. It will be a
major shift in policy from the ticket tax user fee approach to
some other sort of fee that I used to call a cash register in
the sky. As you leave from one airport, you pay a fee. You are
handed off, you pay a fee. You go some place else, you pay
another fee.
You have 13 safety and certification activities from which
to collect fees. Better, not you, I don't mean to personalize
this. The FAA proposal has 13 safety and certification
activities for which fees, but yet there is no evidence of a
cost accounting procedure in place for it.
Many of the questions that I have are the New York-New
Jersey airport operations and the proposal to allow the Port
Authority to use ``market-based mechanisms to control
congestion.'' How are they going to do that?
I have had this discussion over 20 years with the congested
airports and, at various times, it was suggested spreading out
operations over the period of the day. Instead of having the
three major banks, now it is four major banks. Now it is
getting to be five. Airlines, on the one hand, offer a more
economical ticket price to travelers to fly somewhere between
9:00 a.m. and noon or somewhere between noon and 4:00 or after
9:00 at night. Can airports offer lower landing fees to
encourage airport use at those times? Is that what you have in
mind?
Ms. Blakey. Well, I will tell you. You know this is
complex, and there are a number of ways of doing it. Part of
it, of course, is you determine in doing it, how elastic is the
demand because I think that is a big part of the question. It
could be done that way. Yes, you are right. There are several
different approaches in terms of how to do it. Auctions are
another way. So there is some very creative, innovative
thinking about this.
But since this is something that we would work with the
Port Authority of New York and New Jersey on what they thought
would be most effective there. I would say that this is
something that still is very to be determined. This is carving
new ground, and I understand that it hasn't been easy to come
up with these approaches.
Mr. Oberstar. Not really carving out new ground because if
you remember a few years ago, before you were Administrator, we
had very serious congestion problems at airports all across the
Country. Aviation was exploding in growth until September 11th.
We did a look at Dallas Fort Worth. They had 57 departures at
7:00 a.m. Well, the airlines know 57 aircraft can't take off at
the same time. They are deluding their passengers, and the FAA
was part of the delusion. We pointed this out in the course of
Committee hearings. That doesn't make sense. Do something.
Eventually, FAA, airports, airlines, all got together and
figured out how we can spread those operations out over a
period of time. In the end, it comes down the passengers. If
they said, we want to leave at 7:00 a.m. because we have to get
to our business meeting or so and so, and they are not willing
to travel at some other time. So they are paying that premium.
What thinking has gone into, either on the airport side or
the FAA side, making a significant enough incentive to air
travelers and to airlines that they will move from those big
bank periods of the day and relieve congestion?
Ms. Blakey. Well, I will tell you. We spent the better part
of two years, looking at these kinds of models and the way this
could work. We actually did some mock auctions, et cetera. All
of this was theoretical. We were looking at this to see how it
could work, et cetera. I would be delighted to have us come up
and brief you on that because I think that there was some
interesting results from this. Several of the airlines did
participate in this, so you had some real world results.
The one thing, though, that I would point to that is
specific in our bill and is very real world is we have some
language in the bill that is complementary to an NPRM that is
now out on the streets, focusing specifically on LaGuardia. So
within the port authority's domain on LaGuardia as an airport,
we have an NPRM there to deal with the question of the current
cap on slots and how this should be allocated. I would be
delighted to have us come up and talk with you specifically
about that because I think that does need attention.
Mr. Oberstar. I would be very delighted to have that
conversation with Mr. Costello and our colleagues on the
Republican side as we are all in this together. If there are
some lessons to be learned, maybe they can also be applied to
Heathrow in conjunction with our current U.S.-E.U.
negotiations.
Second, very quickly, the FAA proposal would raise the
Passenger Facility Charge to $6.00. Do you have any limitations
on that increase or on the incremental increase?
I am not trying to trap you. What I am getting at, and I
think you know my feelings on the subject, is 23 percent over
the past 17 years. Isn't it? Yes, since I was Chair and we
authorized the PFC. It was 1990, in this room, Sam Skinner was
Secretary.
Ms. Blakey. Right.
Mr. Oberstar. Twenty-three percent has gone into airside
capacity improvements only. That is a disappointment to me. Now
there are a great many airport terminal needs that have been
addressed with the PFC, but I don't think passengers ought to
be paying additional an Passenger Facility Charge if it is just
going to go to help the airport create more malls where they
can go and shop because schedules are so bad and they have got
so much free time between flights that they can spend millions
of dollars at airport shopping malls.
If there is going to be an increase, and that is by no
means decided, in a PFC, then I want to see some movement in
the direction of making sure that the original purpose was to
create capacity on the air side of airports and help airports
do a few other things such as make transportation in the
airport vicinity on airport grounds more compatible with
operations. Just a quick comment and then I will have to close.
Ms. Blakey. Certainly, capacity enhancements have been
enormous. We think they have been very successful, but we would
like to work with you on any concerns you might have about the
issue.
Mr. Oberstar. Aren't you troubled by only 23 percent of the
money going into capacity?
Ms. Blakey. I think that enhancing the financial
independence and stability of these airports is what a lot of
these other improvements are. Hangars, the fuel farms, getting
into terminal improvements, all that make the airport more
stable, independent and successful.
Mr. Oberstar. That is right. That is a good hedge answer.
Thank you.
Mr. Costello. That concludes our hearing.
I thank the Administrator for being here. We look forward
to seeing you again in the coming weeks as we get into specific
areas of the reauthorization.
The Subcommittee stands adjourned.
[Whereupon, at 12:07 p.m., the Subcommittee was adjourned.]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
HEARING ON THE FEDERAL AVIATION ADMINISTRATION'S FINANCING PROPOSAL
----------
Wednesday, March 21, 2007
House of Representatives
Committee on Transportation and Infrastructure,
Subcommittee on Aviation,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2167, Rayburn House Office Building, the Honorable Jerry
F. Costello [Chairman of the Subcommittee] presiding.
Mr. Costello. The Subcommittee will come to order.
The Chair would ask that all Members, staff, and everyone
in the room turn off their electronic devices or turn them on
vibrate.
The Subcommittee is meeting today to hear testimony on the
Federal Aviation Administration's financing proposal. We have a
long list of witnesses. We have two Members, a Member panel
that will testify and then 10 other witnesses, and apparently
someone with a hammer around here.
[Laughter.]
Mr. Costello. I guess Jimmy Miller is working on that.
I will have an opening statement and will recognize the
Ranking Member, Mr. Petri, for an opening statement, and we
would encourage, because of the number of witnesses that we
have, that other Members submit their opening statements for
the record.
But before I give my opening statement, I want to recognize
two of our colleagues who will be appearing here this morning
to present testimony to the Subcommittee, both the Honorable
Todd Tiahrt from the 4th District of Kansas, and the Honorable
John Barrow from the 12th District of Georgia.
And at this time we will take your statements. We will
waive the normal questioning of witnesses. We have extended
that courtesy to Members in the past. We will extend it to you
because we understand that your schedules will not permit you
to be here very long this morning.
So at this time I would recognize our colleague, the
Honorable John Barrow, for his opening statement and any
remarks he would like to make.
TESTIMONY OF THE HONORABLE JOHN BARROW, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF GEORGIA
Mr. Barrow. Thank you, Mr. Chairman. I appreciate your
consideration this morning.
Mr. Chairman, it is an honor to appear before this
Subcommittee to discuss my concerns about the FAA
reauthorization bill, especially the FAA's proposed funding
mechanisms.
Mr. Chairman, I represent Savannah, Georgia, which is home
to Savannah International Airport and Gulfstream Aerospace
Corporation. That means that this bill is especially important
to a lot of folks that I represent.
Gulfstream employs more than 5,000 people at their Savannah
facility. Their annual payroll at this place is $360 million.
And in the district alone they spend another $80 million a year
with suppliers in support of their vendor operations. As a
result, the impact of the FAA reauthorization bill in my
district is huge.
I strongly endorse the necessity to modernize our air
traffic control system. However, the President's proposal fails
to address the critical need for a comprehensive plan for
modernization. I urge the Subcommittee to insist that the FAA
present a modernization plan, including timetables, milestones,
and its estimated cost, before they initiate a debate on
funding.
As with many of my colleagues in Congress, I don't agree
with the Administration's attempt to link user fees to
modernization of the Nation's air traffic control system. The
system needs to be modernized no matter how we pay for it, and
we can modernize it using the existing tax and oversight
structure. But we need to organize a comprehensive plan first.
The Administration proposes to dismantle the current
funding mechanism and tax structure that has built the safest,
most efficient air traffic control system in the world. In
contrast to the current system of aviation excise taxes set by
Congress, user fees would be set annually by the FAA without
congressional approval. Given the monopoly power of the FAA as
the sole provider of air traffic services in the United States,
and given the FAA's poor track record of fielding new
technology to modernize the air traffic control system, we
can't afford to put all of our right to make cost control
decisions, all of our power to tax, and all of our power to
spend on the FAA. We can't afford to put all of our government
eggs in one FAA basket.
Giving the FAA the right to set user fees is a blank check
and it would totally remove congressional oversight from the
funding and governance of our Nation's air traffic control
system. Now that we are trying to expand oversight is not the
time to give it all away. User fees would require the FAA
establish some sort of IRS organization to administer a system
which would be much more inefficient than the current system.
In addition to user fees, the proposal raises general
aviation fuel taxes by over 200 percent. That is nearly a 50
percent per gallon increase in fuel taxes and will have a huge
adverse impact on the general aviation industry just as it is
recovering from the economic downturn caused by the last
recession and 9/11.
I think there are areas where the FAA should be independent
of Congress. For example, I strongly support the FAA's
independence in the area of safety oversight of designees and
certified organizations such as repair stations and
manufacturing facilities. But this argues for the current
system, because safety oversight is an inherently governmental
function and should not be paid for on a pay-for-service basis.
If we are going to protect safety oversight as an inherently
governmental function, we should reject user fees for the
certification of new aviation products and technologies as a
way to pay for it.
Once again, thank you very much for letting us appear
before you this morning and thank you for your consideration in
accommodating our schedules, and I yield back the balance of my
time.
Mr. Costello. I thank you, Congressman Barrow, for your
testimony here today, and we not only receive your testimony,
but you and I have had conversations concerning this issue as
well, and I appreciate that.
Let me now call on our friend from Kansas, the Honorable
Todd Tiahrt.
TESTIMONY OF THE HONORABLE TODD TIAHRT, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF KANSAS
Mr. Tiahrt. Thank you, Mr. Chairman. I have a written
testimony that I would like unanimous consent to submit for the
record.
Mr. Costello. Without objection.
Mr. Tiahrt. Today I hope to convince you that general
aviation is a vital part of our economy, that it is necessary
for the future growth of our economy, that general aviation is
extremely vulnerable to Federal policy, and that the FAA's
proposal is a plan to fail according to the FAA itself. It will
raise less revenue than the current system of fuel taxes and
contributions to the General Fund, and it will set up, as
Congressman Barrow said, an IRS within the FAA; and as a result
of that, less people will fly and their current projections
will have even less revenue. On top of all of that, their plan
will give us less congressional oversight.
I represent the air capital of the world, the 4th District
of Kansas. It is the home of Cessna, Hawker Beechcraft,
Bombardier, which builds LearJets; Boeing; Spirit AeroSystems,
which used to be Boeing Commercial; EADS Engineering; civil
design shops; suppliers; contractors; maintenance facilities;
and a world-class research facility called the National
Institute of Aviation Research at Wichita State University.
Kansas companies deliver over 50 percent of all general
aviation aircraft. These companies provide 32,000 well paying
jobs in my district alone. In 2006, the three largest Kansas-
based general manufacturers--Bombardier LearJet, Cessna, and
Raytheon--manufactured over 1700 airplanes at a value of $5.8
billion. Forty percent of them went overseas in exports.
So it is a national importance that general aviation brings
to us. Not only my district, but each one of the congressional
districts throughout the Congress, all 435 districts, have
either direct manufacturing jobs, fix-based operations,
suppliers, subcontractors, or maintenance. In Congressman
Barrow's instance, he has a huge manufacturing facility with
over 5,000 jobs. Aviation is linked to a total of $142 billion
of payroll alone in our economy and affects more than 600,000
jobs nationwide. But more important than that, employers across
the United States depend on general aviation just to get their
job done, especially in rural areas.
But I want to explain to you why general aviation is so
vulnerable to Federal policy. It is a delicate industry in some
senses . Let me give you an example. In 1994, my predecessor,
Dan Glickman, worked very hard to get the general aviation
revitalization act passed. In South Central Kansas, it created
4,000 jobs. But, yet, following September 11th, 2001, when our
economy took a $2 trillion hit, Wichita lost 25,000 jobs.
Then there was the luxury tax back in 1991. Beechcraft
alone lost 39 airplane sales in the first quarter when the tax
went into effect. They lost 500 jobs that were planned at that
time. That doesn't account for what happened at Learjet or what
happened at Cessna as well.
More recently, accelerated depreciation was what turned
around general aviation. When we allowed companies to write off
two-thirds of the cost of a new airplane in the first year or
purchase, that revitalized again general aviation, and those
25,000 people who were laid off are back at work and now there
are backlogs.
Finally, if you look at certification the FAA is supposed
to be doing, they have not put the number of certifiers in
place, and, as a result of that, we can't get new products on
the market, even as small as safety parts, safety issues,
because they are not certified. So here we have, once again, an
industry that is so vulnerable to Federal policy held at a
standstill, not being able to get new parts on the market or
new safety issues in practice.
Now I want to move on to the Next Generation Air Transfer
System, because it does not require user fees. The former
Secretary of Transportation, Norm Mineta, one of his last
comments, he said he did not want the Department of
Transportation to be a choke point for economic activity. And I
am sure you would all agree with that as well. Unfortunately,
this current proposal is going to be a choke point.
There is a chart that is going to be shown later today that
shows that the average daily use of an airline, a commercial
jet, is about 3800 hours per year. A commercial jet flies about
3800 hours per year. A general aircraft flies less than one-
tenth of that, about 370 hours per year. Yet, what is happening
is that they are trying to shift the burden from commercial
airlines to general aircraft.
I want to make sure that the United States is fully
supporting an air traffic controller system. That is the plan.
But to do it on the backs of general aviation is not a good
part of that plan. It is difficult to see, and false to make
the assumption, that the problem with having an airplane that
carries 300 passengers has the same type of needs as an
airplane that carries 3 passengers.
We have heard a blip is a blip is a blip. It is really not
a blip, there is much more to it. In fact, if you look at
following September 11th, 2001, there was absolutely no layoffs
at Reagan National Airport, even after general aviation was
completely closed out of that market. We didn't lay off any air
traffic controllers. So to say that air traffic control should
be paid for on the backs of general aviation I think is a
misnomer and doesn't accurately represent what the costs of air
traffic control area. In fact, if you look at where the big
costs are for air traffic controllers, they are in hub areas,
where you have a lot of commercial traffic.
I see that my time is up. Let me just summarize by telling
you that this plan will generate less revenue. This plan will
give less government oversight. This plan will have a crushing
effect on the economy and it will certainly damage the general
aviation manufacturing, the maintenance, the suppliers, the
fixed base operations, and our future economy because of the
rolling impact that it will have throughout the economy. So it
is my suggestion that we do not have user fees, and if I can
make it any clearer, I will try to do so in the future.
[Laughter.]
Mr. Tiahrt. Thank you for your time.
Mr. Costello. Well, Congressman Tiahrt, we appreciate your
testimony as well, and you, Mr. Barrow. I think you have made
your points very clear to us, and at this time, as I said, we
will waive the questioning. We know you have other commitments,
so we thank you for being here.
At this time, the Chair will give an opening statement and
then recognize Mr. Petri for his opening statement, and then
ask other Members to submit their statements in the record.
I welcome everyone to the second of our hearings on the FAA
reauthorization. This hearing focuses on the FAA's financing
proposal. Tomorrow the Subcommittee will give consideration to
the FAA's operational and safety programs.
On February 14, the FAA submitted its reauthorization
proposal to the Congress. The FAA's proposal includes a new
financing plan to transform the FAA's current excise tax
financing system to a hybrid cost-based user fee system. The
FAA has cited the need to finance a major new air traffic
control modernization initiative, the Next Generation Air
Transportation System, as a primary reason for reforming the
current tax structure.
After a review of the FAA's proposal, I do not believe that
the FAA has made a strong case for its proposed changes. Last
September I said that, based on the CBO projections, the
current tax and financing system could probably support the
requirements of the next generation system. Today you will hear
from the GAO and they will testify that, in fact, the FAA's
current tax and financing structure has kept up with the demand
for many years and can provide funding to cover the development
and implementation of the NextGen system.
In addition, at the February 14th hearing, I noted that,
based on the Administration's own cost assumptions and data,
the FAA's proposal would hypothetically yield approximately
$600 million less in fiscal year 2008 than maintaining the
current tax structure and over $900 million less from fiscal
year 2009 through fiscal year 2012.
I want to repeat that so everyone understands that the
FAA's current proposal would generate $600 million less in
fiscal year 2008 than maintaining the current system and $900
million less than the current system in fiscal year 2009
through fiscal year 2012.
The GAO will testify today that the FAA has not taken in to
account changes in demand that could happen with an increased
fuel tax, and this could result in even less revenue collected
by the fuel tax than anticipated.
While the FAA states that we need an entirely new funding
system to cover the capital costs of the Next Generation
system, the FAA's estimated cost requirements for its major
capital programs are actually lower than what they were four
years ago.
The FAA's estimated total requirements for facilities and
equipment, and the airport improvement program in its new
three-year proposal are approximately $380 million and $1.5
billion less, respectively, than the FAA requested for the
first three years of its last reauthorization proposal, the
Centennial of Flight Aviation Authorization Act. In my opinion,
this new proposal's lower funding levels for capacity enhancing
capital programs further weakens the FAA's argument that a
radical financing reform is necessary.
But, more importantly, I believe that the FAA's proposal is
bad for consumers, namely, airline passengers and other
airspace users. The FAA believes that its proposal will make it
operate like a business. I disagree. The truth is the FAA will
never be able to compare itself to a business. Most businesses
have competition to spur efficiency. The FAA has no
competition. As I noted in February, airline passengers and
airspace users either get their services from the FAA or they
stay on the ground.
I don't believe it is in the public's interest to give the
agency almost unilateral authority to raise its fee rate to
match whatever costs are incurred. I believe that linking a new
user fee rate to the air traffic control modernization program,
in particular, could result incentives for the program to be
carried out efficiently. The pressure for efficiency will be
much less if the FAA can require airline passengers and system
users to bear the burden of cost overruns or delays.
While the FAA argues that airline passengers will pay less
under its proposal, I believe that they in fact ultimately
could pay more, and they may wind up paying much more if user
fee rates grow unchecked and airlines pass those costs onto
their customers.
The Department of Transportation Inspector General has
reported that the FAA's major acquisitions have experienced
billions of dollars, and we have heard this in hearings
before--they have experienced billions of dollars in cost
growth and years of scheduled delays directly traceable to
overly ambitious plans, complex software development, changing
requirements, and poor contract management. The GAO has listed
the ATC modernization as a high-risk program for the last 12
years.
It is true, as the FAA Administrator testified before this
Subcommittee, that the FAA has met its acquisition costs and
schedule performance targets. At least 80 percent of its
acquisitions have been on schedule and within 10 percent of the
budget. However, at least some of the FAA's recent success is
due to the re-baselining of certain modernization programs.
When an acquisition is restructured in this manner, its
historical cost overruns may not be fully reflected in the
FAA's performance measures. The Inspector General of the DOT
has noted that the FAA's Next Generation effort will, without
question, be a high-risk endeavor and that there is
considerable potential for cost-growth, schedule delays, and
performance shortfalls, particularly with regard to new
software intensive automation systems. The FAA should not be
able to pass such potential cost growth directly onto consumers
through its fee rate without congressional oversight or
approval.
In addition, I believe that there are some very significant
unknowns in this proposal that have not been addressed. For
example, the FAA has not fully explained the potential
administrative costs associated with tracking and billing 14
million flights a year. When I specifically asked the
Administrator about administrative costs, they have not
developed a plan to determine what the administrative costs
would be.
What we do know, as the Administrator indicated here last
week, that, in fact, time is not on our side. I believe that
these factors argue strongly in favor of working within the
current tax and financing structure.
With that, I would like to welcome our witnesses here today
and to recognize our Ranking Member, Mr. Petri, for an opening
statement or any remarks he would like to make.
Mr. Petri. Thank you, Mr. Chairman. I join in welcoming our
witnesses today and appreciate the effort that went into the
statements that will be made a part of the record, as well as
the summaries they will be presenting orally to the panel.
As you are all aware, we are in the midst of a very busy
month here on this Subcommittee, and today's hearing will
address a fundamental question: how we finance the FAA and,
most importantly, the modernization of our air traffic control
system. We are pleased to have all the panelists here to share
their thoughts on the Administration's financing proposal.
There is obviously a lively debate on the financing issue and,
where there are disagreements, it is going to be our job to try
to find the path forward and some kind of consensus.
In order for the United States to maintain its historical
role as a leader in the global aviation industry, we must be
certain to advance our modernization efforts. Other countries
around the world are making great strides in that regard. The
EU plans to have a constellation of its own satellite-based
navigation system, known as Galileo, completed by 2010. The
Russians are advancing their own program, GLONASS. Elsewhere in
the aviation industry, China expects to be manufacturing its
own regional aircraft by 2008 and is striving to produce a wide
bodied aircraft by 2020.
For a century, the U.S. has led the aviation industry and
our industry is, as we have heard from several witnesses
earlier, crucial to our economy, and we can't afford to fall
behind. Whichever financing mechanism is put into place, we
must be sure that it can support the costs of modernizing the
system.
So again I would like to thank all the witnesses for
participating in this important hearing, and I look forward to
your testimony.
Mr. Costello. The Chair, at this time, would recognize the
distinguished Chairman of the Full Committee, Chairman
Oberstar, for any opening statement or remarks he would like to
make.
Mr. Oberstar. Thank you, Mr. Chairman, and thank you for
your opening statement, which is comprehensive, deals with all
the policy issues that we need to address in the course of this
authorization process, and shows your grasp of the subject
matter and understanding of its significance.
I want to thank Mr. Petri for his comments and his
participation, his diligence in taking control of aviation
issues, moving from surface transportation in the past
Congress. Welcome to the great exciting world of aviation.
I want to thank our two colleagues who testified earlier,
Mr. Barrow and Mr. Tiahrt. I was not in the room, I was meeting
in the waiting room with other folks, but I heard their
testimony and it shows the level of interest among our
colleagues in the House on the reauthorization. And I know
there is a great deal of skepticism on both sides of the aisle
about this financing scheme. While we will be receptive, we are
going to listen to views in the course of this hearing and
several subsequent hearings that we will have, my intention is
to give it a decent burial.
I have been through this reauthorization process for a
little over 22 years. When FAA was emerging from the air
traffic control of the 1960s, from which it had just emerged
from the air traffic control of the 1930s, with radio beacons,
preceded by lighthouses, preceded by bon fires, it was evident
that we needed a robust management, robust technology system to
manage the growing air traffic.
The air traffic growth accelerated in the aftermath of
deregulation--it was voted in this committee room--and in the
early 1980s, with industry, with the airlines and with the
manufacturers--particularly at that time it was IBM--began
design of the advanced automation system, which is a very
comprehensive approach of modernizing air traffic in all of its
aspects.
FAA had been criticized for moving too slowly, moving too
fast; of being overly ambitious, not thinking far enough ahead.
You can't be all of those things. You can't be wrong on all
those accounts. I remember very distinctly 1986, 1987 people
said, we just buy it off the shelf. We have got plenty of
technology, just go and buy it.
You don't go buy these things off the shelf at Radio Shack,
for heaven sakes. You are designing a totally new system. This
is not data retrieval; you are not querying the Library of
Congress for information, you are dealing with aircraft moving
at 10 miles a minute, 7 miles in air, no curb to pull over,
look under the hood and figure out what is going on. It has to
be real-time. It has to be designed with a robust platform for
adaptation off into the future.
And, yes, FAA did sort of over-promise and over-propose in
developing the AAS that became the display system replacement,
the DSR, but they went from 300,000 lines of computer code to
1,300,000 lines of computer code. They went from a system being
down 10 to 12 hours a year to one that would be down 5 to 10
minutes a year. And now we need to evolve that system. It is
not a matter of taking today's cell phone, throwing it out and
buying a new one. You are building on a robust platform to move
and evolve ever into the future into a system in which air
traffic controllers, en route controllers, tower controllers,
TRACON controllers, are managers of a system and thinking ahead
looking ahead to where traffic is going to be five and ten
minutes from now, not just to where they are at the moment.
That is going to take robust investment.
This plan, submitted to us by the green eye shade
budgeteers at OMB, does not move in that direction; it
provides, as the Chairman said--and I hope everyone paid
attention to it--less money, $900 million less money,
$1,500,000,000 less money than we know; and unfairly
distributes the cost around the system.
We encountered such a scheme in 1993, then proposed by Vice
President Al Gore, in which he proposed to have sort of a semi-
privatized air traffic system with the airlines in charge. We
weren't going to allow the fox in charge of the chicken coop,
and we are not going to allow it today either. Get ready, we
are going to do something good for aviation. We are going to
make good decisions for the future of aviation in this Country.
But we are not going to do it half-baked. We are going to make
a continued robust investment that embraces all of aviation:
airlines; domestic; international; general aviation, meaning
corporate jets and private aircraft.
We need to deal with the North Atlantic system, the North
Atlantic aviation for which the United States has
responsibility over 3 million square miles of the Atlantic
airspace. The oceanic guidance system has not been completed
yet. That has been in the works for 10 years. That is a $30
billion market. We have to do better and move faster. We are
responsible for 18 million square miles of the Pacific
airspace. That is a $25 billion market growing at 9 percent a
year. We have to have a robust system in place to manage that
air traffic so that we don't have an aircraft, as we did with
KAL 007, because it strayed out of control, out of recognition
of our radar system.
Those are the big challenges ahead of us, not nickel-and-
diming the system to death, as this proposal would do.
Excuse my enthusiasm, Mr. Chairman, colleagues, but I have
been here a long while and have seen a lot of this happen. I am
determined, under your leadership, Mr. Petri's participation,
and all the Members of this Committee and the aviation
community, we are going to do right by aviation. Thank you.
Mr. Costello. I thank the distinguished Chairman for his
remarks.
Before we go to our first panel, I would note to all
Subcommittee Members that we have two panels remaining, this
panel and another. We have a total of 10 witnesses, so I would
ask Members to consider submitting their opening statements in
the record.
And at this time I would ask unanimous consent to allow two
weeks for all Members to revise and extend their remarks and to
permit the submission of additional statements and materials by
Members and witnesses. Without objection, so ordered.
Let me recognize, at this time, Members of the first panel
that are here this morning. We welcome you and we appreciate
your being here to present your testimony and also to answer
questions of Members of the Subcommittee.
First, I would recognize Mr. Daniel Elwell, the Assistant
Administrator for Aviation Policy, Planning and Environment for
the FAA; Dr. Gerald Dillingham, who has testified before this
Subcommittee many times, who is the Director of Physical
Infrastructure Issues with the GAO; The Honorable Calvin
Scovel, who has testified here just in the last few weeks, who
is the Inspector General for the U.S. Department of
Transportation.
At this time I would recognize Mr. Elwell for your opening
statement.
TESTIMONY OF DANIEL K. ELWELL, ASSISTANT ADMINISTRATOR,
AVIATION POLICY, PLANNING AND ENVIRONMENT, FEDERAL AVIATION
ADMINISTRATION; DR. GERALD DILLINGHAM, DIRECTOR, PHYSICAL
INFRASTRUCTURE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE;
AND THE HONORABLE CALVIN L. SCOVEL, III, INSPECTOR GENERAL,
U.S. DEPARTMENT OF TRANSPORTATION
Mr. Elwell. Chairman Costello, Chairman Oberstar,
Congressman Petri, Members of this Subcommittee, thank you for
putting the spotlight this morning on the state of aviation's
finances. While this is my first appearance at a Congressional
hearing and it is an honor to be here, I recognize that I have
been invited primarily to listen to the views of others,
including my fellow panelists, the DOT Inspector General, and
the GAO. Their views and the views of other witnesses here
today are vital to the current debate over our legislation.
You know, I have spent close to two decades in one cockpit
or another. I have flown military aircraft all around the world
and I have had the pleasure of flying lawmakers home to their
districts. No matter who or what I have transported, the point
is to get there safely and on time. Nobody wants to be late.
Yet, without the funding provided by our legislation, there
will be no NextGen system in time to prevent gridlock in the
skies. Without the program flexibility, financial stability,
and beneficial budget treatment that our bill brings, our plans
to use satellite technology to control air traffic will likely
just limp along while congestion races ahead. We have to plan
for the future now.
In the meantime, the FAA is making headway in reducing
delays on a variety of fronts. For example, in just the last
year alone, we have added new runways at five of our busiest
airports. They include Atlanta Hartsfield, Boston Logan, and
St. Louis Lambert. Together, those runways will account for
thousands and thousands of additional takeoffs and landings.
But pouring concrete, while important, isn't the only answer.
We have got to get started on NextGen now. Our bill will help
put the infrastructure together piece by piece.
NextGen is an enormous undertaking, and it is not going to
drop into place just like that. It is going to take time and
money to make this system of tomorrow a reality. Everyone has a
stake in this endeavor, so, naturally, we feel everyone should
help make it come about. It is all about fairness and balance.
Yet, if you look at how the Trust Fund is structured today
and who is paying what, you will find that it is mostly one-
sided, and we at the FAA don't think that is fair. At least
week's hearing, it became clear that this issue of balance is
very important to this Subcommittee. We agree. And we believe
that our proposal strikes the balance that has been missing in
aviation financing for the last three decades. Our measure
stands on two principles: first, the revenue that we collect
should tie directly to the costs of providing the services;
second, everyone who uses our services should pay their fair
share. These principles come straight out of Business 101.
At last week's hearing, also, several Members talked about
the importance of equity in funding FAA. Frankly, without
implementing these concepts, equity will not exist. It
certainly doesn't exist today. Administrator Blakey has talked
about how the current funding system treats the guy flying on a
commercial flight in seat 22B, the passenger in the middle seat
on a crowded flight at the end of a long day. We all know him.
You represent him. You have been him. We have all been him.
Right now, that guy is subsidizing the corporate CEO flying in
the company jet and, yes, the general aviation pilot flying his
Cessna as well. He is the most over-taxed individual in the
system.
The Administrator has compared this to sitting in a
restaurant and being asked to pay for the meal of the party at
the next table. It doesn't make sense in a restaurant and it
shouldn't make sense in aviation. That is because commercial
aviation foots 95 percent of the bill, even though they use 73
percent of our services. General aviation, on the other hand,
uses 16 percent but pays just 3 percent into the Trust Fund.
This inequity becomes all the more glaring as our airspace
braces for one billion passengers in 2015.
Year after year, passenger numbers in general aviation
activity are rising at a record-setting pace. Last year we had
741 million travelers. Tops so far, but it won't be that way
for long. We also set another record in 2006: delays. More than
490,000 flights didn't take off or land on time. From the looks
of things so far, 2007 isn't shaping up any better.
It doesn't have to be like this. Under our reform proposal,
we will be able to implement our NextGen transformation efforts
a lot faster than under the current system. To get there we
need everyone, commercial and GA operators, to pay for the
costs that they impose on the system.
I appreciate that change is hard and the known is
comfortable, but this concept of paying for what you use isn't
a new one. I think it is even harder to justify an exception
for aviation when you realize how much our Nation depends on
flying. The next six months are pivotal. With the current
financing structure expiring in September, we have to get this
right the first time.
Once again, I appreciate the Subcommittee bringing this
situation to everyone's attention, and I look forward to a fair
hearing on our proposal. Thank you for inviting me to
participate today. I look forward to answering your questions.
Mr. Costello. Thank you.
Dr. Dillingham, the Chair recognizes you at this time for
your testimony.
Mr. Dillingham. Thank you, Mr. Chairman, Mr. Petri, Mr.
Oberstar, Mr. Duncan. This morning I will be discussing GAO's
analysis of changes to FAA's funding and budget structure that
are contained in the Administration's reauthorization proposal.
Before I talk about those changes, I want to briefly
discuss the ability of FAA's current funding system to provide
enough revenues for FAA's activities, including the Next
Generation Air Transportation System.
As you know, FAA is currently funded through a series of
excise taxes and a contribution from the General Fund. This
funding structure, with some changes to the excise taxes and
the level of General Fund contribution, has successfully funded
the FAA budget, a budget that has consistently trended upward.
The Congressional Budget Office recently projected that the
revenues that could be obtained through the current funding
structure would increase substantially over the next 10 years.
Given certain assumptions, including no change in the excise
tax rate, CBO estimates that through 2016 the Aviation Trust
Fund could support about $19 billion in additional spending.
If Congress thinks that additional revenues are needed to
fund NextGen, or for other reasons, Congress can also make
additional revenues available under the current funding
structure by increasing the excise tax rates or by increasing
the General Fund contribution, or both.
Our bottom line is that the current funding system is able
to provide enough revenues to support FAA's activities,
including the early development of NextGen. However, the
concerns that have been voiced about the equity and efficiency
of the current system would not be addressed. In addition,
keeping the current funding system would not address the
Administration's desire to link FAA's revenues closer to its
costs.
Now I would like to turn to the Administration's proposal.
Our analysis shows that some of the proposed changes to the
current funding system may create a better alignment of FAA
revenues and costs, and this alignment could address the
concerns about revenue adequacy, equity, and efficiency that
have been raised about the current system. However, the ability
of the Administration's proposal to address these concerns is
critically dependent on two considerations: first, how
reasonably does FAA's cost allocation system allocate cost to
users and, second, how closely does the proposed funding
structure adhere to the principle of cost-based funding.
In the first instance, the key component of the proposed
funding system is FAA's cost allocation report. That report was
only recently made public and we have had only a short time to
review it. So although we can't definitively answer the
question about the reasonableness of the proposed allocation,
our preliminary analysis raised some concerns that we think
require further study. We currently have a detailed study of
FAA's cost allocation methodology underway for this
Subcommittee.
With regard to adherence to the principles of cost-based
funding, we have also identified some concerns in this area,
such as the policy decision not to apply a congestion charge to
all users of terminal airspace near busy airports. These types
of policy decisions on pricing may be appropriate in some
instances, but they do not necessarily adhere to the principle
of cost-based funding.
Let me now turn to the Administration's proposed changes to
FAA's budget structure, which are designed to align FAA budget
accounts with its lines of business. On one hand, such an
alignment could allow for greater transparency and provide a
better link between cost and revenues. For example, the new ATO
account, which would fund operations, maintenance, and upgrades
to the National Airspace System, could better enable FAA to
charge for direct usage and modernization of the system. On the
other hand, some FAA activities, such as those related to
safety, may not be easy to divide into discreet categories. As
a result, it may be difficult to allocate their costs between
aviation users that benefit directly from a safe air traffic
control system and the public that receives general safety
benefits.
Mr. Chairman, in the final analysis, the Administration has
introduced a complex proposal for funding FAA, and we believe
that it deserves thoughtful consideration. However, adopting
this proposal is not necessary to provide more money to FAA,
but it does address some of the concerns that FAA and other
stakeholders have raised with the current funding system.
We also think that a more detailed analysis is called for
to determine whether FAA's cost allocation methodology can
support a fair and efficiency-driven cost-based funding
structure for FAA. Members of the Subcommittee, a timely
reauthorization of the current excise tax is critical even if
Congress chooses to continue its consideration of the
Administration's proposal or other alternatives for funding FAA
beyond this year.
Thank you, Mr. Chairman.
Mr. Costello. Thank you, Dr. Dillingham.
Mr. Scovel?
Mr. Scovel. Chairman Costello, Ranking Member Petri,
Members of the Subcommittee, I appreciate the opportunity to be
here today to discuss FAA's financing proposal.
I would like to make five points today regarding FAA
financing and FAA's proposal.
First, there are important reasons to consider alternative
mechanisms to finance the FAA that have been well documented in
previous reports and commissions on reforming FAA. While
airspace users pay for the system, the current financing
mechanism bears little relationship to the services they
actually use, and whether they use them at busy or slack times.
And concerns have been raised about whether the current system
is fair, equitable, or flexible enough to meet FAA's evolving
needs. However, it is important to note that FAA's current
financing mechanism could support both FAA's ongoing efforts
and the potential cost of developing the next generation air
traffic control system (NextGen), now pegged at $4.6 billion
between fiscal year 2008 and fiscal year 2012. This assumes
revenue projections materialize.
Second, at the request of this Subcommittee, we examined
the use of the National Airspace System and who contributes to
its congestion. Our bottom line conclusion is that there are no
marginal users. Specifically, general aviation activity
accounts for a not insignificant amount of FAA's workload.
Therefore, it is appropriate to consider this activity if the
allocation of costs among users of the NAS is going to be
included as part of any effort to move to a new financing
system.
Third, FAA's cost accounting system provides the underlying
data upon which user fees would be based. As we noted in
testimony before this Subcommittee in February, FAA's cost
accounting system can support the user fees currently
envisioned by FAA. Some adjustments to the cost accounting
system may be required, depending upon structure of the fees
ultimately decided upon. In addition, FAA's method for
allocating costs among user groups, which underlies what each
group would pay under FAA's proposal, is reasonable. FAA's goal
was to allocate costs in a manner that was simple, transparent,
and repeatable. Further, FAA's cost allocation method reflects
tradeoffs and assumptions made by the agency. For example, FAA
determined that the NAS was built to meet the needs of large
air carriers. This resulted in fewer costs being allocated to
general aviation and some air carriers using medium activity
airports than other possible methods. Congress will have to
decide if it wants to make similar tradeoffs.
Fourth, FAA's cost recovery proposal does not completely
link costs and fees and, therefore, is not fully consistent
with its stated rationale for moving to user fees. For example,
FAA chose not to recover either the cost of towers at airports
that board less than 100,000 passengers annually or flight
service stations from general aviation operators. Instead,
these costs will be recovered through the General Fund.
Nonetheless, there is more of a link between costs and fees
under this proposal than currently exists.
Fifth, how best to finance FAA is a policy call for
Congress. Nevertheless, a number of issues need to be
addressed. FAA must continue to take steps to control costs
regardless of whether it is funded in the future by excise
taxes or user fees. We also think greater clarity is needed
with respect to how FAA will manage and execute NextGen
initiatives, particularly given past experiences with cost
growth and schedule slips. In addition, FAA's proposed
borrowing authority presents serious risks unless it is
accompanied by strong controls.
Finally, FAA's proposal provides one year for the new board
to be appointed and reach agreement on a fee structure and fee
levels, and for FAA to implement a billing system. This
timetable is ambitious even if FAA employs a contractor for the
billing process.
In sum, FAA is at a critical juncture with regard to how it
is financed. Decisions should be made with an eye on FAA's
projected workload and funding requirements. Excise taxes are
one funding mechanism that could provide sufficient resources
to support FAA's needs, but fall short in other regards. User
fees are another alternative that are not without controversy,
particularly regarding how costs are allocated among users.
Mr. Chairman, that concludes my remarks. I would be happy
to answer any questions you or other Members of the
Subcommittee may have.
Mr. Costello. Mr. Scovel, thank you.
We, I am told, are going to have votes here pretty soon,
but let me just say to the Subcommittee Members that, when
votes are called for, we will go to the floor, take a short
recess only to allow time for votes, and then we will come back
immediately after the last vote and continue the hearing.
I have a comment, Mr. Elwell, concerning the FAA
Administrator's statement to the Subcommittee last week and the
issue of time, that time is not on our side; and I agree with
the Administrator. She stated very clearly that we have to do a
reauthorization this year and time is not on our side.
But I want to note, and I think it is worth noting, that
one of the reasons why time is not on our side is that the FAA
did not produce its reauthorization plan until February the
14th of this year. We asked continually last year when the FAA
proposal would be coming out. There was an indication early on
that there would be a radical proposal to change the current
tax structure and the way to collect revenue to finance and
fund the system, including the modernization program. There was
an indication that we would get the plan somewhere around last
summer, and then it was September, and then it was by the end
of the year, and then it finally came in on February the 14th.
So, you know, I just want to say that we now are dealing
with hearings concerning the reauthorization proposal that we
just received 30 days ago, and you are proposing a radical
change to the system. A Member on the minority side declared
the user fee proposal dead on arrival and you heard the
Chairman of the Full Committee say today that he wants to give
it a proper burial. I want to tell you that if in fact this was
a serious proposal, it should have been delivered to the
Congress on time, and to the American public and the users of
this system, so that they could understand the ramifications,
as opposed to delivering it to us and expecting us, in a very
short period of time, to radically change the system.
Now, I don't expect a response from you, but I do want to
make that point for the record.
Dr. Dillingham, in your statement you indicate, and I will
quote: ``The current funding structure has supported FAA as
FAA's budget has grown, and it can continue to do so to fund
planned modernization. Excise tax revenues are forecasted to
increase if the current taxes are reauthorized without change
and thus could support additional spending.'' Then you go on to
say that, ``If necessary, Congress can obtain more revenue by
increasing the excise tax rates or the General Fund
contribution to the FAA's budget,'' and it goes on and on.
I want to ask you two questions and ask you to give a very
short response, if possible.
I asked the Administrator, when she was here, concerning
the FAA's proposed budget, the Administration's budget, if,
after we reviewed it, it was apparent to us that the new
proposal would generate $600 million less than the current tax
structure in fiscal year 2008 and $900 million less in fiscal
year 2009 through 2012. And I asked her if she would dispute
those figures, and she said that she could not really dispute
those figures.
In your review, I ask you to comment. Is there any question
that the new proposal that the FAA is proposing, the user fee
system, is there any question that it would not generate less
in fiscal year 2008 than the current system?
Mr. Dillingham. According to the work that we have done to
date, Mr. Chairman, that is correct, there is no evidence.
Mr. Costello. So it is very clear that, if we enacted the
proposed plan by the FAA, we would generate $600 million less
the first year--those are my figures--and $900 million less
from 2009 to fiscal year 2012.
Let me ask you, in your testimony you indicate that the FAA
has not taken into account--and I mentioned this in my opening
statement--what could happen if in fact the new scheme is
enacted into law with an increase in fuel tax, which could
result in less revenue collected by the fuel tax than
anticipated, and I wonder if you might elaborate on that.
Mr. Dillingham. Yes, sir. We talked to FAA about this and
FAA indicated that they did not take this into account because
their rough calculation said that the fuel costs were less than
5 percent of the cost of operating the aircraft. We pointed out
that, you know, without actually doing that analysis, you
really can't say to what extent less fuel will be purchased. If
less fuel is purchased, then less revenues would come in, and
that may mean the need to raise the taxes higher or find the
funds from someplace else to pay for AIP.
Mr. Costello. Let me ask you about the rationale. As I
indicated in my opening statement and I think the FAA has made
pretty clear that, in part, the reason that they want to go to
this new system is to finance the new modernization program.
Your office has done extensive review of FAA acquisitions and
the experience that the FAA has had in the past, spending
billions of dollars and having what I would call cost overruns
or costs that were not anticipated by the FAA, schedule delays,
overambitious plans, complex software development, and so on,
and two years ago your office reported that 11 of the 16 major
projects it reviewed experienced total cost growth of about
$5.6 billion.
So I guess my question to you, and I made clear where I am
coming from and where I am going to, but I want to ask you in
these experience cost growths of 11 of 16 programs of $5.6
billion over what the FAA anticipated, historically speaking,
has the FAA had problems with the ATC modernization efforts
because Congress did not provide enough money or was not
generous enough in providing funding, or what were the reasons
why they had a $5.6 billion cost growth in the 11 of the 16
programs?
Mr. Dillingham. Mr. Chairman, there are many reasons why
FAA has had cost overruns in the past. As you suggested, we
have had the ATC modernization program on our high-risk list
for about 15 years now. Among the reasons were also cited
earlier in terms of overestimating or underestimating the
complexity of the acquisition particularly with regard to
software requirements creep, that is, once the program is set,
someone or for some reason they will change what is required;
lack of stakeholder input in some cases; lack of having the air
traffic controllers as a part of the design and development. We
also mentioned the fact that sometimes FAA's plans for money to
acquire a system was not met by congressional appropriations
and such, but that was a much smaller element than the other
miscalculations.
Mr. Costello. Mr. Scovel, since it was your report, I would
ask you to comment as well.
Mr. Scovel. Thank you, Mr. Chairman. We stand by our
assessment from 2005. It is clear that the transition to
NextGen was then and continues to be an extraordinarily high-
risk effort. As Dr. Dillingham has pointed out, it has been on
the GAO's high-risk list for a number of years; it has been
listed as a top management challenge by my office for our
department for several years now as well.
Your summary in your opening statement, Mr. Chairman,
captures our concerns with development of NextGen: overly
ambitious plans, complex software development, shifting
requirements, and we would add to that poor contract
management, and we would point to the STARS program as Exhibit
A in that regard.
Underlying all of this in terms of not only the interest of
this Committee in terms of the financing proposal is the need,
when assessing NextGen progress, of not only the cost to the
agency, which will be very substantial in terms of many
billions of dollars in order to implement NextGen, but also the
need for industry to design and install the avionics that will
be required in order to interface properly with NextGen
programs. My understanding is that recent estimates of the cost
to industry have also been in the range of $14 billion to
perhaps as much as $20 billion as well over the development
cycle of our NextGen programs.
What I am getting at, sir, is the need to integrate not
only the agency's plans, but also the industry's needs in order
to fully be able to exploit the potential of NextGen.
Mr. Costello. Thank you. As I indicated, I do have a number
of other questions. I will come back, hopefully we will have a
second opportunity. But let me say that that is exactly one of
the reasons why I am concerned with this user fee system, where
the agency would have the ability, regardless of what the cost
growth is for future gen, that if they underestimated the cost,
if there was mismanagement, all they would have to do is
generate the revenue to match the cost with very little
oversight or control by the Congress. That is one of many
issues that concerns me with implementing this user fee system.
The Chair at this time recognizes the Ranking Member, Mr.
Petri, for any questions.
Mr. Petri. Thank you very much, Mr. Chairman.
Mr. Elwell, you may have detected a slight note of
skepticism about some of the Administration's financing
proposals. I wonder if you could just respond to what you have
heard in the context of a question, which is how is the
Administration's bill is a better way to fund NextGen than the
current system?
Mr. Elwell. I think the primary reason we believe it is a
better way is because, under our proposal, the budget treatment
allows us to examine exactly where our costs are and capital
expenditures, and set fees to recover exactly what we plan to
spend when we intend to spend it. The offsetting collection
treatment that is written into the bill allows those funds that
we collect through user fees not to compete with other
discretionary needs outside of the Administration and all us
and you the transparency to follow the money, if you will, from
the point at which we allocate the cost, set the fee, recover
the funds, and then spend it for what we are collecting it for.
Typically, under the current system, with the financing of
the FAA having absolutely no relation either to our current
costs or proposed capital expenditures, we believe this is a
far more transparent and direct link between costs and
expenditures.
Mr. Petri. Let me ask Dr. Dillingham. It is pretty clear
that there have to be assumptions in order to allocate costs,
and I just wonder if, doctor, you think the basis for the
Administration's cost recovery system--based on your
preliminary investigation, are the methods that the FAA used in
the development of its cost allocation methodology reasonable?
Do you have any comments on it?
Mr. Dillingham. Mr. Petri, if you were to compare the
methods and approaches that FAA used with either Federal
standards for setting up cost allocation system or ICAO
standards, we would conclude that they are in fact reasonable.
What happens after that is within those broad parameters of
generally accepted standards or ICAO standards, there is a lot
of flexibility and, therefore, within those parameters FAA has
made some policy decisions and some assumptions that have
turned out to have some pretty powerful implications in terms
of cost recovery. But, yes, the short answer is it was a
reasonable process.
Mr. Petri. Dr. Scovel, what is your view of the FAA's
method for allocating costs among the different users?
Mr. Scovel. Mr. Petri, I would concur with Dr. Dillingham
that FAA's proposal, and specifically its cost allocation
methodology, is indeed reasonable. As he pointed out, there
have been certain policy decisions, what I referred to in my
opening statement as tradeoffs made by FAA, specifically in its
adoption of general aviation's contention that the NAS has been
developed primarily to support the needs of the large air
carriers. That resulted in an allocation decision by FAA that,
frankly, works to the advantage of general aviation.
You mentioned cost recovery, as well, in your statement to
Dr. Dillingham. FAA has made certain decisions in its cost
recovery methodology as well that appear to favor to some
degree general aviation. Those are policy decisions, of course,
by the FAA and reviewable by you on the Committee and the rest
of Congress. I am not offering my recommendation in favor of
them or any other policy alternative, but I am merely pointing
them out for your consideration.
Mr. Petri. Let me just turn to one other subject briefly. I
think there is some proposal for some $5 billion borrowing
authority. Could you discuss that? Is that a desirable thing?
Should it be done sooner, the timing of it? Should Congress
have greater oversight it? Could you just put that in context
for us?
Mr. Scovel. Yes, sir, I will try to do that. To be up
front, I suppose I should say that we are skeptical currently
as to the need for that $5 billion borrowing authority. As I
understand the proposal, FAA suggests that it would need to
borrow and would request authority to borrow up to $5 billion
beginning in 2013, with all sums borrowed to be repaid by 2017.
The primary basis for our skepticism at this point is the
uncertain nature of the purpose for that borrowing.
Given FAA's track record when it comes to acquisition
management, we would like to see very strong controls placed
over that. The need and the ability to execute with that money
program development and implementation within the time frame
stated is an important concern of ours. We think that the short
time frame between 2013 and 2017, which strikes us as unusual
because, clearly, I think what FAA intends to do is to use that
money to fund the development and implementation, institution
of programs that will have far-ranging effects, far more long-
lasting effects than 2017. So, in effect, they are borrowing
money on the short-term, having to pay it back almost
immediately without being able to see the long-range payoff and
benefit. Those are our concerns.
Mr. Costello. I thank the Ranking Member.
The Chair recognizes the gentleman from New York, Mr. Hall,
under the five minute rule.
Mr. Hall. Thank you, Mr. Chairman and our Ranking Member,
and thank you to our witnesses on the panel.
Just an observation. As the passenger in 22B myself a
number of times, I would believe that I am and many of the
traveling public, who I talk to as I frequently fly with them,
when they are sitting waiting on a late flight, either late
departure or late arrival or waiting for a gate to open up, the
common opinion out there is not that what we need to do is
build some pie-in-the-sky ill-defined $4.6 billion satellite-
based system, but what we need is more gates, more runways,
more air traffic controllers, and other similar things that
cost less money and could be provided now. But that is just a
comment.
I wanted to follow up on the question about borrowing
starting with Mr. Elwell. What does the FAA anticipate will
happen during this 2013 to 2017 time frame that requires the
borrowing authority?
Mr. Elwell. The plan for the purchase and development of
NextGen has within the second five-year period--with 2008 to
2012 being the first five years_the second five-year period we
anticipate cost spikes that under our proposal would require us
to set user fees higher in one year than another. So having the
ability to borrow for those expenditures gives some stability
to the contracting of those expenditures and also leavens, if
you will, the fees that we would charge going forward for the
payment of those capital expenditures.
Mr. Hall. Okay, so the decision was made by the
Administration philosophically that rather than charge a
realistic user fee or tax, if you will, or something that pays
as you go, that there is more anticipated borrowing and debt.
That is a preferable course for financing this program, am I
correct in that?
Mr. Elwell. I think I would characterize it more as giving
us the ability, when the large spikes come, to make the users
pay an even user fee over five years as opposed to something
that varies widely from year to year.
Mr. Hall. Okay. I will take that answer and ask Dr.
Dillingham what your thoughts are on the proposal for $5
billion of borrowing authority in that time frame.
Mr. Dillingham. I think we have some of the same concerns
that the Inspector General voiced in terms of the short payback
and the borrowing authority, and not knowing exactly what it is
going to be used for; and it is not a lot of borrowing
authority at that. We also, though, I think, are sort of
gratified that there has been a move from the earlier proposal
of going to the capital markets, but now FAA is moving towards
borrowing it from the Treasury, which is certainly cheaper. But
even so, we have a concern about any kind of situation that
sort of commits future resources given the way the overall
fiscal state of the Government is.
Mr. Hall. Right. Borrowing from a Treasury that is in
record debt is a questionable proposition in my opinion.
Here is another topic, the President's proposal to move
from excise taxes to fees and financing his dramatic shift. The
proposal for AIP just cracks the $3 billion market height and
only provides $8.7 billion overall. How can this proposal fund
capital improvements at small and mid-sized airports such as
Stewart Airport or Westchester in my district, if it provides
almost $2 billion less over the next three years than it did
over the last three years? I am just curious how a funding
proposal that actually produces less money is going to allow
improvements at small and mid-sized airports.
I guess first that would be to Mr. Elwell.
Mr. Elwell. Of course, next week this Committee will have a
full hearing on airports, so I don't want to try to get too far
out of my area of responsibility, but what I will say, though,
is that the proposals that we have in our bill that modify the
current formulas we believe--and you will hear this next week
in much fuller detail, but the formula changes puts the AIP
money where it is most needed. The increase in the PFC
proposal, the relaxation of some of the more unnecessary
requirements that were placed on airports in capital spending,
combined with the new proposal that would have no entitlement
money going to those airports which have demonstrated self-
sufficiency frees up entitlement money for the airports that
need it most.
Mr. Hall. Thank you very much.
Thank you, Mr. Chairman. I yield back.
Mr. Costello. I thank you.
The Chair, at this time, recognizes under the five minute
rule Mr. Hayes.
Mr. Hayes. Thank you, Mr. Chairman, and thanks to all the
witnesses for being here today. As I have listened very
carefully, I find myself in agreement with both Chairman
Costello and Oberstar about what is going on, and I have just a
couple observations before questions.
Our focus needs to be on making the system better. It is
working pretty darn well. We don't need to get our sledge
hammer out, which is this very costly system, to drive a carpet
tack. I mean, that has come across time and time again. It
would seem the FAA is gulping the airline Kool-Aid, as opposed
to my friend, Mr. Mica, we talk about sipping 3800 hours a
year.
Mr. Elwell, you and I have talked about this at grave
length. Emphasis needs to be far greater on next generation
aircraft, not next generation cost system, which we just can't
seem to get our arms around. Again, it is a problem looking for
a solution that does not yet exist. I mean, I think in personal
terms of what could be done with STARS and SIDS and existing
equipment that everybody has now to provide the kinds of
increased capabilities that we will not necessarily get with
this huge expensive system. So please focus on those ideas
going forward as well.
It is kind of like Earl Blumenauer. If you brought him in
here and said, Mr. Blumenauer, your bi-caucus is not paying
your fair share for highways. That is what is kind of being
said here for general aviation. And it was talked about over
and over again how many jobs, how much revenue, how much
commerce. The general aviation industry provides a tremendous
resource for this Country, and also exporting aircraft. We just
can't afford to come in here and kill that whole process.
Tort reform needs to be--some frivolous lawsuits and what
that is doing to the industry. That is a good focus of
attention. Getting the airline pilot age issue solved in
equitable fashion.
A quick question, Mr. Elwell. September 30th, if I
understand correctly, the present tax system expires. It is
going to be difficult to get something passed in that short
amount of time. Wouldn't it be a good idea to go ahead and
extend those as we continue this discussion?
Mr. Elwell. Well, the history of extensions--many on this
Committee remember vividly the highway bill. The history of
extensions has proven that it wrecks havoc on especially
capital programs at the airport level. It is very, very
difficult to get starts on extensions that sometimes are just
months at a time. Even a one-year extension could present
difficulties with capital spending.
Our bill, remember, sir, proposes that the user fee regime
not be put into place until fiscal year 2009, and any
contemplation of getting the bill passed this year, having that
year grace period to have everything set and ready to go.
Mr. Hayes. Well, again, my point is we have got a system
that both of these other gentlemen have said is working, and if
we go the other way we are going to decrease our revenue, so I
think we can hear well enough to know that a six-month
extension or we need to come up with a realistic extension to
make a system that is working continue to function. In the
meantime, 3 percent of the airports are causing the congestion,
but we are focusing all our attention on there. There are a
number of specific fixes--and you and I could go on for days
about what they might be--that could be used immediately and
really address those problems, again, without opening up this
huge can of worms that has got us all concerned.
I think the questions that have been asked or are in our
material have pretty well gone over. It boils down to this: the
system works, it has got plenty of revenue; you have got a new
system we don't understand that is going to cut revenue. Let's
get on down the road and fix the problems that we have got.
Again, we thank you for coming, but I have been talking
to--we are going to get all our pilots together; Mr. Salazar, I
see, is here and Mr. Ehlers--the equipment manufacturers,
talking to our pilots, and also talking to air traffic
controllers, and begin to look at some things that we can do
right now that won't cost money to speak of and solve some of
the problems. But, again, thank you all for wrestling with
this.
And I thank the Chairman and the Chairman of the Full
Committee and all our Members for being so conscientious and
interested in this.
Mr. Costello. The Chair recognizes the gentleman from
Colorado, Mr. Salazar.
Mr. Salazar. Thank you, Mr. Chairman.
First of all, let me thank the witnesses for being here
today and testifying.
In September 2006 there was a hearing where CBO testified
and I think Dr. Dillingham's testimony was almost identical to
what was said. In general, basically, the CBO testified that
the modernization of NGATS could be accomplished under the
existing FAA financing structure.
In Colorado today, for example, the Colorado Department of
Transportation tells us that the sale of general aviation fuel
is down 23 percent across the State. I am sure it is probably
the same in other States as well. The airport managers tell us
that this is tied directly to the price of fuel. Nine out of 10
AOPA members have told us that if the tax on aviation gasoline
is increased by even 50 cents a gallon, that they will reduce
their purchase and they will curtail their flying.
Your proposal, Mr. Elwell, actually basically stated that
you will raise aviation taxes by 355 percent. Now, you tell us
that you have not taken into account that formula and I have
some severe concerns about what is going to happen to general
aviation. Right now, I have concerns that your plan is
basically not well thought out. So I would like your comments
on that.
I would also like Dr. Dillingham to make his
recommendation, or I don't know if he can. Could you basically
recommend or would you recommend that maybe FAA should wait and
extend or wait for one year before we put such a risky proposal
on the table?
Mr. Elwell, would you start, please?
Mr. Elwell. When we laid out the proposal and went through
the cost allocation and came up with an assignment of cost to
the different users, we found that there is 3 percent input
into the Trust Fund from general aviation in total, and, yet,
as Mr. Scovel has just said, the allocation showed that GA has
16 percent of the burden on our system.
When we looked at how to set the fees and how the recovery
process would work, we set a system that would recover 11
percent, which, of course, is less than the 16 percent of the
burden that GA has. Of that 11 percent, 1 percent of the
recovery from GA would come from I think the portion of GA you
are talking about, 1 percent would come from the piston
operator.
And when we looked at the fuel tax rate that would be
needed to get there, and then we looked at the overall
operating cost of a GA airplane owner, we found that it raised
their operating rate to less than 5 percent and did not
consider that to be substantial enough to warrant looking into
the effect that that would have since, within the past five
years, the price of fuel for GA operators had doubled and
overall--now, I am not familiar with the Colorado statistics,
sir, that you cited, but overall we saw that that translated to
about a 2 percent decrease in activity.
So the answer to the question is we looked at it and, as a
percentage of operating cost, didn't think that it was going to
have as big an impact. And it not only went along with the cost
allocation and the recovery of the system, we took almost two
years to develop with very substantial interaction with the
stakeholders, we just figured that it was and is the fairest
way to do it.
Mr. Salazar. Dr. Dillingham.
Mr. Dillingham. Mr. Salazar, I think what we said in our
testimony is that we have certain concerns both with regard to
the cost allocation as well as the cost recovery that FAA has
put forward. I think the Chairman spoke this morning about the
fact that the proposal has only been out there for a relatively
short time, and we think that it is sort of like the devil is
in the details. And this Committee has asked us to look at
those details and, though we don't make recommendations in this
area, we say we need to put on the table that we do have some
relatively serious concerns about the whole makeup of it. I
mean, we talked about some of the assumptions that were
involved in it. For example, one of the fundamental assumptions
is this category of aircraft. They used two categories of
aircraft when in fact they could have used many other
categories of aircraft. And so, you know, I guess the bottom
line for us is that we do have some serious concerns and we
again just caution that we go forward with reauthorizing the
excise taxes so we don't have that lapse again.
Mr. Salazar. Thank you. I yield back.
Mr. Costello. The Chair recognizes the gentleman from
Tennessee, Mr. Duncan.
Mr. Duncan. Well, thank you very much, Mr. Chairman. You
know, this is my 19th year on this Subcommittee and I have sat
through quite a few FAA reauthorizations in that time. You
mentioned a few minutes ago Mr. Ehlers' statement--and
certainly he is one of our most respected Members--when he said
at the first hearing that this Administration was dead on--he
used those words that we hear so often, dead on arrival, and
maybe some parts of it are and maybe there are some parts that
we could take a look at.
But, you know, in all those reauthorizations we have worked
out some pretty tough issues. Mr. Hayes mentioned the lawsuit a
minute ago. Chairman Oberstar will remember when we worked out
the general aviation liability reform and took an industry that
was just about dead and brought it back to life. Some said we
couldn't work that out.
I think one thing that we haven't really taken into
consideration too much--we talk about general aviation like it
is all one thing, it is all the same, and it is not all the
same. There are a lot of differences within general aviation.
By the same token, there are a lot of differences--we talk
about commercial aviation like it is all one entity, and it is
not. There are a lot of differences between the different
airlines and between cargo and passenger and several other
things.
Mr. Coble asked me, during my six years as Chairman, who
was my ranking Member, and I told him Mr. Lipinski. And no
chairman and ranking Member, I don't think, could have gotten
along any better than Mr. Lipinski and I did, but I told him, I
said, the main difference was I liked to hold hearings because
I felt like I learned something at every hearing, and his was
the Chicago way; I don't think he wanted us to hold any
hearings, I think he wanted us to work out everything just
between me and him and our office.
[Laughter.]
Mr. Duncan. But, you know, there comes a time for both. We
can all learn a lot from these hearings, but I don't think you
can really work out a lot of these tough issues in a group this
big. What I am going to suggest is simple, and after we hold
these hearings, you couldn't find two fairer people than
Chairman Costello and Mr. Petri. We certainly can't find
anybody who knows more about aviation in this Congress than
Chairman Oberstar. I know, Mr. Mica, this is his top concern.
I know Administrator Blakey said, when she testified a few
days ago, that she had held meetings with all the different
parties before they did the proposal, Mr. Elwell. Well, now
that we have got the proposal out there, now is when we need to
start having some of these meetings.
Dr. Dillingham is not tied in, I don't think, to either
side. He said he can't make recommendations, but he sure can
give us some good information.
But I think there is some common ground that we can reach
to work out most of these things, and we are going to have to
make some changes because we have got all this growth that
people are talking about, all these passengers that are going
to be hitting us.
Mr. Hayes mentioned that 3 percent of the airports are
causing most of the problem. We need to take a serious look at
that.
The witnesses all said what was reasonable, and there is
nothing unreasonable about anything that has been proposed
except you have got to take into consideration what is
politically feasible at the same time, and sometimes there are
a lot of differences.
So I just thought I would make those comments, and I have
some suggestions that I am willing to make to Chairman Costello
and Mr. Petri at an appropriate time, when we get down to the
nitty-gritty, which I think we will before too long.
Thank you, Mr. Chairman.
Mr. Costello. I thank the gentleman from Tennessee.
At this time the Chair recognizes the gentleman from
Washington State, Mr. Larsen.
Mr. Larsen. Thank you, Mr. Chairman.
Dr. Dillingham, you said the devil is in the details. I
agree with you. And if that is the case, there is a lot of
devil in this proposal. There are a lot of questions unanswered
going through this, so I have got a few questions.
I want to go back to borrowing authority a little bit. Mr.
Elwell, you talked about the borrowing authority, the $5
billion borrowing authority and the need for that because you
anticipated cost spikes in the future. Can you provide any
detail of the activities of the borrowing authority, specific
details that the borrowing authority would finance and what
specifically are the cost spikes that you are referring to that
you anticipate from 2013 to 2017?
Mr. Elwell. I don't have with specificity in the second
five years.
Mr. Larsen. If you don't, then how can you talk about
anticipated cost spikes?
Mr. Elwell. We have it, sir, I don't have the JPDO stats
with me.
Mr. Larsen. Okay.
Mr. Elwell. I would be happy to provide you plenty of
detail for the five years. And, of course, as the Administrator
has testified, for the first five years we can enumerate the
$4.6 billion that our proposal would raise and exactly what it
is spent on, but, yes, we will certainly get that to you.
Mr. Larsen. Can you talk to us about the borrowing
authority and whether or not you are creating a separate
account to manage that money, and to what extent either FAA
will have oversight over the spending of that or Congress will
have oversight over the spending of those specific dollars
being borrowed?
Mr. Elwell. Yes, sir. The oversight is the same as it is
today. It would be subject to annual appropriations as it is
today. This Committee's oversight in the reauthorization
process and, of course, in the interim, whenever this Committee
sees fit to hold hearings or to examine our accounts. In fact,
I think the oversight of this Committee on the spending, both
on the borrowing side and in the setting of the user fees,
which would incorporate this service to the debt, I think the
oversight is going to be enhanced because of the transparency
of both how we are raising the money and exactly where we are
spending it.
The cost allocation study that we propose to do annually
would have 600 separate lines of cost that are as transparent
as can be, and one of those lines, if borrowing--and, again,
remember the borrowing is permissive--if the borrowing were to
take place, it would be borrowed against one of those lines,
completely to be transparent and examined. The funds would have
to be appropriated, but they would also have to be sort of
first-in-line, if you will, and paid back by an adjustment to
the user fees.
But, in answer to your question, a separate account is not
contemplated, it would be built into the fees.
Mr. Larsen. You said the borrowing is permissive. It may be
allowed under the authority if we end up allowing it, but my
guess is if we allow it, it will get borrowed, honestly,
probably to its fullest amount.
Dr. Dillingham, do you want to provide any answer to any
question I asked about the borrowing authority? Do you have
other concerns about it, or thoughts?
Mr. Dillingham. No, sir. I think we expressed all of our
concerns about the shortness of the duration and what it is
actually going to be spent for and whether the Federal
Government can in fact stand that, you know, should we need it.
Mr. Larsen. Okay.
Mr. Scovel?
Mr. Scovel. Right. I guess when Mr. Elwell said that the
justification for the anticipated spike is uncertain at this
time underlies our term--and I used the word skepticism in
describing our need for borrowing for the period 2013 through
2017. NGATS funding needs are fairly--and I emphasize fairly--
well defined between now and 2012. Beyond that point, my staff
finds the funding requirements rather murky.
Mr. Larsen. Well, you mentioned that for industry alone it
might be from $14 billion to $20 billion, which might sound
small, but it is a lot of zeroes behind that. It is $6 billion
difference. It is $14 billion or it is 48 percent more than
that. So it does seem murky. And then going through some of the
other numbers in the NGATS proposal as well, I am a little
confused about whether or not the total cost of the program is
$15 billion to $22 billion or if it is $15 billion to $22
billion plus the $14 billion to $20 billion that you outline.
Have you got any thought on that?
Mr. Scovel. My understanding is that the agency's needs
will be in the range of $15 billion to $20 billion; industry's
needs, as well, $14 billion to $20 billion, perhaps $15 billion
to $22 billion. I have seen both ranges. So roughly comparable
between the agency's needs for modernization and the industry's
funding needs in order to accommodate.
Mr. Larsen. Thank you. I have may have a second round of
questions.
Thank you, Mr. Chairman.
Mr. Costello. I thank the gentleman.
At this time the Chair recognizes the gentleman from North
Carolina, Mr. Coble.
Mr. Coble. Thank you, Mr. Chairman.
Gentlemen, good to have you all with us. You have been
bombarded with many questions, but I don't think this one has
been put to you.
Mr. Elwell, how have you taken the importance of general
aviation into account in drafting your proposed bill?
Mr. Elwell. I think the importance of general aviation is
recognized throughout the bill, sir, and most of that
consideration I think you will find in the policy decisions we
make in recovery. Much has been said about the increase in the
fuel tax that this bill proposes, and that is a necessary step
to take if you are going to get fairness in the system, if you
are going to get to a point where the users of the system pay
for their use of the system.
But as is done in many user fee systems throughout the
world, we took--and this has been pointed out by my colleagues
on the panel already several times, that when decisions could
be made on a policy basis for the recovery of the funds--of
course, I want to emphasize again that the allocation of cost
is an accounting process, but the recovery of those costs
through the setting of fees is where policy can interject, and
it is in that area that I think we recognize the importance of
GA.
If you look at the bill, we propose that low-activity
towers, about 286 of them throughout the Country, be funded by
the General Fund. We also propose that flight service
stations--flight service stations is service that we did an A-
76 on flight service stations some years ago to tremendous
savings to the FAA, but those flight service stations are used
predominantly by general aviation pilots. The cost of that
service, flight service stations, we also put on the General
Fund as good for general aviation population.
Mr. Coble. Thank you, Mr. Elwell.
This will apply to either of the three of you. How does the
FAA user fee system affect regional service? Either of you
three.
Mr. Elwell. We don't believe that our proposal will
adversely affect regional service at all.
Mr. Scovel. Mr. Coble, we anticipate that there will be
some effect, although small, in that while there won't be tower
fees, for instance, for regional jets landing at the small
airports that Mr. Elwell mentioned, when those small regional
jets take off and land, for instance, at a larger hub airport,
there may well be user fees incurred there. Of course, there
will be increased gas taxes, some of which may be passed on to
customers.
Now, there may be some potential for offset, I should note
in fairness, as well, because if reduced costs to the larger
airlines are indeed passed on to passengers, some of those
passengers, in transferring from a regional airline segment to
a larger carrier leg of their trip., may find that those costs
offset each other, but it is an if, and you can apply your own
experience as to how often cost savings are passed on to
customers.
Mr. Coble. Thank you.
Dr. Dillingham, do you want to weigh in on that?
Mr. Dillingham. Mr. Coble, we had the same kind of
findings, at least preliminarily, that the IG has just related
to you.
Mr. Coble. I thank you, gentlemen.
Yield back, Mr. Chairman.
Mr. Costello. I thank the gentleman.
At this time the Chair recognizes the Chairman of the Full
Committee, Chairman Oberstar.
Mr. Oberstar. Thank you, Mr. Chairman.
I greatly appreciate the contributions. Dr. Dillingham, you
have always served the interest of aviation and the public
interest exceedingly well with your measured and balanced,
thoughtful observations and inquiries into aviation, and other
issues that we deal with.
Mr. Scovel, I welcome you to the Committee and to a long
line of distinguished service by the Inspector General of DOT.
We are grateful for your contribution.
Mr. Elwell, we welcomed you for the hearing without a
statement previously submitted to the Committee because you are
really going to backing up what Ms. Blakey said last week. And
one of the things that she said is that the Trust Fund balance
cannot support a lapse in funding and that the Fund did lapse
10 years ago because of a disagreement over reauthorization.
That is not true. That was just a complete mixup, in fact, a
failure in the reauthorization of a series of taxes that the
new majority was engaging in, and in the process the airline
ticket tax lapsed. It lapsed for a long time. And airline
ticket prices didn't go down by 10 percent, they largely stayed
the same. Don't rewrite history.
Your governance proposal lists all those who will have
input, including foreign carriers. Why foreign carriers?
Mr. Elwell. The air transportation system advisory board is
not proposed to have a foreign carrier.
Mr. Oberstar. No, no. You have proposal and then a setting
of fees listing all those who will have a contribution and have
a voice in it, including foreign carriers. Why?
Mr. Elwell. In the consultation process, Mr. Chairman, we
do--not on the advisory board, but in the consultation process,
we do list foreign carriers because they will be charged user
fees.
Mr. Oberstar. I am not aware the Russians consulted with
our carriers when imposing fees on the Polar routes. The
Chinese don't consult our carriers when imposing their fees.
The Europeans don't include our carriers in setting their fees.
This is a misguided proposition.
You also include on the proposed board a representative of
the Department of Defense. But then you, later on in the cost-
based user fee explanation provision, state the military would
not pay these fees. So a non-payer is going to have a voice on
the board. Why?
Mr. Elwell. Well, there are a number of non-payers who have
a voice on the board.
Mr. Oberstar. But why the military?
Mr. Elwell. The military uses our services; we use the
military's services and----
Mr. Oberstar. I know that. But you are going to exempt them
fees but give them a voice on the board.
Mr. Elwell. That is correct.
Mr. Oberstar. And have you abandoned the weight component
of the formula?
Mr. Elwell. No, we have----
Mr. Oberstar. You are sticking with that?
Mr. Elwell. The Administrator----
Mr. Oberstar. Why don't you use wide bodies instead of
weight? That would be a little more credible. I don't want to
help you with your proposal, but if you had said wide body
aircraft instead of weight of aircraft, it would at least have
a relationship to aviation considerations, such as wake
turbulence and a distance needed en route, en trail between
aircraft.
Mr. Elwell. I am sorry, was that a question?
Mr. Oberstar. No, it is a statement you can respond to.
Mr. Elwell. I think there is not a fine line to draw
between weight. I mean, to say that you would introduce weight
in the terminal area for 300,000 pounds, but not for 290,000.
So our formulas are progressive with regard to weight. And
while we do believe that weight plays a factor in the terminal
area with regard to cost, the primary decision with regard to
weight was on the policy matters I talked about earlier, the
policy decisions for ability to pay and fairness.
Mr. Oberstar. Well, it is reasonable for airports to relate
landing fees to weight because they do exert pressure on the
runway and the taxiway and the parking apron, but they are not
exerting a pressure on the air. The block is the same for a 747
as a 787--which will be entering in service, we hope--a 777 or
the A-380. Same block. Doesn't have anything to do with weight
in the air, but does have a lot to do with wake turbulence.
Your proposal would be somewhat more credible--somewhat more
credible--if that were included.
It was said well earlier, this proposition is not well
thought through. There is a big rush to move from the splendid
work that Russ Chew did in allocating costs in the system to
then taking that cost allocation and applying it to cost
recovery or to financing of the system.
Now, tell me, how is this proposition for a fund going to
work, the borrowing authority? How is it going to be
capitalized? Are you going to appropriate $5 billion and then
FAA is going to borrow against it, or how is this going to
work?
Mr. Elwell. Mr. Chairman, the language allows for borrowing
up to $5 billion in the five-year period, the latter five years
of the bill. Conceivably, that could be $5 billion in the first
year or----
Mr. Oberstar. Will FAA go to the Treasury to borrow it?
Mr. Elwell. Yes, sir.
Mr. Oberstar. To the money markets to borrow it?
Mr. Elwell. Treasury, sir.
Mr. Oberstar. To Treasury. And will that be borrowing at
current market rates, Treasury notes?
Mr. Elwell. It would be at the Treasury rates, sir. I am
not----
Mr. Oberstar. Treasury rates. So it would be repaid to the
Treasury at roughly 6 percent or so, whatever that rates happen
to be at the time?
Mr. Elwell. Sounds reasonable.
Mr. Oberstar. But not at the overnight rate that the Fed
charges to banks.
Mr. Elwell. I----
Mr. Oberstar. You don't know.
Mr. Elwell. I am not qualified to answer that, sir.
Mr. Oberstar. A lot of stuff for us to work our way
through.
What is the borrowing authority for? Why do you need that?
Mr. Elwell. Well, the implementation of NextGen is going to
have some capital expenditures in the latter five years, things
like the software systems that the controllers and the traffic
flow managers use; the civil aviation requirements for
position, timing and augmentation; GPS constellation
enhancements----
Mr. Oberstar. So you are going to borrow in the Treasury
against these systems as they develop or as you are investing
or as you are contracting with the private sector to build
these systems for FAA, or what?
Mr. Elwell. I think basically all the above, sir. It is to
have stable funding on the front end of the contract----
Mr. Oberstar. Is that going to be repaid, then, from the
fees you propose to charge to aviation?
Mr. Elwell. Yes, sir.
Mr. Oberstar. Oh my goodness. That will take about three
years to establish, given the way government systems work. By
that time, we might just as well write the death knell for
aviation. I just think this is a very dangerous scheme,
dangerous to the future of aviation.
I would point out, although FAA and some DOT and some
Administration spokesmen say funding is not secure, Congress
has rarely failed to appropriate the amount of funds requested,
and I think we can well count on a sustainable funding. We may
have to increase the dollar amount going in to the ticket tax,
but I think these schemes that come up to us in this proposal
are risky; they will unbalance our system. For example, you
propose to generate revenues from the oceanic system. Is that
limited to our 3 million square miles of transatlantic
airspace?
Mr. Elwell. It is limited to the airspace we control, yes,
sir.
Mr. Oberstar. And to the 18 million square miles we control
in the Pacific airspace?
Mr. Elwell. Yes, sir.
Mr. Oberstar. And what about the Polar system that we are
using? We cooperate with the Canadian Air Traffic Control
System in managing Polar systems. So there won't be a fee for
that?
Mr. Elwell. If the Canadians are controlling it, no.
Mr. Oberstar. No. Okay.
Well, I am unpersuaded, unpersuaded at all. I have been
through these schemes for 25 years and I think you are off on
the wrong track.
Thank you, Mr. Chairman.
Mr. Costello. I thank the Chairman.
The Chair at this time recognizes the gentleman from
Florida, Mr. Buchanan.
Mr. Buchanan. Thank you, Mr. Chairman, and I want to thank
the Committee.
Back to general aviation. I want to get your thoughts or if
it has been considered. My son is a pilot, and I am looking at
a lot of these people who fly piston planes, and I am concerned
about general aviation. One of the things you don't talk about
in here is what the cost of the fuel is for these various
entities. I know that--and this is just an estimate, because I
didn't check it, but probably commercial is paying $2.00 to
$2.50 a gallon. I am guessing. Navgas and jet fuel for people
that maybe--net jets maybe pays $3.50 a gallon, estimate. But
the guy that is flying a piston plane or a small turbine jet is
probably paying $4.50 for jet fuel and $5.00 for Navgas.
So when you add 50 cents to that, the guy that is flying
the small piston, you know, recreational flier, they are not
millionaires, and you go from $5.00 to $5.50 a gallon, it is
like in the car business when you are used to driving a large
sports utility, it hits $3.00 a gallon. I think it can be a
huge psychological factor, if nothing else, and that is one of
my biggest concerns.
You look at your fee increase, but you really don't talk
about what everybody is paying for their fuel, and I think it
is a big factor, because we are close to $5.00 or maybe over
$5.00; you add 50 cents, $5.50, $6.00 a gallon, I think it
becomes a big issue.
I guess I wanted to ask all the witnesses your thoughts on
that, if you gave it any consideration, because at the end of
the day, like they have said numerous times, if we are going to
drive a lot of people out of this industry, as well as the
FBOs, some of them, then what have we really done in terms of
increasing revenues? So I would like to--and I am kind of for
sharing the burden, but I want to make sure, at the end of the
day, there is enough gallons being bought that it makes sense,
your 50 cents increase a gallon.
Mr. Elwell?
Mr. Elwell. Thank you, sir. Again, when you look at the
current burden, the current taxes, 19.3 cents and 21.8 for
avgas and jet fuel, respectively. That represents about 1.5
percent of the total operating cost of those respective
aircraft. The raising of the gas tax brings it up to still be
under 5 percent. And as I said earlier, when the price of gas--
which, by the way, is the proxy, but it is somewhat unrelated
to the tax; the tax is the way in which the user will pay for
their cost burden on the system. But when the price of fuel
went up post-9/11, in the past five years, by almost doubling,
we did not see a significant diminution of general aviation
activity that we could peg to that, to the rising fuel.
So I think it is important to look at this rise in the fuel
tax in relation to total operating cost. For instance, for a
piston user, on average, I think it is about $2.00 to $4.00 per
hour, and on the numbers that general aviation survey provides
for the average recreational pilot, we are talking about
anywhere from $400 to $500 additional a year to operate a
piston aircraft, single-engine piston aircraft. So these are,
in our estimation, not huge numbers, not debilitating numbers.
And certainly when you look at how we propose to recover their
burden on our system, 11 percent versus the 16 percent, I think
we have made a lot of accommodation for GA everywhere we could.
Mr. Buchanan. I talk to a lot of piston operators and a lot
of them are concerned. I think by taking this up to $5.50,
$6.00 a gallon, because I think that is where the reality is
going to be, and if we add some other kind of increase, that is
what I am hearing is the sentiment in Florida, and we have a
lot of GA people there that are flying.
Doctor, you want to comment on that, any thoughts?
Mr. Dillingham. Yes, Mr. Buchanan. We mentioned earlier
that, as far as we could determine, FAA had not taken into
account this issue of price elasticity: at what point does it
become too expensive for certain aviation participants to fly.
We don't know if it will make a difference, but there are
statistical techniques that could be applied to in fact see if
it made a difference. And, in fact, because a decision was made
to divide the aviation community into piston and turbine, and
not further divide it, it sort of set the stage for all things
that followed in terms of cost recovery.
It is also the case that, as Mr. Elwell has said, certain
policy decisions were made in terms of cost recovery, and as I
am sure you are aware, around the world other policy decisions
are made with regard to how to recover costs from GA operators,
and in many cases it is a nominal fee. Of course, their GA is
much smaller than ours, but it is still a policy decision that
is made.
Mr. Scovel. Mr. Buchanan, if I may.
Mr. Buchanan. Yes.
Mr. Scovel. Thank you. I don't have before me figures
regarding the price per gallon for Avgas or jet fuel, for
instance; however, I will say that our research shows that
while the percentage increase in fuel taxes for general
aviation amounts to, by our calculation, 334 percent--and that
is an eye-popping number, to be sure--our research further
shows that the cost typically to the small piston aircraft user
amounts to about $8.00 and change per flight hour; a larger
amount, to be sure, for the user of a larger business jet, but
in terms of the small recreational user we are looking, by our
calculations, at about $8.00 per flight hour increase.
Mr. Buchanan. Yes. Some friends that I have got that used
to fly twin King Airs are going down to single engine turbo
props. They are looking at efficiency areas. They are still
flying a bunch, but they are flying in planes that are more
efficient per hour, operating cost.
So I just would ask you to take that into account when you
are looking at this, where navgas--because they said 410,000 is
part of the organization. There must be a million. I don't know
what the total number is, but there are a lot of folks out
there, and I can tell you, the other business I am in is the
car business, and there is some psychological barriers that
affect certain areas, where they will take that big sports
utility and get something else. They liked it, but not that
much.
Thank you.
Mr. Costello. I thank the gentleman from Florida.
The Chair recognizes at this time the gentleman from
Michigan, Dr. Ehlers.
Mr. Ehlers. Thank you, Mr. Chairman. I think we sort of
beat the gas tax to death, although I am sure we have a lot
more work to do on it. Let me shift gears a bit.
Perhaps it is my science background that makes me
interested in this, but in the 13 years on this Subcommittee I
have noticed a considerable number of cost overruns every time
we have a new generation of equipment. So my questions are,
first of all, for Mr. Dillingham, and we will go on from there.
The first question is how certain are you that the cost
figures are accurately calculated and based on reasonable
assumptions about developing the NextGen system? Secondly, the
assumption has been that a good deal of the research effort
would come from NASA, whereas NASA is shifting money, appears
to be shifting money away from their aeronautics part and into
the space area and the research. Will NASA be able to, as part
of JPDO, really contribute substantially to this? And, if so,
does that have to be paid for out of the increased fees or is
that going to come out of NASA's research budget?
So most of those questions are relating to the progress of
the whole JPDO and developing the NextGen system. So you are
the independent observer here. I would appreciate your
comments.
Mr. Dillingham. Let me take on the last question first,
with regard to the research and development efforts that were,
early on, sort of slated for NASA. As you have just spoken
about, their budget has been reduced significantly, and their
focus has also been changed as well. It is an ongoing problem
that has to be worked out from FAA's perspective in terms of
how much is it going to cost to do the necessary research and
development that needs to proceed some of the NextGen systems.
This research is needed for regulation development, it is
needed for demonstrations. All of these things need to be taken
care of now, before the systems are acquired.
FAA has asked for certain amounts of money in this year's
budget to start to close where NASA used to be; however, it is
not clear to us that that is enough money. Their own REDAC
committee has said that, because FAA's RE&D budget and its
capabilities have been reduced so much, that it might take
several years before that could be built up and several
hundreds of millions of dollars as well to build that up. So it
is an issue that has not been resolved.
Your first question was about whether the cost figures were
correct. I think it is an estimate at this point in time. To
give FAA credit, clearly, they are working in a unity fashion
with industry and developers as well to come up with cost
figures, but, again, it is just an estimate and estimates have
been made before. FAA has in fact done better keeping on budget
and on cost recently, but still, as I said earlier this
morning, we maintain the ATC modernization on our high-risk
list because it is in fact high-risk both for cost overruns and
schedule breaches.
Mr. Ehlers. Let me just ask Mr. Elwell and Mr. Scovel to
comment as well.
Mr. Elwell? Just on the last part, about your confidence
level on the cost estimates for the research and development of
the NextGen system.
Mr. Elwell. We have a high confidence in the RE&D. Our
concern, of course, is in being able to spend the money we need
in the process, in the iterative process that Mr. Dillingham
mentioned, which is a big part of our proposal, is the laying
out of what is required to build NextGen and to be able to
collect the fees necessary to spend the money where we need to
spend it, which we at times have difficulty doing under the
current system. But I think the estimates are realistic. As was
pointed out, $14 billion to $22 billion through 2025
represents--or $15 billion to $22 billion, I am sorry, on our
side represents sort of the going forward with NextGen. There
are a lot of variables that are hard to pin down in the latter
years, but the JPDO and the organizational evolution
partnership with industry is going to be very helpful in
getting that narrowed as we go forward.
Mr. Ehlers. Mr. Scovel, any final words?
Mr. Scovel. Yes. Thank you, Mr. Ehlers. As I noted before,
the price tag of $4.6 billion for NextGen for the period 2008
through 2012 is the current price tag. To be sure, it needs
refinement. Beyond 2012, as I mentioned before, we see a very
uncertain future regarding the level of funding required for
NextGen.
With regard to NASA, NASA has already told us they intend
to spend less. You have noted that they are turning their
research more to space instead of aeronautics. We reported in
our report in February concerning JPDO that NASA intends, as
well, to turn its focus more to basic research and less to the
applied science and information technology that may be of most
benefit to NextGen efforts.
If FAA intends to look to NASA exclusively for its
research--and I know that is not the exclusive focus, but
largely to NASA--then we think that is a wildcard, given NASA's
stated funding intentions.
No question, lots of development ahead. Refinement needs to
be accomplished both by FAA and industry. Beyond 2012 it is an
uncertain picture for us.
Mr. Ehlers. Thank you very much.
Mr. Costello. I thank the gentleman.
Let me mention to both the witnesses and those in the
audience that you will notice a number of empty chairs over
here. The leadership has called a caucus, so most of our
Members are in caucus, and I am certain that Mr. Larsen
probably just returned from there, and others will shortly.
Let me go to a second round.
Have you had a chance, Ms. Fallin, to ask? Well, let me
recognize you at this time to ask questions or any statement
you would like to make.
Ms. Fallin. Thank you, Mr. Chairman. I appreciate the time,
and I appreciate all of you being so patient to sit here for so
long and answer all of our questions. I know that all of you
are very committed to what you do and believe in the different
positions that you are taking.
I do find it interesting that, from sitting up here, it
appears that the FAA and the DOT seem to have a difference of
opinion as to how this is going to work, and the FAA's proposed
financing methods for the Next Generation and how FAA will meet
its goals in raising enough revenue for the next system.
I hear one person say, and I think it was you, Dr.
Dillingham, that the new system would generate $600 million
less--is that a true figure?--$600 million less under the new
system than what we currently get today. That is correct?
Mr. Dillingham. Yes, that is correct.
Ms. Fallin. Okay. And, Mr. Elwell, I have great respect for
the FAA and love the FAA, and I have respect for what you are
trying to do to update technology and take care of all the
increased passenger needs and flight delays, and all the
different things that we need to deal with. I also believe that
we should have a culture of continuous improvement in
government in whatever we are doing. But I was curious about
how many years have we had the current fee structure? How many
years have we had that system in place, the one that you are
proposing to leave?
Mr. Elwell. Since 1970, I believe, when the Airport and
Airway Trust Fund was developed.
Ms. Fallin. Because I remember you saying that everyone
should pay their fair share and that we should link revenue to
costs. So I guess my curiosity was if we have had it that long,
has it always been a problem, considering what your goals are,
to link revenue to costs and for everybody to pay their fair
share?
Mr. Elwell. Well, it has been a growing problem, ma'am,
since deregulation in 1979, because when--actually, when it was
developed, the excise tax system was meant and designed by
Congress to be a cost fee for services and it was--I am going
to use the term ``alignable'' because we were a regulated
industry. The FAA regulated the industry, could set the price
of tickets, and could therefore drive the generation of
revenue.
Since deregulation, that has not been the case. In fact, we
did bring a slide, and I don't know if it is cued up, but it
would show you, as a function of departures over time, aircraft
departures, through about 2006, the revenue generated, even
though departures and, therefore, ostensibly revenue and the
number of passengers flying seems to be steady, the revenue
generation is really all over the place. And, unfortunately,
the spikes--if it comes up--that you will see in the revenue,
unfortunately, those spikes on either the high or low side
rarely correspond with a same spike in the spending needs, and
that is the problem, is that we have never been fully aligned
on the spending side, and this proposal would do that.
Ms. Fallin. Okay.
Mr. Elwell. We didn't get the slide, I am sorry.
Ms. Fallin. Thank you, Mr. Chairman. If I could continue on
for just a moment.
Dr. Dillingham stated that with the present fee structure
and the growth in the FAA revenue, that he predicted it would
generate around $19 billion in revenue?
Mr. Dillingham. Yes, ma'am. We were quoting the
Congressional Budget Office analysis.
Ms. Fallin. And that with that type of growth and revenue,
that the FAA would be able to pay for the NextGen system, is
that true?
Mr. Dillingham. That is correct.
Ms. Fallin. But although it would not meet your goal of
having more revenue-to-cost basis, but it would meet your goal
of transforming the system to meet the passenger increase, the
time delays, the increased traffic in certain airports, that
you would be able to develop the system with current revenues
in place as they are now.
Mr. Elwell. As the Administrator said, it is conceivable,
but on a much different schedule, we would anticipate, because
of the difficulty in getting, under the current system, as the
Trust Fund is filled, being able to spend the money you need on
facilities and equipment when you need it. Our proposal,
through the user fee proposal, forecasts a billion more
dedicated F&E by 2012 than even the last year's budget, the
2007 budget that goes through 2012 without the user fee
proposal.
So while it is possible, as the Administrator said, to get
it done, we don't believe that it could be done near as
efficiently or expeditiously as our proposal, which is designed
to generate the funds we need to invest in the system when we
need it.
Ms. Fallin. Thank you, Mr. Chairman. I yield back my time.
Mr. Costello. I thank the gentlelady from Oklahoma.
We are going to a second round of questioning, and I am
told any minute we will get called for a vote.
Dr. Dillingham, I mentioned in my opening statement and I
made a comment as well about the fact that the Administrator
has said that they recently have 100 percent record on major
capital projects on time and within budget. Frankly, I want to
ask you, you have looked at this. Is that because certain
modernization programs have been re-baselined, for instance,
like STARS, in order to, frankly, hide some of the growth in
cost? I would like your comments.
Mr. Dillingham. Mr. Chairman, we are still looking at that
issue for you and the Subcommittee. It is true that FAA has
announced that for the last three years they have had their
major systems acquisitions on time and on budget in terms of
the 80 percent in terms of time and the 10 percent in terms of
budget. It is also true that some of those systems have been
re-baselined, and that re-baselining can lessen the
transparency of knowing what the original baselines were.
Our discussions so far with OMB indicate that under certain
circumstances re-baselining is permissible and that information
is communicated to OMB. Our question now is to what extent is
that information communicated to the Congress and to the
American public in terms of full disclosure, and we are still
working on that and hope to have a report for you soon.
Mr. Costello. That is a very diplomatic way to put it,
lessen the transparency. And I realize that OMB, under certain
circumstances, will say it is permissible, but it seems to me
that it is a pretty difficult way for us to go back and assess
the true costs.
Mr. Scovel, I wonder if you might comment as well.
Mr. Scovel. Yes, thank you, Mr. Chairman. We would concur
in Dr. Dillingham's assessment of, as he and you put it, the
lack of transparency, perhaps, in assessing the true cost and
schedule requirements of some programs that have been re-
baselined. It is important to note that a re-baselined program
is simply a snapshot in time of cost and schedule requirements.
We would hope that any program, if you have re-baselined it
recently enough, you could hit your cost and schedule goals.
We would further note that some of the performance targets
that have been identified for the programs that have been re-
baselined are simply, if you will, hardware delivery items,
rather than performance capability based, and so they may not
represent, in our view, a true picture of the progress a
program may be making to full completion and readiness, as
opposed to some intermediate steps that are less helpful to the
Committee and to the public in assessing how FAA is executing a
given program.
Mr. Costello. Thank you.
Dr. Dillingham, I guess it was a few years ago the
Committee asked you to take a look at how some other countries
were funding their air traffic control system, and, as I
recall, your team did look at some other countries and came
back, and I think that some of those countries the general
aviation community there assessed a smaller fee than what the
FAA is proposing here in the reauthorization. I wonder if you
might tell us the findings, in other words, what some of the
other countries are doing relative to general aviation versus
what the FAA is proposing in their reauthorization.
Mr. Dillingham. Yes, Mr. Chairman. We did undertake that
study and looked at five countries around the world, including
some European states, Canada and Australia, and basically what
we found is that, with regard to GA--keeping in mind that the
U.S. GA population is many, many times larger than anyplace
else in the world, but accommodations were made for the general
aviation community in that in some cases they were charged a
nominal fee based on either the number of flights that they
took in a given fiscal year or they were just charged a nominal
fee, period, without regard to the number of flights. For
example, in Canada, they charge about $70 a year as an annual
fee. That has been recently increased and also added a
congestion charge when they go into a busy airport; and in
Australia they do it by the number of flights they do in a
fiscal year.
So, again, it is the issue of cost allocation versus cost
recovery, and that policy decision about how to recover costs
from GA differs from what we are proposing here.
Mr. Costello. So the other countries that you looked at,
they are not attempting to do cost recovery as the FAA is
proposing here?
Mr. Dillingham. That is correct, sir.
Mr. Costello. Okay. Let me ask you what the implications
are of basing the cost recovery only on cost allocation, as
opposed to principles, for instance, of the ability to pay.
What are the implications, if in fact this system is
implemented, strictly based on cost recovery?
Mr. Dillingham. I think one of the principal implications
is something that has been mentioned many, many times this
morning, that is, to what extent will this act as a damper on
the general aviation industry in terms of the number of general
aviation fliers, as well as the general aviation manufacturing
industry. It is an unknown, but clearly a possibility exists.
Mr. Costello. Mr. Scovel, in your testimony you talk about
the challenge that the FAA faces in a billing system within
available time frames, and I wonder if you would elaborate on
that.
Mr. Scovel. Yes, thank you, Mr. Chairman. If I could use a
couple examples. The STARS program, which I know is well
familiar to this Committee, involves a program that started off
to provide for terminal modernization at 170 sites nationwide,
for a cost of about $940 million. As the program developed, FAA
found that it had funding and installation problems. It was
forced to reassess the program. Ultimately, when the cost
appeared to approach $2 billion, the program was cut to install
that modernization equipment at 50 more sites. Ultimately, that
in fact was reduced to 47, and the cost now is well in excess
of $1 billion for a much smaller and less capable system.
That doesn't also include the cost of Common ARTS, which
was the controlling system then in place and which STARS was
intended to replace. That system had to be updated and
modernized at a number of other locations in order to provide
those locations with the capability needed, when in fact those
locations had been anticipated to receive STARS but ultimately
were denied that capability.
FTI is another example, sir, which my office has studied.
This is the FAA's telecommunication initiative. It has been re-
baselined. Its cost and schedule time lines have been extended.
Our current assessment shows that FTI is still on a problem
track; it has FAA's full attention, however, but the schedule
has been extended. The importance of FTI as a platform for
NextGen accommodation can't be overstated. We are carefully
watching FTI and we have a current assessment of FAA's remedial
actions in progress.[The witness added the following subsequent
to the hearing: As we note in our testimony, FAA's proposal
provides 1 year for the new board to be appointed and reach
agreement on a fee structure and fee levels, and for FAA to
implement a billing system based on the fee structure. This is
ambitious even if FAA employs a contractor. FAA has a study
underway to examine how a billing system could be set-up, but
we have not reviewed it. We think just getting the board up and
running will be more time-consuming than FAA's proposal
suggests.]
Mr. Costello. I thank you.
At this time, the Chair recognizes the gentleman from
Washington State, Mr. Larsen.
Mr. Larsen. Thank you, Mr. Chairman. Just a few questions
here before I think we are getting called to vote, having to do
with the fee collection process. I don't know if those
questions have been asked yet, but I hope not.
Mr. Elwell, the FAA's proposal will provide the FAA with
the authority to terminate, reduce or withhold non-emergency
services if a user fails to pay user fees. If you could
distinguish and provide examples of what would be emergency
services and what would be non-emergency services?
Mr. Elwell. Sir, I don't think that I am really qualified
to enumerate that. There is a hearing tomorrow, an ops and
safety hearing that is, Nick Sabatini and his shop will be
eminently qualified to answer that.
Mr. Larsen. Okay. Can you answer the question, if a user
believes there is an error and they are billed for a service
they did not actually receive, what sort of appeal process does
the FAA envision having?
Mr. Elwell. The appeal process I believe is in the language
of the bill. I do not have the tenets of that memorized. Again,
I feel like I am not answering any of your questions. I
apologize. I would be happy to get that for you.
Mr. Larsen. I feel that way, too.
[Laughter.]
Mr. Elwell. I am sorry, sir. But there is built in language
on the appeal process. And we anticipate that, especially in
the early stages, to be part of the growing pains of a brand
new system. But there is an appeal process built in.
Mr. Larsen. We have asked Dr. Dillingham this question, I
think, but I would like to ask you this question. Has the FAA
analyzed the long-term effects of the user fee proposal on the
growth of various aviation users, such as air taxis or business
or general aviation? Have you looked at that and are you taking
that into account, the results of those forecasts into account?
Mr. Elwell. Again, as I said before, clearly the most
dramatic change in payment is the GA community, because they
were the most dramatic difference in what they are currently
paying versus the costs they impose. While we didn't do a
structured or detailed analysis of the effects that this would
have going forward, we did feel an examination of what the tax
means as a percent of operating costs that it was not as
substantial as the recent doubling of the cost of gas over the
past five years, which as I said before, did not demonstrate a
significant reduction in activity.
So I am not sure what you mean by long-term. But we don't
have a study, per se.
Mr. Larsen. I asked a question earlier of Mr. Scovel about
the estimate of the cost of the program, an FAA cost versus an
industry cost to implement Next Generation. I think the numbers
I saw were $15 billion to $22 billion, again a very wide range.
on the FAA's side, then a $14 billion to $20 billion range for
industry costs for implementation. Are those the numbers you
are operating under?
Mr. Elwell. Yes, sir, those are the estimates. Which I
would point out are actually very closely in line with the
estimates the Europeans are giving for SESAR.
Mr. Larsen. I personally don't have too much of a problem
with the idea of Next Generation. The name is not all that
descriptive, but the concepts behind it, satellite based and so
on. But in other committees that I sit on, we have a problem
with some other projects. It comes down to Robert Frost's poem,
a line from his poem that a man's reach should exceed his
grasp, or what's a heaven for. It seems in a lot of these
programs, our reach never quite gets to the grasp. That has
been the concern that we have seen in some other major spending
programs in other committees that I sit on, major spending
programs in this Committee and other Subcommittees we sit on.
It drives me to extreme caution, as well, when I see the long-
term, the 25 years of build-out, 18 to 25 years of build-out
and the cost of this program. Is the technology mature to do
this? Will it be mature by the time we expect it to be
implemented? The financing plan seems to be questionable as
well. At least we have a lot of questions about the financing
plan as well.
I just don't want this to turn into, I don't want to turn a
$25 billion venture into a $25 billion adventure.
Mr. Costello. I thank the gentleman. I thank our witnesses
on the first panel for their testimony today. We appreciate
your testimony and your attempts to answer the questions that
we have posed to you.
We will ask the second panel to come forward so we can
begin the testimony of the second panel. Again, thank you,
gentlemen.
While the second panel is coming forward, let me make some
introductions of the witnesses on our second panel. Mr. Edward
Faberman, who is the Executive Director of the Air Carrier
Association of America; Mr. Phil Boyer, the President of the
Aircraft Owners and Pilots Association; Mr. Jim May, President
and CEO of the Air Transport Association of America; Mr.
Stephen Alterman, President, Cargo Airline Association; Mr.
Matthew Zuccaro, President of the Helicopter Association
International; Mr. Ed Bolen, President and CEO of the National
Business Aviation Association; and Mr. Roger Cohen, President
of the Regional Airline Association.
Obviously this is a large panel. As I mentioned, we have a
caucus going on on the Democratic side. We are about to start
some votes, I am told, in the next 15 to 30 minutes. So I would
ask our witnesses to summarize their statements and to adhere
to the five minute rule, if they would. I would recognize Mr.
Faberman for his statement at this time.
TESTIMONY OF EDWARD P. FABERMAN, EXECUTIVE DIRECTOR, AIR
CARRIER ASSOCIATION OF AMERICA; PHIL BOYER, PRESIDENT, AIRCRAFT
OWNERS And PILOTS ASSOCIATION; JAMES C. MAY, PRESIDENT AND CEO,
AIR TRANSPORT ASSOCIATION OF AMERICA; STEPHEN A. ALTERMAN,
PRESIDENT, CARGO AIRLINE ASSOCIATION; MATTHEW ZUCCARO,
PRESIDENT, HELICOPTER ASSOCIATION INTERNATIONAL; ED BOLEN,
PRESIDENT AND CEO, NATIONAL BUSINESS AVIATION ASSOCIATION;
ROGER COHEN, PRESIDENT, REGIONAL AIRLINE ASSOCIATION
Mr. Faberman. Thank you and good afternoon.
I am glad to be here today to talk about the future of the
Nation's aviation system and propose funding mechanisms to
support that system. I am the Executive Director of the Air
Carriers Association, that continues to try to bring affordable
air fares to American travelers around the Country.
The Administration's financing proposal addresses a very
important issue, but also raises a number of significant
questions, including funding requirements should be fairly
assessed to all operators in the system and to the general
fund; congestion charges must not be allowed to further block
access and competition; passenger facility charges should not
automatically increase as those charges disproportionately
impact lower fares; distribution of access at capacity-
constrained airports like LaGuardia should promote competition
and must not further limit competition; and the Air
Transportation Safety Advisory Board must include a
representative of low-cost carriers.
It is essential that we create a first-rate system that
makes flying easier and safer. At the same time, we must
continue the dream of deregulation. This Committee has played
an active role in improving the Nation's aviation system and in
opening the doors to competition and travel options for
consumers.
We support setting modernization as a priority. It is
essential that the Nation's air traffic system be upgraded to
meet growing demand and ensure the smooth operation of the
system, while promoting maximum travel opportunities. We must
also understand that we are not operating in an environment
where costs are stable. Rather, costs, including fuel, security
and facility expenses, continue to increase. Additionally, the
cost for small airlines is higher at many airports because they
do not have dedicated facilities and often struggle to get the
facilities they need to operate.
The Department has taken steps to open skies around the
world. We want to see those skies now opened in this Country.
Let me just comment on a few of the issues that have been
raised this morning. We urge Congress to consider all possible
cost-cutting measures and to take appropriate steps to enure
that all stakeholders fairly participate in funding the system.
The costs associated with these efforts cannot be borne by air
carriers alone. Since the Nation's air traffic system is a
national system that benefits travelers, communities,
manufacturers, the entire travel and tourism industry and
business expansion, general fund contributions must be at least
maintained at existing levels.
The proposal allows the FAA to increase fees on its own
initiative with very little oversight. Therefore, we cannot
endorse that approach. Congestion fees must apply to all
operators who use the Nation's largest and most congested
airports. The cost-based congestion charge in the proposal has
no restrictions and seems limitless. Any congestion charge the
FAA decides to issue should be imposed on those carriers
actually causing the congestion. We don't believe it is
appropriate to charge a small carrier or any operator with a
small number of flights at a particular airport the same
charges as those operating hundreds of flights.
Low-cost carriers are already blocked from many airports
and their operations are severely restricted in others. If
congestion charges are imposed on carriers with only a few
operations, it may close the door to access completely. As to
general aviation costs, we are not proposing that they be
significantly increased for less congested airports or that
aircraft at small, uncongested airports should face any new
charges.
Rather, at congested or closed airports, general aviation
aircraft should pay fees identical to those paid by carriers
operating full-size aircraft. The same applies for fees for
regional jets. For example, a regional jet flying between
LaGuardia and National Airport should not pay 20 percent less
of what a larger aircraft pays when that regional jet blocks
others from operating at those airports.
Currently, regional jets, VLJs and general aviation at
congested airports contribute equally to congestion but pay a
great deal less. PFCs cannot be analyzed in a vacuum because
they are not the only fees or costs the airlines must absorb.
Even though a small PFC increase might improve airport
facilities, increasing PFCs as proposed by some parties would
impact the ability to provide the low fares necessary to
generate system growth. It could also have a real impact on
travel, because many people will travel more frequently when
lower fares are available.
Congestion pricing, we believe we should consider it and
look at it. However, there are too many questions out there as
to whether it will promote, destroy or completely close
opportunities for growth by all sectors of the industry. I also
want to note that it is important that the Air Transportation
System Advisory Board include representatives of all in the
industry, including low-cost carriers.
We applaud the Committee for holding these hearings and we
are very anxious to work with the Committee and the
Administration to craft a bill that will effectively serve the
airline industry and consumers. Our dream is to create a high-
tech, safe and secure system that maximizes consumer choices
and ensures that low fares are available to all. The concerns
noted above, as well as those outlined by the Members of this
Committee, and other parties, must be thoroughly discussed and
significant revisions must be made before this proposal becomes
a reality. This is only step one.
Thank you.
Mr. Costello. Thank you. The Chair recognizes Mr. Boyer.
Mr. Boyer. Mr. Chairman, thank you.
As you know, I am President of the Aircraft Owners and
Pilots Association, probably the first user group to sit here
at the table. We have talked a lot about the effect of this
bill on the general aviation community.
I represent 410,000 of those pilots. That is more than two-
third of the Nation's pilots and aircraft owners. And they use
their planes, in the main, like you use a personal automobile,
for business, personal travel. We are talking the average type
plan, a single engine, piston airplane.
The Chairman mentioned his number of years on this
Committee. I have sat on this side of the table for about six
years shy of the number of years you have, Chairman Oberstar. I
have never seen such a distortion at a reauthorization hearing
in all my years as this one here. We are manufacturing a
crisis, a crisis about a Next Generation system, a crisis about
funding. Where is the crisis? I would ask you to look at that
very closely.
But let me go on record. Status quo, to our organization,
to our pilots, to our Members, is not an option. We don't want
to just renew what we had exactly. But if we could get user
fees off the table we could begin a dialogue on many of the
things all of us here and the panel before me, and others you
have heard from agree on. Next Generation system and all kinds
of other things, including, perhaps, the kind of excise taxes
that are paid. Because as you know, Mr. Chairman, we have
addressed those before. We have raised them, we have changed
the configuration, et cetera. All those things are possible.
In business we always ask, what problem are we trying to
solve? I would say there are various answers from whoever you
ask that question of. The Administration, we haven't talked
about it yet. But they want to cut back on the general taxpayer
fund contribution to the system. The airlines, in spite of the
huge Government bailout that they have been given in the last
few years, wants to cut back on the taxes that their
passengers, not the airlines themselves, but their passengers
pay to ride the system. And the FAA, unfortunately, it wants to
get out from under the Government, the Congressional control
that has served that agency very well for many, many years.
The Next Generation Air Transportation System, for heaven's
sake, what a name to give to something. Obviously it is trying
to sell you this crisis. Oh, we have got to do this now, we
have got to do it to get things ready. But they have not
determined the needs yet. They have no shopping list yet. It
has not been priced out. Sitting next to me, my counterpart, is
Mr. May. We agree on a lot more than you might think we might
agree about on this proposal. But the one thing I think we
agree on is we do need a Next Generation system. He and I co-
chair the industry institute that handles the JPDO decision-
making, the input.
At this moment, neither one of us, I would maintain, could
spell out the technologies that are going to be burdens to his
operators and my operators, the price of those technologies,
nor could we put a price on what the ground base and the FAA
has to pay.
My concern, and once again, getting user fees off the
table, is get them out of here, and then we can get on with the
dialogue. It is the camel's nose under the tent. Wherever you
look in the world, remember, Jim would claim and the FAA would
claim, well, these are primarily for the airlines. We say once
they start at one segment of aviation, there is what I would
call the trickle-down effect. Eventually, it gets all the way
to the small operator flying VFR.
In this proposal, there are a lot of catch phrases and
carefully worded sentences: GA will pay primarily through the
fuel tax. Primarily. There is congestion pricing in this bill,
user fees for using the large air space considerations that we
call Class B. A lot of certification charges, also.
How would that affect users? Well, you asked questions of
the last panel about the foreign models. I got an e-mail from
an old friend from Australia just last week. When I was
Chairman of the CAA, their civil aeronautics authority, I
accepted the government's assurance that the user pays would
put pressure on to reduce costs. The assurance was wrong. We
now have user pays, general aviation is almost destroyed and
there has been no real pressure on the bureaucracy to reduce
costs.
The commercialization of their equivalent of FAA and their
equivalent of our air traffic organization has been a disaster
for GA in Australia. I believe we will have the same happen in
the United States if it goes ahead. And this was from somebody
who tried to sell me on user fees 10 years ago. It is pretty
plain and simple, when you look at the figures from their own
government, a 28 percent decline in general aviation.
Congressional oversight, we have talked about it, another
catch phrase, offsetting collections. Look that up carefully.
It is one appropriation that then goes outside of Congress'
control. You have served us very, very well. I do not know that
we will be as well served by an Air Transportation Advisory
Board. Once again, Mr. May, to my left here, even agrees, as I
have heard his recent statements after seeing the proposal,
that it doesn't give the airlines enough input into how the
money will be spent.
The huge gas tax increase, my gosh, I can't tell you how
painful that will be, and I don't have to, because the Members
have probably been writing you and telling you exactly what
they think. From 19.4 cents to 70.1 cents? We should have been
having these hearings every year and slowly graduating that
tax. I have never heard of an increase that huge at one
particular time.
Then you heard it from Dan Elwell, the Administrator, who
says less than 5 percent of the cost of operating a plane, it
is not a burden on pilots. Well, all you have to do is read
some of those letters. Here is what one of our Members say. I
am not going to belabor this tax increase, but let's look how
it falls graphically, 3.4 four times for piston aircraft, 3.33
times for jet aircraft.
But what about the other side of the coin? The legacy
airlines, a huge savings, and the low-cost airlines, a savings
also. Here is the table, but you know, the numbers that we
had--I am sorry we spent the money, we used a consultant. And
he came up with almost the same numbers you heard from this
first panel. We are a billion dollars off, but what is that
among friends. And that is, plenty of money here for the
operations. Let's not forget that general fund contribution.
Let's remember that the Administration would like to lower it
to 18 percent and then even lower.
Here are the general fund contributions of various other
things that benefit the general public. And as you can see,
aviation right now is the lowest.
You have heard it on airports, all I want to do is once
again repeat, let's get user fees off the table and as Mr.
Duncan said, we can then have the dialogue we have been having
about how to get a meaningful reauthorization. Thank you.
Mr. Costello. The Chair thanks the gentleman and recognizes
Mr. May.
Let me mention that there is a vote going on on the Floor,
a series of votes. We will leave from here to go vote. My
understanding is we will have about 45 minutes to an hour. We
have four or five votes on the Floor with a motion to recommit.
So I would announce that the Chair would put everyone on
notice that we will be back here in one hour or after the last
vote.
Mr. Oberstar. Mr. Chairman, I can't help noticing Mr.
Boyer's comment that he and Mr. May are close on--I will be
worried if you get any closer.
[Laughter.]
Mr. Costello. The Chair recognizes Mr. May.
Mr. May. Thank you, Mr. Chairman, and thank you, Chairman
Oberstar, for your observation as well.
I am pleased to be here today on behalf of more than half a
million passenger and cargo airline employees, three-quarters
of a billion passengers who fly every year and the millions who
ship goods daily to all parts of the world. You have an
extensive written statement, I will truncate my oral statement
and just hit a quick summary.
I think there is a need to modernize the air traffic
control system and implement NextGen. As Phil has indicated, he
and I agree on that point. At some point along the way, this
Committee has to make a determination on the funding structure
of that particular system. I would remind you that in 1970 when
it was first established by Congress, it was done on the basis
of user pays and cost-based financing. So I think we have to
find a way to balance that cost recovery opportunity that goes
on.
Today's system is shortchanging our future, and I am
referring to the air traffic control system. It uses 1950s
architecture that is ground-based, finite, point to point
routings, inefficiencies. I don't think it has the ability to
be scaled for new growth. And new growth is exactly what we are
going to have. In 1970, when that Trust Fund was created, there
were about 2,500 commercial airliners in the system of all
sizes. At the time, there were about 1,800 corporate aircraft
using that system.
Today, the numbers are 8,000 for our friends on the
commercial side and 17,000 and growing, 18,000 corporate
aircraft. I am referring now specifically to turbine, high-
performance aircraft. The FAA projects, and I think they are
accurate, that we are going to go from three-quarters of a
billion to a billion passengers a year enplaned by 2015. Today
there are about 45,000 IFR operations managed by our air
traffic controllers and the FAA every single day, 45,000. That
is going to jump to 62,000 in the next 10 years.
On top of that, we are going to have another 10,000 VLJs
come into the system over that period of time. You will see a
snapshot of some of the traffic taken from just a couple of
days ago.
The point I am trying to make is that there is huge demand
growing, the system we have cannot be scaled to accommodate
that demand. The consequence of all of that is going to be
delay. We have had some very significant weather-related delays
this winter. We are going to have more significant weather
delays in convective weather in the summer. We have projections
from a man I think most admire, Russ Chew, indicating that we
are looking at some 62 percent over 2004 levels of delay coming
over the next 10 years, if we don't do something to change this
system.
I don't disagree, actually, with Phil that we don't have a
good game plan going forward as to what that system ought to
look like. I do think that we are looking at somewhere in the
range of $15 billion to $20 billion to put a new system
together. I do think there is an imperative that we get that
done and that we have an appropriate funding mechanism for
making that happen. The consequences are particularly severe.
Now, the good news is, we have these systems going in
around the world. There are a lot of countries, unfortunately,
that are ahead of the United States in establishing Next
Generation systems: GPS, satellite-driven, using technologies
like ADS-B where you transfer the intelligence of the system to
the cockpit of the aircraft. But that takes me to the second
part, which means, we have an avionics change coming, and I
think those numbers are reasonably accurate that have been
quoted this morning about the cost to airlines being somewhere
between $18 billion and $20 billion for equipage.
So I think that lost in the maelstrom of debate over the
issue of user fees, i.e., cost recovery as opposed to cost
allocation, is the fact that we have to find a way to pay for
this system. I have advocated that it needs to be a four-part
funding system. I think one part of it is some kind of a tax on
the users of the system, whether it is an excise tax or whether
it is a repeat of what we have today.
But it has to be a balanced formula, because today airlines
are paying 94 percent of all the dollars that are going into
the Trust Fund. And you may choose to excoriate the idea of a
user fee. But I certainly hope you won't choose to excoriate
the reality that we are paying the vast majority of the dollars
into that system today and from an equity basis that needs to
be rebalanced. I think the best way to rebalance it, regardless
of the recovery mechanisms, is to do it in accordance with the
use or the demand that is being placed on that system. Only
fairness.
Mr. Costello. I thank the gentleman, and we will announce
that the Subcommittee will recess until 1:45 or until after the
last vote, which I am told should take most of the hour.
[Recess.]
Mr. Costello. The Subcommittee hearing will resume. We had
obviously more votes than anyone anticipated, and it took
longer than anyone anticipated.
But I will say that Chairman, the former Chairman of the
Subcommittee, Jimmy Duncan, just reminded me on my way over, I
said, I have witnesses that have been waiting for a long time,
and he said, well, tell them not to feel too bad, I had six or
seven CEOs of airlines waiting one day and we had 24 votes in a
row and we had to cancel and bring them back the next day.
Fortunately we did not have to do that.
Let me move on the next witness and recognize the President
of the Cargo Airline Association, Stephen Alterman.
Mr. Alterman. Thanks, Mr. Chairman. My name is Steve
Alterman and I am President of the Cargo Airline Association.
Although we are an integral part of the air transportation
community, the cargo segment is unique. In order to serve our
worldwide customers and to provide them with time definite
services, a large percentage of our flights are during the
night-time hours, thus enabling us to offer expedited delivery
throughout the world. We are also one of the fastest-growing
segments of the commercial aviation marketplace, with growth
rates of 3.1 percent domestically and over 6 percent
internationally expected over the next decade.
In order to provide the service that our shippers in the
world economy demand, we are dependent on a modern air traffic
system. We simply cannot afford to continue to manage traffic
with technology that was designed in the first instance to
fight World War II. We must build a system using the technology
and procedures necessary to address the shortfalls and capacity
that will certainly occur. The modernization of our system must
therefore be the major priority in the ongoing FAA
reauthorization effort.
And modernization of the system is critical for reasons
other than simply addressing future capacity. Operational
procedures using satellite-based technology will yield more
efficient operations resulting in less noise and less fuel
burn, thereby reducing aircraft engine emissions. The
environmental benefits cannot be overlooked. Nor can the
potential safety enhancements that will result with the
provision of better and more timely information to both pilots
and controllers.
Finally, it is crucially important that these steps to
modernize be taken now. We cannot simply wait any longer.
Capacity will overwhelm us.
With respect to the FAA financing proposal, it was issue
don February 14th, 2007 and dealt primarily with the financing
element of the system. Unfortunately from the cargo airline
perspective, it actually created more questions than it
provided answers. While the FAA has made significant strides in
the past few months, especially in the area of the decision to
use ADS-B technology, we still do not know the details of the
Next Generation plan, and until the details of this plan are
known, it is difficult to assess the funding required. Yet the
FAA proposal focuses primarily on the funding element.
Before moving to completely overhaul the system that has
provided the basis for the FAA financing for decades, it is
necessarily to more completely analyze the requirements of the
system and how those requirements impact the resources
necessary. In our opinion, the questions that must be asked and
answered are: what is the precise nature and associated cost of
the Next Generation system; what are the cost savings the FAA
will realize from implementing the modernized system; will the
current system provide the funding that is necessary; what are
the costs and benefits to the user community; and should this
system be purchased or perhaps leased to allow flexibility by
the agency.
Even if it is determined after this analysis that the
current excise tax system must be completely overhauled, we
cannot support the plan envisioned by the FAA proposal where
the FAA is given virtually unfettered authority to set the
level and structure of fees at will with little or no
Congressional oversight and no provisions for judicial review.
Such authority would clearly eliminate any incentive for the
FAA to cut costs or restrain future cost increases since feels
could always be raised to cover unnecessary agency spending.
But even more importantly, it appears that the user fee
system envisioned by the FAA proposal will require a
complicated and costly bureaucracy simply to assess and collect
the fees. In an era of limited resources, care should be taken
to ensure that to the maximum extent possible the funds
generated are actually spent to improve the system. The added
cost of establishing and maintaining a bureaucracy juts to
assess and collect the fees simply can't be justified.
But whatever the eventual structure of the finance, we urge
the following principles and considerations should be
paramount. First, the U.S. aviation system is a national asset
that benefits all citizens and drives the Nation's economy. The
general fund contribution should reflect that fact.
Historically it has been in excess of 20 percent and we urge
that it not go down from there.
Second, whatever funding mechanism is ultimately decided
upon, Congress should ensure that industry funding obligations
are fairly allocated. As a basic principle, no industry segment
should be forced to subsidize any other industry segment. From
our perspective in the all cargo industry, where under the
current system, we pay a 6.25 percent airway bill tax plus a
4.3 cent per gallon fuel tax, studies indicate that our
industry segment pays somewhat more than 100 percent of our
system use. This is before taking into account that we fly
mostly at night.
While we don't expect any relief for that portion of the
system that exceeds 100 percent, neither should we be expected
to pay more than our current share in order to make up for the
shortfall in other industry segments. This result can be
accomplished by simply retaining the current funding mechanism
for the air transportation of cargo or by ensuring that any new
system does not impact our industry adversely.
Finally, I will wrap up, we strongly believe that Congress
should support the funding necessary for continued research and
development. It is today's research and development that
provides tomorrow's products for the NextGen system. We can't
overlook the R&D segment.
Thank you very much. I will be happy to answer any
questions.
Mr. Costello. We thank you very much.
Mr. Zuccaro?
Mr. Zuccaro. Good morning, Mr. Chairman. Thank you for the
opportunity to provide comments.
Rather than repeat the facts and figures and information
you have probably heard already, I would like to focus on the
uniqueness of the helicopter industry and its environment. HAI
is a not-for-profit professional trade association of over
2,600 members, inclusive of 1,400 companies and organizations.
Unlike many other trade associations, operations conducted by
HAI members are not limited to one type of specific flying or
one purpose. HAI members operate helicopters across a wide
spectrum of uses, such as on-demand charter, commercial
utility, corporate, law enforcement, emergency service,
agriculture, as well as news gathering and private use. It is
my sincere belief that the proposed FAA funding program, if
enacted, will have an extremely detrimental economic impact on
HAI members and will in fact constrain or eliminate some of
these operations.
The current FAA funding methodology can meet the future
operational and developmental needs of the FAA inclusive of the
NextGen initiative, which HAI actively supports and promotes.
This is generally not in dispute.
Almost all segments of the aviation community appear to be
unanimous in their strong opposition to the Administration's
funding proposal, the notable exception being the airlines. How
can one support a proposed funding program that significantly
reduces the cost to a high use entity such as the airlines and
they place the highest demands on the system and then
dramatically increase the cost to other segments of the
industry, such as the helicopter community, whose utilization
of the system is generally incidental with little or no impact.
All of this being done with the stated need to fund NextGen
as the stated purpose, whose very makeup, technology, benefits
and costs are not even yet known. The icing on the cake is the
fact that the actual revenue to the FAA under the proposed
funding program will be reduced by $600 million in the first
year alone.
Consider this: currently some HAI members that are seeking
initial FAA certification as commercial operators who are
requesting similar FAA services are being advised that they can
expect a wait of 18 months to 2 years for an initial
appointment with an FAA representative. If this is the level of
service under the current funding program, one can only imagine
what it would be if the FAA reduces its annual income by $600
million.
It is important to note that the majority of HAI members
are small businessmen and women who operate in excess of 5,100
helicopters and fly more than 2.6 million hours per year. The
vast majority of these operations are actually conducted at
private heliports and facilities in remote locations without
utilizing the services of FAA air traffic control or the need
to operate to and from airports. In fact, the very nature and
capability of a helicopter, in conjunction with the prime
benefit of direct, point to point transportation, actually
eliminates the operational need and desire to operate to and
from airports. This has been further enhanced by such industry
initiatives as privately funded point in space, off-airport
instrument approaches.
Historically, the helicopter industry has had to finance
its own infrastructure with no Federal funding or support,
inclusive of off-airport operation and maintenance bases,
heliports, communications networks, and instrument approach
procedures. This is due to the fact that the missions
performed, operational altitudes, and locations of helicopter
operations are normally outside the reach of the FAA ATC
service area and the airport infrastructure. Some examples of
this are the offshore operations in the Gulf of Mexico where
over 650 helicopters support oil exploration and production,
where helicopters have spent untold millions of dollars
providing their own infrastructure, since they cannot talk to
or be seen by the FAA air traffic control system. Similar
situations can be found in hospital-based EMS helicopters that
operate in remote rural areas where they accomplish their life-
savings missions, utility helicopters which provide services on
behalf of the greater good, such as firefighting, aerial
application, logging, power line installation and maintenance.
Also corporate operators serving the off-airport needs of the
business community.
I hope you will agree that the helicopter community places
the least demand on the air traffic control system and the
airport system. In fact, the helicopter community is actually
assisting the FAA in solving the problems of airport and air
space congestion and the lack of capacity. We do that by
removing from the system those passengers and those flights
that would otherwise be flown in airplanes to airports and
diverting them to off-airport, non-ATC environments. Utilizing
advanced technology, helicopters have been able to provide off-
airport city center to city center transportation, thereby
further creating new capacity at congested airports. When one
considers this situation, maybe some thought should be given to
the FAA compensating the helicopter community for services
rendered.
HAI and its members are supportive of the NextGen
initiative, and when requested to support such initiatives, the
helicopter community has already stepped up to the plate. Last
year, HAI and its members formed a partnership with the FAA via
an ADS-B memorandum of agreement, which facilitated the
installation of ADS-B technology in conjunction with enhanced
weather reporting and communications in the Gulf of Mexico.
As part of their commitment to assist the FAA in the first
phase of implementing ADS-B into the national airspace system,
HAI members are providing in-kind service valued in excess of
$100 million to the project. This includes no-cost helicopter
transportation for the FAA staff and related project personnel
to the platforms in the Gulf of Mexico where the equipment will
be installed. These flights are currently taking place as I
speak. No-cost space for the equipment on the platforms and our
commitment to equip with the proper avionics.
It is most interesting to note that although the helicopter
industry is the only industry providing in-kind service and
partnered with the FAA in this initiative, other airspace
users, such as the airlines, will also reap the benefits of the
new ADS-B system in the Gulf of Mexico once it is installed.
With the above in mind, it would seem appropriate that the
helicopter community should be the one segment of the aviation
community that has the least economic impact on it. To do
otherwise would be like charging a farm tractor that only
leaves the farm once a month to travel on a public road a short
distance to go to another farm the same highway tax as a long-
haul tractor trailer.
The current funding system has been tested and proven. From
a conceptual point, as a thought, the majority of the funds
collected from helicopter operators should not be assigned to
runway and airport development. Instead, these funds should be
considered in the utilization of funding a nationwide system of
heliprots for the helicopter industry.
The current funding system, as I mentioned, is not yet
broken. I think we should leave it in place. To replace it with
something that has no logic, is widely opposed, will increase
overall costs and has unknown results in terms of efficiency,
fairness and productivity, would be counterproductive.
I also would mention as a closing remark that helicopters
should be considered as a separate aircraft category and not
put in the same category as any airplane category that is
currently being considered.
With that, HAI and its members stand ready to work with
you, the Committee, the FAA and the stakeholders to come up
with an equitable funding system that will provide a safe,
appropriate, efficient operating environment for all segments
of the aviation community. Thank you for the opportunity to
make these comments.
Mr. Costello. Mr. Zuccaro, thank you very much.
The Chair recognizes Mr. Ed Bolen, the President and CEO of
the National Business Aviation Association.
Mr. Bolen. Thank you, Mr. Chairman. It is an honor to be
here representing the National Business Aviation Association
today.
As you know, and the others on this Committee know,
business aviation is actually an FAA-defined term. Business
aviation is the use of any general aviation aircraft, piston or
turbine, for a business purpose. A number of piston operators,
over 50 percent, according to AOPA, use their single-engine
pistons for business purposes; twin-engine pistons and
turboprops are used almost exclusively for that.
So when you really look at the general aviation aircraft
fleet being used for a business purpose, we have a slide, I
don't know if we will be able to get that up or not. But it
basically shows that the fleet is primarily 85 percent piston
twins, turboprops and entry level turbofans. The kinds of
companies that use these airplanes are as you would expect,
small and mid-size companies primarily, again 85 percent of our
membership. A typical member would be Richard Schein, a second
generation owner of a recycling company in upstate New York
that uses a twin engine Mitsubishi MU2 to go about expanding
their work.
Mr. Chairman, we all are here today to ostensibly talk
about modernization. But for those of us who were here 10 years
ago, there is a strong sense of deja vu. After all, it was the
last time that we had a user fee debate that the Nation's
biggest airlines proposed a user fee formula that would have
shifted $600 million of their costs onto what they assumed was
their competitor.
But more importantly, it would have, as one senior
executive CEO said at the time, given the airlines exclusive
control over the ATC system. We want to make sure that does not
happen today.
The FAA has proposed what they call a Next Generation
financing system. And the FAA has done a lot of talking about
the need to modernize. Our concern as we look at the bill is
that when it comes to Next Generation, FAA is talking the talk
but they are not walking the walk. This bill that they have put
forward, as you know, cuts FAA funding by $600 million. It caps
the general fund contribution below today's levels and takes it
down in the future. It diverts money that could be used for
modernization, the towers, runway expansions, new technologies,
and uses it to create a bureaucracy. It allows the FAA to go
into debt, and it fails to provide a modernization time line
and cost schedule.
Now, Mr. Chairman, the general aviation community believes
strongly in the need to modernize the system, because expanding
capacity is necessary for our very survival. Every time there
is congested airspace or congested airports, it is general
aviation that gets squeezed out. You know this from Illinois,
where we saw Chicago Midway, it was a great general aviation
airport, then started attracting commercial service and we were
pushed to secondary and tertiary airports. We have seen that
repeated in Fort Lauderdale, San Jose, Manchester, New
Hampshire. So expanding the capacity of the system is
fundamental to our survival.
Now, when we look at how to do that, we think it is pretty
straightforward and there are no easy answers. If someone wants
to lose weight, they basically have three choices: they can eat
less, exercise more or do a combination of those two. When we
look at additional funding for the Next Generation system, we
think that the FAA can try to look for cuts in non-essential,
non-safety programs. They can look for an increase in the
general fund contribution. We can increase taxes on aviation
users across the board. We can do some combination of those.
But what the FAA has proposed is some radical scheme that
moves us to user fees. I want to echo the comments of those who
have preceded me in saying, let's get that idea off the table,
so that collectively we as a community can work with you to
make the hard choices necessary to put us on the path toward
continued modernization of our air transportation system.
Thank you, Mr. Chairman.
Mr. Costello. We thank you, Mr. Bolen.
Our last witness for this panel is Mr. Roger Cohen, the
President of the Regional Airline Association.
Mr. Cohen. Thank you, Mr. Chairman, Members. I am Roger
Cohen.
For the past three months, I have had the honor of being
President of the Regional Airline Association. I would like to
just limit my remarks to those things that you have not heard
yet.
Without much fanfare and under the radar screen, America
has come to depend on regional airlines. Last year, we flew 158
million passengers. That is almost one out of every four
passengers in the United States. We are about 40 percent of the
commercial fleet and nearly 50 percent of the total departures
every day.
Just yesterday, I saw the figures that post-9/11, our
member airlines, in a very difficult environment, have added
18,000 jobs, 18,000 full-time jobs. Our network partners have
been forced to eliminate 87,000 jobs, about 23 percent of the
total work force. Most importantly, our regional airlines serve
some 650 communities across this Country. Here is the telling
point: 442 of those, 70 percent, are served exclusively by
regional airlines. In other words, if it were not for regional
carriers, those 442 communities would have no scheduled airline
service.
Preserving this network of safe, convenient, and affordable
regional airlines service is at the heart of RAA's views on the
financing proposal. It is our number one priority. I wanted to
clarify and answer to a question that was asked before, how
this proposal would impact the regional airlines. I must tell
you, we believe that the legislation before you would make air
travel less convenient and less affordable for millions of
Americans, particularly those who live in those 442 communities
whose service is exclusively provided by regional airlines.
Everything else you have heard today, we echo many of the
comments you have heard about modernization and working
collectively with the other stakeholders toward the Next
Generation system. There obviously is no disagreement on that.
But finally, at the end of a long day, but it is not an
afterthought, I just want to share with you one last thing. I
was a very young public relations representative working for
TWA covering the hearings in Congress when Congress deregulated
the airlines. Congress made a pledge to communities across this
Country that they would not be abandoned, that because of their
size, they would not lose all access to the national
transportation network. The Essential Air Service program was
created as part of that. Every Congress since then has
maintained that pledge. We would hope and trust that you
continue to recognize that pledge that was made to date, 140 of
those communities across the Country.
With that, thank you very much, Mr. Chairman.
Mr. Costello. We thank you, Mr. Cohen.
Mr. Boyer, you indicated in your testimony that nine out of
ten of your members would reduce or curtail their flying if the
fuel tax is raised to 70 cents. Can you tell us how you arrived
that at figure, nine out of ten?
Mr. Boyer. Actually about a year ago, once again, like you,
we were waiting for a long time for this proposal. So it was
supposed to be out last spring, and we decided when we started
to hear of a dramatic fuel tax increase possibly being in it,
we commissioned a study in conjunction with NBAA. We actually
segmented the turbine and piston powered airplanes. We did a
sliding scale that went from 25 cents, not knowing what it
would be, all the way up to $1. Then we asked questions on,
reduce your flying, curtail flying altogether. In the NBAA
example, we said, disband your corporate fleet, et cetera.
Our numbers came out actually 88 percent would reduce or
curtail their flying. Now, I am picking the largest of the
numbers. The curtail was down at about the 27, 28 percent
category. So it was a survey done of very statistically valid
size sample of our membership. Once again, in anticipation of a
proposal that came out about a year later.
Mr. Costello. I understand also that you are doing some
type of an analysis right now to take a look at similar charges
that are imposed on boats and motor vehicles. I would just
request that once the analysis is done that you make it
available to our Committee, if you would.
Mr. Boyer. We very definitely will. It should be completed
within about a week and a half or two weeks. It will address
the certification fees that are in for getting a license,
buying a plane and licensing it, and the charges that are in
the bill that we didn't talk about today. But they are
minuscule compared to what we are talking about at this panel.
Mr. Costello. Thank you.
Mr. May, you talked about a commitment and that you would
like to see a robust general fund contribution. As I have said
many times to I think everyone here testifying today, I just
wonder what your definition, what percentage should that robust
contribution from the general fund be?
Mr. May. Mr. Chairman, I think it is probably north of 20
percent. But I think the question that needs to be answered
first is, how much money are we looking to raise? What is the
formula for trying to raise that money? Are you going to have
some sort of a contribution by people who use the system? Are
you going to have bonding? If you are going to have bonding, it
has to be obviously under a lot better circumstances than are
proposed in the Administration's bill.
I happen to think that innovative financing is a very
worthwhile idea if done right, because there are some huge
capital expenditures that are foreseen by the FAA. We are
spending $2 billion a year, today, right now, on maintaining
this antiquated system. How much savings are you going to
generate out of that?
Then when you get down to that fourth leg of the equation,
how much do you then need for general fund? And what are the
policy considerations that attach to that?
Mr. Costello. The next question that I would ask is, from
the FAA's proposal for the user fees, it makes me a little
nervous and concerned that the FAA would have almost unilateral
authority to raise fees. Given their track record, and it has
been demonstrated, you heard from the earlier panel, both the
IG and the GAO, I have concerns that if human nature is if you
have a system where you can just spend whatever you decide to
spend and then generate the revenue to match what you are
spending, there is not an incentive for efficiency.
I just wonder if you have concerns about the FAA's ability
to, under their proposal, to be able to generate revenue as
their expenses go up?
Mr. May. Mr. Chairman, STARS, ERAM, WASS, FTI, $6 billion
in overruns. We absolutely have those concerns. We have had the
blank check conversation, if you will, with a number of people
in the Administration and Members of Congress up here. We have
looked, philosophically. We are paying 94 percent of the bill
right now. I would like to readjust that down the road, and I
would hope we would find some support for equity among users in
the system.
But at the end of the day, I am still going to be paying
the lion's share of the bill. It is in my absolute best
interest to assure that we are not giving anybody, FAA or
anybody else, a blank check to do what they need to do. That is
why I happen to think that governance is a critically important
subject also.
Mr. Costello. Last question about privatization. You have
indicated in your testimony and other conversations that you do
not necessarily support privatizing the air traffic control
system. Is that an accurate statement?
Mr. May. That is an accurate statement.
Mr. Costello. Do you support some type of, if not
privatization, a system similar to the Canadian system?
Mr. May. No, sir, I do not. What I have tried to suggest to
people is, look, this is a difficult subject to talk about. But
we have this massive job in front of us. There are a whole lot
of people that have a tendency to try and indicate how they
would like that job to be done, even though they are not part
of the process, necessarily.
The FAA has about 5 percent discretionary opportunity with
its AIP money. I think we both know what a major part of the
reason for that is. Every time the FAA tries to shut down or
consolidate operations, boom, a lot of our friends up here
object to that. Seriously. Phil did a heroic job on flight
service stations, trying to get them to go to a different
status. It was not an easy task, even though it was the right
thing to do.
So I think there needs to be some level of independent
thought and governance created, however that happens. I am not
advocating corporatization, privatization. But I think there
needs to be some level of independent authority that says, here
is what we need to do and we need to make the right decisions
and we need to think through. Because the FAA by itself has not
done a really spectacular job.
Mr. Costello. Thank you.
Mr. Alterman, you indicate in your testimony that the FAA's
proposal would require a complicated and costly bureaucracy. Do
you want to just give a brief follow-up and explanation?
Mr. Alterman. Yes, under the proposal, it looks to us,
anyway, that it would be not really very simple to figure out
who owes what and how to collect that money. An analogy I have
made before is that we all get solicitation letters from
charitable organizations asking for money. One of the first
questions I ask is, does all the money I contribute go to the
intended recipient, or am I going to be giving money to pay
somebody's salary and have 20 percent or more in administration
fees.
It is the same thing here. There are not unlimited funds.
Believe me, they are not unlimited funds. So the money we do
raise should go to the modernization effort and not to fund
another bureaucracy at the agency.
Mr. Costello. And as it stands today, we still do not know
what it would cost to administer the collection of these fees,
how the system would operate and what the costs would be. When
the Administrator was here, she indicated that it would be
contracted out. But there were not costs associated with
contracting out.
I thank you.
Mr. Zuccaro, you indicated that helicopters could help
with, and currently help with the congestion at some of our
airports. As you have seen and reviewed the FAA's proposal,
would helicopters receive any kind of incentives for easing the
problems with congestion at our airports?
Mr. Zuccaro. Not that we noted in the proposal. Right now
there are a number of elements. That is why I indicated what I
said, if we are talking in terms of fairness and equitability,
the money that is contributed by the helicopter operators
through whatever system, some thoughts should seriously be
given to develop that system that will allow that methodology
of city center to city center to further develop.
We would require FAA funding or governmental assistance in
developing that heliport network. Also the network of
instrument approaches that would be off-airport, that would not
require us to take up a slot, even in IFR weather. We currently
do that now. It is privately funded. The heliports are
privately funded. The approaches are privately funded. We are
doing everything we can to draw more traffic into off-airport
locations. With new technologies, such as the civil tilt-rotor,
with the potential to carry up to 70 passengers, city center to
city center, that is a significant off-take from the airport
infrastructure and the IFR infrastructure.
But we really don't see any recognition of the helicopter
industry in any of this. We are kind of lost in there. And we
are placed in a category with piston airplanes. We do not
operate, as I think I clearly indicated, like any airplane. Our
needs are different, our requirements are different. But the
good news is, our capabilities to help in the system off-
airport are much different than airplanes.
So now, we are not being addressed at all. that is what is
frustrating, quite frankly.
Mr. Costello. Mr. Bolen, you have pointed out that there
has never been an FAA modernization plan or program that has
failed for the lack of support from the Congress or lack of
funding from the Congress. You also point out that we may be
going down a slippery slope here as far as reducing
Congressional authority and oversight by implementing a user
fee system. I happen to believe that both of those statements
are correct. But I would ask you to elaborate.
Mr. Bolen. I think they are fairly straightforward. When
you look at the number of programs, and my friend, Jim May,
just announced a few of them, the thing that Congress showed
throughout all of those programs is a strong commitment to
Congress to funding them unless and until the FAA determined
they couldn't use those funds effectively.
The FAA has tried to say that the reason they can't
modernize is because Congress has not been providing stable and
predictable funding. That simply is not true. Even if you look
at their request this past year for the NextGen programs, and
there are two Next Generation programs in the current budget,
one is ADS-B and the other is the system-wide information
management system. The Administration asked for a collective
amount of $50 million for those. Congress provided $80 million.
Congress is consistently supportive of capacity enhancement
programs. They have not been the problem. They have provided
strong, necessary oversight. They have made the FAA
accountable, and that has made them better program managers. We
don't want to see that go away.
Mr. Costello. I thank you.
At this time the Chair would recognize the Ranking Member,
Mr. Petri.
Mr. Petri. Thank you very much, Mr. Chairman. I just have
one or two, maybe three or four questions, but not too many, I
hope.
Mr. Boyer, I apologize for having missed part of your
testimony. But the full statement is in the record. You
represent probably a majority of the pilots in the United
States who are licensed. And so you have to take a pretty broad
position. I don't know if you would be willing to address this
question or not, but you heard my colleague, Mr. Duncan,
talking about difference in charges for people who actually use
the system as opposed to don't fundamentally use the system. We
have a lot of people who are crop dusters or who are very much
recreational pilots, going around but not really having their
flights within the air traffic control system.
Do you have any suggestions as to how we could
differentiate between elements of the general aviation
community, or do you think one size fits all so far as the fuel
tax assessment actually makes sense?
Mr. Boyer. Once again, I think if we can get the most
onerous part of this bill out of the discussion, the user fee
part, I think this is excellent discussion material. We have
had long thoughts and actually suggested to the FAA in the two-
year period they were putting this together some various
categories. I don't mean to sound as if I have created this
answer for your question, but the market is changing. Now, once
again, you have a district that sees the most recreational side
of general aviation, once a year at the world's greatest air
adventure in Oshkosh. But all flying is not like that. Even
that event, which is primarily people who fly what I would call
below the radar screen, do have to use a control tower at that
event. It is boosted up.
We are going to a system that more and more requires air
traffic services, whether you just be a pleasure flyer. The
security restrictions in aviation, the more control, the
various classes of air space, the temporary flight
restrictions, the use of a transponder and now subsequent
devices that will be used in NextGen all require operating. So
it will be very hard to operate in the future as we did
yesterday, as Mr. Graves, who came in, does with his Piper Cub
in the middle of Missouri. But it will be very difficult to do
that as we move forward.
So we are going to have take that into account. But it is
something we would welcome the opportunity, already have put
some ideas on the table to begin to figure out, okay, what
segment uses more, uses less. It is still not going to be the
science that the FAA would claim they already have down, and
that our panel number one indicated may be right, may not be
right. I think we are all going to have to work together on
that.
Mr. Petri. Mr. May, I think you pointed out that in the
opinion of your organization, the existing system of paying
could stand some improvement. Could you give examples of
inequities and inefficiencies in the current system of funding
the air traffic control system?
Mr. May. Mr. Petri, I think the cost allocation exercise by
the FAA does as good a job of that as anything. If you take a
look at where the FAA is expending its resources and energy, we
account and commercial airlines account for probably somewhere
in the range of 68 to 70 percent of operations in the system.
We are paying for 94 percent of all the dollars that are going
into the Trust Fund. That is a direct allocation number.
So what we have suggested is, if you want to focus in on
that cost allocation, if you want to look at the other high
performance users of the system, and as I explained to my
friend, Mr. Boyer, back in April of 2005, I have no interest in
going after the piston aviation GA crowd. But if you look at
the high performance turbine operations, the net jets, the
charters, the privately owned, the corporately owned aircraft
that are in the same airspace that demand the same system, FAA
tells us 98 percent of them fly IFR, then I think it is a
matter of fairness and equity that if they are using 16 percent
of the system, which they are, and they are paying for 6
percent, that that number needs to be adjusted. I think this
Congress and this Committee, along with the Ways and Means
Committee, will have the task of doing that. I think it is a
matter of equity.
Mr. Petri. Thank you.
Just one last question, if I could, of Mr. Bolen. Could you
give us any sort of brief overview of what you feel can be
accomplished in the next three to five years so far as
improving the air traffic control system?
Mr. Bolen. First of all, I think we ought to make sure we
understand just how far we have come in the past couple of
years. The foundation clearly of going forward according to the
FAA, the Joint Planning and Development Office and everyone
else associated with NextGen is the automatic dependent
surveillance broadcast technology. That is a technology that
the general aviation community pushed to have a pilot program
in Alaska. The cargo carriers have done that in the Ohio
Valley. We feel that that technology is clearly at the
forefront of the modernization effort.
We have some questions related to certification and
implementation that need to be ironed out. But that is clearly
something that we can do.
Another example of the transformation that is already
underway is reduced vertical separation minimum. Two years ago,
we effectively doubled the amount of capacity in our en route
air space because of significant investments that were made
primarily by the general aviation community but also by the
commercial airlines in altimetry that allowed us to go from
2,000 foot spacing to 1,000 foot. When we continue to look
forward, ADS-B is clearly at the foundation. The System-Wide
Information Management program, or SWIM, is part of that. Then
we need to be about Phase 2 of the ERAM program. Those
technologies are really at the heart of the next system. And
when you look at what we think the cost of that is, either the
industry groups, the Joint Planning and Development Offices,
all of industry, the cost of modernizing the system for NextGen
is somewhere around $300 million to $1 billion per year.
To put that in perspective, that is about 3 to 8 percent of
the FAA's funding. It is an amount of money that we can all get
our arms around and we should be able to find a way to make
happen.
Mr. Costello. I thank the Ranking Member.
The Chair will recognize the gentleman from Illinois, Mr.
Lipinski.
Mr. Lipinski. Thank you, Mr. Chairman.
As we start out on looking at the FAA reauthorization and
specifically, the funding here, I only have one question. But
this question, a very broad one. Just to get a sense from all
of you, because I have heard a lot of and I have read in your
testimony a lot of ideas about what is wrong with the
Administration's proposal. Not that I am here defending the
proposal. But I would like to hear, probably starting with Mr.
May, what you would see as the general outlines of what you
think would be the most fair and the best way to fund. Where
should the funding come from, how exactly? Because there is a
lot of, understandably, problems that all of you have in
different parts of the Administration's proposal. But what do
you think should be done?
Mr. May. I will answer that as two questions. The biggest
concern we have with the proposal staying strictly with the
finance side of the proposal, is the subject that your
colleague Chairman Costello brought up a minute ago. It has to
do with cost and the lack of cost controls. It has the
potential to become a wide open funding mechanism, blank check,
whatever term you want to use. That is probably the single
biggest concern I have with this.
What I would like to see going forward is a funding system
that allocates revenue into that system in some fashion that is
tied to the use of that system. I understand that----
Mr. Lipinski. How do you----
Mr. May. I understand that the term user fee is nuclear in
this Committee, that you will be fighting with one another to
have the honor of playing taps at the funeral. But there has to
be some mechanism where you can allocate costs, a cost
allocated revenue system that can suggest that if I,
representing the commercial airlines business, United Airlines,
right on down the line, am using roughly 68 or 70 percent of
the overall cost of the ATO, then I ought not to have to pay
into the system more than what I use.
Mr. Lipinski. Let me focus down my question then on use and
how use is defined. Because that is another question that is
certainly out there for all kinds of different suggestions on
this one. Mr. Bolen, you had something?
Mr. Bolen. I was just going to follow up on that. You are
absolutely right. How you define use is fundamental to this
debate on one's fair share. What the big commercial airlines
have been promoting for a number of years here in the United
States is something that they have been promoting
internationally for decades. And that is that you look at all
airplanes the same, whether they have 3 passengers, 30
passengers or 300.
That idea of looking at all airplanes the same has been
rejected by every country around the world. It has been
rejected by the International Civil Aviation organization. We
keep hearing about the privatized places like Canada and
Australia. Even Canada says, it should be noted that from a
cost of service perspective, the majority of the infrastructure
and operating costs of the system are driven by commercial air
carriers operating large transport aircraft. You see,
everywhere in the world, they see the fallacy that all
airplanes are the same. They understand that the system costs
are driven by commercial carriers and their large aircraft
operating in a hub and spoke model. We understood this when we
created it in 1970, that the system was built by and for the
commercial airlines. And we have repeated understanding that
every time the financing has been extended, including the last
time in 1997, when changes were made to the formula, but they
weren't made to the concept.
Mr. Lipinski. If I can come back to, I want to let Mr. May
conclude here, because this isn't meant to be any kind of
statement on the definition of use that you use. I want to see
if anyone else has any comments on that definition, then I will
let Mr. May.
Mr. Boyer. Well, I hate to let Mr. May have the last word,
but I think the key, and your question is an excellent one
about how do we define use. How and when do you use the system
drives costs. Not a lot of airliners are taking off at midnight
or at 11:00 p.m., and that is a place where even Mr. Alterman
in his written testimony said, we primarily use the system
during a period that not a lot of airlines use it.
There are a lot of scheduling, and you have heard this,
when you look at the airline schedules, all departures in the
morning and late in the afternoon and sometimes during the
middle of the day you can shoot a cannon off through those
airports. What about the airlines that decide they are going to
abandon a hub, that the FAA has put a huge infrastructure in
the terminal radar environment, in the runway environment,
Nashville is a good example, St. Louis is a good example. It is
how and when you use the system, not just counting it.
And the last one is, in the news this week was the landing
of the 380 here in the United States, at a couple of our
airports. The Airbus 380 cost the Los Angeles Airport, using in
many cases Federal funds, $60 million to upgrade. At JFK, it is
$150 million. So these are costs in the system that the FAA is
not picking up when they call a blip is a blip or this was the
cost of flying IFR. There is quite a difference between when
you use the system, how you use the system and what you need
from the system, like Category 3 approaches, which are not used
by business aviation or general aviation, sophisticated
approach lighting systems, et cetera. It is an excellent
question.
Mr. Lipinski. If the Chairman will allow us to hear from
Mr. May.
Mr. May. I think this is a discussion, Congressman, that
can probably take most of the afternoon back and forth with a
lot of different views. I would suggest to you that what the
FAA has suggested as a measure is the distance flown in the
system as a variable. Because what we are talking about is use
of airspace, fundamentally, how much time do you spend in the
system, how far do you travel in that system, and then some
fixed component. I have a problem with the way the FAA did it
in this particular piece of legislation, but a fixed component
that relates to the number of operations or the use of
terminals. I think you can adjust, as Mr. Boyer has indicated,
by time of day, et cetera.
What I am trying to get at fundamentally is that if the FAA
has a cost allocation approach and the IG sat here this morning
and said it was sound, GAO sat here this morning and said it
was sound, if you got an accepted cost allocation study, then
you ought to apportion the cost of the ATO in some fashion back
to people who are using that system. You can call it whatever
you choose. I don't want to lead to corporatization or
privatization. But I think there is an equity issue involved
that says, if we are paying for 94 percent of all the costs of
the ATO and we are only using by Price Waterhouse generated
measurements that have been reinforced by the IG and the GAO,
if we are only using 68 percent, then we ought to find a way to
rebalance that equation.
Mr. Lipinski. Thank you. I know this discussion will
continue.
Mr. Costello. The Chair recognizes the gentleman from
Kansas, Mr. Moran.
Mr. Moran. Mr. Chairman, thank you very much.
Mr. Cohen, as I walked in you were talking about regional
airlines. Kansas of course is a State in which regional
airlines are awfully important.
I am interested in your just reminding me that, what
components of FAA reauthorization should I and others who care
about regional airlines and smaller airports be most concerned
about? What issues do you want to raise? And is there something
in the Administration's proposal that is particularly
troublesome to the regional airlines?
Mr. Cohen. Mr. Chairman, Mr. Moran, yes, there is quite a
bit that is troubling in the Administration's proposal. And I
would just point, a couple of weeks ago, the FAA gave everybody
in this room an illustration of various scenarios under which
the new system would change, how you would pay, what you would
pay today as opposed to what you pay tomorrow. The one that
struck me as the representative of the regional airlines is
that a CRJ from Minneapolis-St. Paul to Minot, North Dakota
would have to pay 36 percent more under the FAA's proposal. And
the next example they gave was that a 747 from Tokyo to Los
Angeles would pay 16 percent less.
I think that that same kind of calculus can be used
virtually around the Country at all of those communities, a
number of them in the middle of the Country, in Kansas, as you
know, a number of places. It is interesting that you mentioned
Kansas, because I had the pleasure of working for both Mr. May
at the Air Transport Association and Mr. Boyer at the Aircraft
Owners and Pilots Association. When I would work for AOPA and I
would go out to try and talk to a number of mayors and city
councilmen and State legislators about the value of their
general aviation airport, what they have told me repeatedly
over the last few years was the kind of great service that they
were getting to multiple hubs from their commercial airport
because of the regional aircraft that are serving them now. For
example, right now in Wichita, you can go to Chicago, you can
go to St. Louis, you can go to Denver. And there are multiple
choices, much better, more frequent service than there had been
previously.
So that is probably a long answer, but the question was
asked earlier, and I don't know if you were in the room, by Mr.
Coble, who asked the FAA how their proposal would impact
regional aircraft. He said, I believe, I don't want to
mischaracterize what he said, that it wouldn't harm them. And
that is just patently not true.
Mr. Moran. I know that this Subcommittee is going to have a
hearing on essential air service, or at least the topic of
essential air service is scheduled for April. I would invite
you to visit with me and make certain that we are well informed
of any issues that we need to pursue in regard to essential air
service. Kansas is another State that is very much dependent
upon that program.
Mr. Bolen or Mr. May or both of you, during the last FAA
reauthorization, GAO found that the major cost drivers of the
air traffic control system was the hub and spoke system. I know
Mr. Bolen just talked about that. Is that still true today? I
guess I just heard you say that what we started with a long
time ago was, I think Mr. Boyer was saying this, that what we
started with a long time ago was the hub and spoke system. The
system was designed based upon that plan. And my guess is that
not a lot has changed in regard to hub and spoke. Is that true?
Mr. Bolen. I think over the past 10 years, since this
particular Committee did a deep dive into FAA funding and
actually modified the taxes to reflect what was the current
environment, what we have seen over that time is that
commercial operations have grown faster than general aviation
operations, including general aviation turbine operations. And
that in addition to them growing, they have grown in hub
operations specifically.
That is why, and we have articulated a number of concerns
with the FAA's cost allocation study. But it is hard for us to
understand how it can be so radically different from what they
did in 1997, since it was understood that hub operations drove
costs then, there are more hub operations now, the relative
activity between commercial and general aviation shows more
growth on the commercial side.
And yet because they have gotten away from what is known as
the first, best approach to accost allocation and the second
best approach to cost allocation, and come up with their own
customized system, they have come up with a cost allocation
that shows general aviation owing much more this time around
than the last time. So that is really our concern, is it seems
to be at odds with good economic principles and with what we
know has happened in the market over the past 10 years.
Mr. Moran. When you describe what has happened, and my time
is expiring, but are the projections the same for general
aviation and commercial, as we look into the future, the same
kind of increasing use?
Mr. Bolen. I think there is a variable out there that has
been discussed that no one really seems to know. And that is
the impact of very light jets on the market. There are some who
have suggested that will facilitate a new business model known
as the air taxi market. And if that is successful, that could
eventually change some traffic patterns. We don't really know.
Jack Pelton, who you know is the President, Chairman and CEO of
Cessna, which since 1927 has built half of all general aviation
airplanes in the world, believes that there are maybe 500 very
light jets that will be delivered between now and four years
from today. We heard earlier, someone used a 10,000 figure.
Difficult to know what those numbers are.
I think the important thing is that the number of general
aviation airplanes has grown significantly since 1970, the mix
of hours flown between commercial and general aviation has if
anything become more dominated by commercial. The fundamental
reason for that, and it was stated earlier in the hearing, is
that a commercial airplane flies about 3,800 hours per year. A
general aviation turbine airplane flies about 370 hours per
year. In other words, for every commercial airplane, they are
flying about 10 times as many hours as general aviation. We
expect that to hold true with the very light jets as well.
Mr. Moran. Thank you, Mr. Chairman.
Mr. Costello. I thank you.
Mr. Bolen, just a quick question. You heard me, I think
earlier, ask Dr. Dillingham about looking at other countries. I
would ask you, in your capacity of looking at other countries,
do any countries that you know of assess fees according to
those who use the system? In other words, we talked about many
other countries that for general aviation they assess one fee
that is much lower, so it is not based on just how often you
use the system.
Mr. Bolen. Almost universally around the world, rates and
charges are based on aircraft weight and aircraft distance. In
some companies, if an aircraft gets below a certain weight,
they will go to a registration type fee. So there are two
different ways that are universally done. What we have said is
in the United States, we have a very good proxy for aircraft
weight and distance flown. That is called the fuel tax. We are
able to pay that without an administrative burden on either the
Government or industry. It is an ultra-efficient way to do it
and we think it should be continued.
Mr. Costello. Thank you.
The Chair recognizes the gentleman from Missouri, Mr.
Graves.
Mr. Graves. Thank you, Mr. Chairman, I appreciate it. I
have been here and there all day long today and I apologize for
missing a good part of the hearing today. As you are well
aware, I am very interested in this subject.
But I do have a couple of questions. One, the statement was
made earlier today by Mr. Dillingham with GAO, he stated that
cost overruns, when implemented in a new system by FAA in the
past, the cost overruns were the cause of a number of reasons,
including the lack of stakeholder input. My question is, how
many of your organizations were included in that process as
they were talking about this new air traffic control system and
obviously, the stakeholders, as he put it, there are people who
are going to be paying for it.
Mr. Bolen. Well, Congressman, I would simply say, from an
NBAA perspective, we have attended a number of briefings where
the FAA has told us what they are going to do or how they are
going to do it. We have always submitted comments and requested
additional meetings to follow up with them. To date, those have
not been, in most cases, answered. In the few cases where they
have been answered, the requests have been denied.
Mr. Alterman. One thing I can say for the FAA, as Mr. Bolen
indicated earlier, the cornerstone of the Next Generation
surveillance system will be a technology called ADS-B. We
started working on ADS-B about 11 years ago when we started to
look for an alternative to a radar-based collision avoidance
system. I think we were before our time, because we never got
that done, and we have a traditional TCAS in our aircraft.
What we discovered was that the technology involved, ADS-B,
had a whole host of other options to help the system. And we
have been working cooperatively with the FAA Safe Flight 21
office to help develop those, as has the general aviation
community in Alaska, with the Project Capstone that they had up
there. But I think the implementation of ADS-B technology
reduced the accident rate by approximately 42 percent, or
something around that number.
So not with respect to whatever proposal they have now, but
over the past decade, I have to say that the agency has worked
cooperative with industry on specific projects that will help
the NextGen system.
Mr. Boyer. The one thing I can tell you, using Steve's ADS-
B analogy, which we have been involved in, as you know in
Alaska for almost over a decade, I think the FAA lacks some
organization right now. The Committee should be aware that ADS-
B is the one technology of NextGen that everybody seems to be
talking about.
But on a fast track, because they are set up in silos for
program offices, they are fast tracking a rulemaking procedure
that will begin in September, they hope to have it out in
September, just to say, hey, we have this new technology out.
And there are still a significant number of unanswered
questions. We have been scrambling in our organization for
three weeks, meeting with various vendors, with the FAA and
with others.
So the FAA is set up in a way in which it is not integrated
over all paths. ADS-B could be a data link of the future, ADS-B
has to be integrated with collision avoidance systems in the
planes that fly in the Class Bravo airspace. These things are
not being looked at.
So this will probably cause a delay and an overrun unless
we get stakeholders even more involved in asking these
questions up front.
Mr. Zuccaro. I can put a little different perspective on it
from our standpoint, from the helicopter industry. We are
involved heavily in the ADS-B initiative. As I pointed out
previously, we had a situation in the Gulf of Mexico where for
over 40 years, you had 650 helicopters operating on a daily
basis, moving tens of thousands of people on and off platforms.
You had no ability to talk to the FAA, nor could they see you.
The operators had to create their own infrastructure.
Last year, we were able to negotiate with the FAA as a
partnership the installation of ADS-B into the Gulf of Mexico.
That is a complete turnaround from the past history of the
operating environment in the Gulf. The burden economically had
been historically on the operators completely to build their
own systems, because there was no national airspace system
extended out over the Gulf in the altitudes that they operated
in.
We have stepped up to the plate in working with the FAA by
contributing $100 million in in-kind services. We are committed
to the technology. But the unique aspect of this is the
advantage of ADS-B to the helicopter community is off-airport
environment, outside that normal environment. It is an area
such as this where we have nothing. We don't have
communications or weather or air traffic control surveillance
communications. It is to the EMS operator that is in a rural
area that has no services, because he is below the radar
screen, outside communications and not in an ATC environment.
We have to create that system for him, and ADS-B provides us
the best methodology to do that. So it is a safety enhancement
and an operational efficiency enhancement.
I will acknowledge freely that we sincerely appreciate the
Administrator's help and leadership in taking ADS-B to that
level within the helicopter community to recognize the safety
initiative and the operational information that it provides us.
But it is a flip-side coin. As was previously noted with the
question, how do you get an equitable system? You take our
segment of the industry. We do not operate in that environment.
We are paying for a system that builds runways and airports. We
don't runways and airports. We need heliports.
How do we get that equitably put into place? We don't mind
paying our fair share. But make sure it is fair and make sure
we get the benefit of the funds that we put in that reflect our
segment. We do operate at airports occasionally. And some of
the funds we pay absolutely and rightfully belong in the
support of those airports that we operate at. It is not an easy
question.
Mr. Alterman. One final point on what Mr. Boyer said. I
think it points up a problem. One of the things that we
mentioned in our testimony was, we don't seem to have the
definition of the system yet. We have components of the system.
And that is a real problem. We as an organization and as an all
cargo industry, have supported the development of ADS-B. But
before the commercial airlines start investing multi-billions
of dollars in the avionics to support that, we have to know
what the system looks like and the benefits to the industry
defined. We know that we have to do phase one, which is putting
in ground stations, and that will help GA more than the
commercial airlines. We don't have any problem with that. But
we have to do the research to understand and get the system so
that the air to air applications, where the real benefits occur
to the commercial airlines occur. We don't have that defined
yet.
So we are total supporters of ADS-B. We have worked on it
for over a decade now. But how it fits into the system and the
cost and benefits to everybody in that system have been poorly
defined. That is what makes everything so difficult. We don't
know what we are funding yet.
Mr. Graves. That is actually the best point of all, and I
see no reason why we need to put a funding system ahead of
something we don't even know quite yet what it is going to be.
Will the Chairman allow one more? And I have to ask this
half in jest, and it is to Mr. May. In light of the subject
matter, and talking about user fees and how we are going to
fund the system, I think it was in the Wall Street Journal
recently, the article about air carriers using highly
sophisticated software to fly through Europe, so that they
would miss user fees in certain countries. In fact, this one
airline was cited as, they used it to avoid about $146 million
worth of user fees in Europe.
I am just curious as to how that blends in with all this
talk of, if we are trying to avoid user fees in Europe, then
why on earth are we trying to implement them in the United
States?
Mr. May. Mr. Graves, sometimes you have to be able to
answer in half jest as well as ask the question.
Mr. Graves. I understand.
Mr. May. It brings a smile to my face.
Mr. Costello. I thank the gentleman from Missouri.
Let me in closing thank all of our witnesses here today.
Certain it was a longer day than you anticipated or we
anticipated your being here. But it has been very productive. I
think there is one thing that we all can, I think, agree on,
and that is that the FAA's proposal in particular for the user
fee system presents a lot of questions, answers that they have
not been able to put forth yet. It seems to me that if you are
going to radically change the current system that you need to
explain what your alternative is in detail, outline the cost,
the administrative cost as well as every other associated cost.
And you need to get out and sell the plan.
As I mentioned earlier, we were told last summer, in June,
that we would receive the FAA's proposal. Had we received it
then, it would have given us time to analyze and to ask and try
and spend some time on their proposal. Unfortunately, June
slipped to September and then September to the end of the year.
Then of course we received the proposal about 30 days ago.
Realistically, I don't know how we are going to be able to
write a reauthorization bill and I don't know how the FAA or
anyone else would expect us to implement this user fee system
as it has been presented. As the Administrator pointed out, we
do have a time problem. We have a short window here for us here
in the House to be able to mark a bill up, get it from the
Subcommittee to the Full Committee to the Floor, let alone what
our friends on the other side of the Capitol, the work that
they have to do and then get it to conference and get it to the
President.
So I think it has been said, and I will repeat it again,
Dr. Ehlers said that it was dead on arrival, Chairman Oberstar
said that the user fee system today, that he would like to give
it a proper burial. I think that it would be in our interest to
consider everything that is on the table, but to be realistic
and move on and address things that we can agree on and can
address.
So you have added to the debate today and we of course are
holding a hearing tomorrow on the operations and safety issues.
We will move on to hear from other stakeholders in upcoming
hearings.
We thank you for being here today. We thank you for your
testimony and the Subcommittee stands adjourned.
[Whereupon, at 4:00 p.m., the Subcommittee was adjourned.]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
HEARING ON A REVIEW OF FEDERAL AVIATION ADMINISTRATION OPERATIONAL AND
SAFETY PROGRAMS
----------
Thursday, March 22, 2007,
House of Representatives,
Committee on Transportation and Infrastructure,
Subcommittee on Aviation,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2167, Rayburn House Office Building, the Honorable Jerry
F. Costello [Chairman of the Subcommittee] presiding.
Mr. Costello. The Subcommittee will come to order. The
Chair would ask all Members, staff, and everyone in the room to
turn off their electronic devices or put them on vibrate.
Let me welcome our witnesses here, all of them. We have
three panels today and we will hear from the first panel very
shortly.
The Subcommittee is meeting today to hear testimony on a
review of the Federal Aviation Administration's operational and
safety programs. Today is an opportunity for the Subcommittee
to hear from various stakeholders and those involved in the
system their views, comments, and recommendations for the
reauthorization.
Let me say that the Chair will impose the same procedures
that we used yesterday at our hearing, since we have a number
of witnesses. I believe we have 11 witnesses to hear from
today. I hope we don't experience the number of roll call votes
that we had on the floor yesterday.
One is that the Chair will give an opening statement, will
call on the Ranking Member to give his opening statement or
comments, and then ask all of the Members to submit their
opening statements for the record.
Mr. Mica, I did not see you come in, but we certainly will
recognize you.
Let me begin by giving my opening statement.
I welcome everyone here to the third Subcommittee hearing
on the FAA's reauthorization. This hearing will provide a
general review of issues associated with the FAA's operational
and safety programs.
This hearing represents an opportunity for our panelists to
discuss issues that they believe this Committee should consider
in the FAA reauthorization. The first panel will include
testimony from the FAA's workforce, including the controllers,
represented by the National Air Traffic Controllers
Association; air traffic technicians and aviation inspectors,
represented by the Professional Airways System Specialist; and
other FAA professionals, represented by the American Federation
of State, County and Municipal Employees.
I have repeatedly stated that I am concerned about future
staffing levels for the FAA's controller and safety inspector
workforces. In particular, over the next 10 years,
approximately 70 percent of the FAA's nearly 15,000 air traffic
controllers will be eligible to retire. The FAA believes they
could lose more than 10,300 air traffic controllers by 2015 and
they 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.
There is no question that the FAA's imposition of pay and
work rules on the controllers' workforce has increased
retirements. According to NATCA, veteran controllers are
currently retiring at a rate of more than three per day since
the end of the fiscal year 2006.
It is clear that the current contract negotiation process
does not promote good faith negotiations and gives an unfair
advantage to the FAA. I am committed to fixing this grossly
unfair process during the FAA reauthorization bill.
In addition, it is not just NATCA that is affected by the
FAA's interpretation of its authority to impose pay and rule
works, it extends to the FAA's entire workforce. I look forward
to hearing from PASS and AFSCME on the status of their
respective contract negotiations with the FAA.
I am also concerned about the potential attrition in the
FAA safety inspector workforce. I am told that over one-third
of the FAA safety inspectors will be eligible to retire by the
year 2010, and I was informed this morning and given a chart
that, in fact, since the end of the last fiscal year in
September, that we have already lost 77 inspectors. It is an
alarming rate of 12 or 13 per month. So I am concerned about
the staffing levels for the safety inspector workforce.
Last year, the National Research Council reported that the
FAA lacks staffing standards for inspectors and recommended
that the FAA undertake a holistic approach to determine its
staffing needs. It is imperative that we make the 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.
Their carrier workforce is also well represented here by
the Air Line Pilots Association, the Association of Flight
Attendants, and the International Association of Machinists.
With the airlines largely back on track after September the
11th, it is time once again to turn our attention to the
workplace and safety issues. I look forward to hearing about
issues of concern to the pilots, flight attendants, and
mechanics.
On our third panel today, we will hear from a diverse
group, including a return visit from Dr. Dillingham of the
Government Accountability Office, who, of course, was here with
us yesterday and has been with us many times, to discuss issues
related to safety, accommodating new users in the airspace
system, airport congestion, and air traffic staffing and
training.
With that, I want to welcome all of our witnesses here
today, and I look forward to hearing their testimony.
Before I recognize the Ranking Member and the Ranking
Member of the Full Committee for statements and comments, I
would ask unanimous consent to allow two weeks for all Members
to revise and extend their remarks, and to permit the
submission of additional statements and materials by Members
and witnesses. Without objection, so ordered.
At this time, the Chair would recognize the Ranking Member
of the Full Committee, Mr. Mica, for his comment or statements.
Mr. Mica. Thank you. I will try to be brief. I commend you
and our Ranking Member, Mr. Petri, for conducting this series
of hearings which I think are vitally important to
reauthorization and some very critical questions on how we fund
a system for the future.
I think it is very important, too, that we have labor
involved in some of these discussions so that we can move
forward, and certainly labor I think is undoubtedly the largest
percentage of our costs. Capital costs are just a fraction of
what it does cost to run the system, so it is important that we
include them in this process.
I am also particularly pleased to be here today. Just a few
minutes ago I got a call from Secretary Peters and also learned
on the wire that the European Union Transport Commissioners
have approved the Open Skies Agreement, which is probably one
of the most historic events in international agreements that
the United States has ever engaged in relating to aviation. And
I think that is also important in regard to this hearing
because we have to have a system that will handle this
additional business at least on our side of the Atlantic, and
then the incredible potential this holds for expanding
employment and aviation industry, opening markets in
communities that have never had international service, and the
benefits to consumers, which are absolutely unprecedented. So
we will see lower prices, see more jobs, dramatic expansion of
air activity on the international side between both sides of
the Atlantic. So a pretty exciting day.
Yesterday, DOT announced the approval of Virgin America's
request, which I think is also historic because I think they
will inject a new level of competition that we have not seen
before. So some exciting things, but we have to have the system
available, ready to operate and meet the needs of the future
traffic that we will see dramatically expanded by these events.
With those quick comments, I am going to stay for a few
questions. I have read some of the testimony, but I thank you
again for this hearing and allowing me to participate.
Mr. Costello. The Chair thanks Mr. Mica for his comments
and the Chair recognizes the Ranking Member of the
Subcommittee, Mr. Petri, for his opening statement or comments.
Mr. Petri. Well, thank you very much, Mr. Chairman. I would
like to join you in welcoming the three panels that we have
here as witnesses today.
Today's hearing is addressing FAA's operational and safety
programs, and while the testimony will reflect a broad variety
of issues that Congress will be considering during this
reauthorization cycle, it is important to remember that we are
conducting this hearing at a time when America's aviation
system has been safer than at any other time in our Nation's
history.
This remarkable safety record is not an accident, it has
been achieved through sound policy and through continuous
oversight and, of course, we can't stop where we are, we must
continue to strive for further improvements.
So I look forward to learning more about the FAA's
operations and its safety programs and yield back the balance
of my time.
Mr. Costello. I thank the Ranking Member for his comments
Let me welcome our first panel of witnesses here today. As
we said, we have 11 witnesses that are here to testify, and
hopefully we will have all of you understand that we ask you to
summarize your testimony. We have, I know, a number of
questions and other Members who will be joining us.
Our first panel, let me introduce and welcome: Mr. Pat
Forrey, president of the National Air Traffic Controllers
Association; Mr. Tom Brantley, the President of the
Professional Airways Systems Specialists; Mr. Tom Waters,
President of American Federation of State, County and Municipal
Employees Local 3290.
Gentlemen, the Subcommittee welcomes you here this morning
and we would ask you to summarize your statements in five
minutes or less, if possible, and we will have questions for
you at that time.
The Chair recognizes Mr. Forrey for his opening statement.
TESTIMONY OF PAT FORREY, PRESIDENT, NATIONAL AIR TRAFFIC
CONTROLLERS ASSOCIATION; TOM BRANTLEY, PRESIDENT, PROFESSIONAL
AIRWAYS SYSTEMS SPECIALISTS (AFL-CIO); AND TOM WATERS,
PRESIDENT, AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL
EMPLOYEES (AFSCME) LOCAL 3290
Mr. Forrey. Thank you, Chairman Costello, Ranking Member
Mr. Petri, Mr. Mica. I would like to thank the Members of this
Committee for inviting me to testify today to review
operational issues and safety programs at the FAA.
On behalf of the 19,000 aviation safety-related
professionals that NATCA represents, I would like to praise
both Chairman Costello and Chairman Oberstar for recognizing an
urgent need to repair NATCA's current contract dispute with the
FAA and for risking their political capital in an attempt to
right the injustice that we unilaterally imposed upon aviation
safety professionals in July of 2005, as well as America's air
traffic controllers last September. You need to know that the
men and women charged with keeping the skies safe for the
flying public appreciate all that you do for them. Thank you
very much, sir.
What these men and women are asking Congress for is not
complicated. The workforce at the FAA simply wants a fair
collective bargaining process. We want a process that includes
the role for the agency, a role for Congress, and a role for an
experienced arbitrator when the two sides cannot come to an
agreement. Simply stated, we are looking for fairness.
I am here to tell you that for the men and women in control
towers, TRACONs, and en route centers across the Country, there
is considerable disillusionment, frustration, and distraction
due to the effects that these unilaterally imposed work rules
have had. The impacts of this situation are affecting the
safety margins of the system. Yet, despite having their rights
denied by the FAA, my membership continues to work as the
safety professionals that they are and hopes that a
congressional correction could be made that has already eluded
us to this date.
Currently, there are tens of thousands of FAA employees
working without a contract, and even though the FAA continually
makes reference to a contract, the truth is that air traffic
controllers, engineers, test pilots, nurses, lawyers, and
others represented by NATCA are working under imposed pay and
work rules. This, sir, is not a contract.
Mr. Chairman, I want to be clear that this is not just a
collective bargaining rights issue. The impact of the current
situation is greatly affecting the agency, its employees, and,
by extension, the safety of the entire aviation system. These
unfair work rules have resulted in the increased early
retirement of veteran controllers, the same controllers who
safely landed 5,000 aircraft in just over two hours on
September 11th. This acceleration of retirements has aggravated
the already existing controller staffing crisis.
These oppressive work rules have also resulted in mandatory
overtime to offset the understaffing, denial of sick leave and
vacation time, an increase in stress and fatigue, and low
morale among FAA employees. Today there are fewer controllers
watching over more traffic, and the fatigue and stress is
beginning to show.
Simply stated, because of the imposed work rules and pay,
the agency has a problem retaining veteran controllers and
recruiting qualified candidates. They have now sunk to the
level of advertising for candidates on MySpace.com and Craig's
List.
These problems have begun to negatively affect the safety
margins in the system. Here are the facts. Because new hires
now face a 30 percent pay cut, experienced military controllers
are turning down FAA jobs in droves because it would mean a
huge pay cut to them; retirements and even total attrition are
exceeding the FAA's planning for a fourth year in a row; and,
more importantly, the resulting fatigue among the remaining
employees is now having a major safety concern for us.
Controllers are forced to work longer hours on position without
a break, 10-hour days, and mandatory six-day work weeks due to
the effects of the imposed work rules and resulting short
staffing.
I strongly urge this Committee to carefully study this
safety issue. I firmly believe that without a concerted effort
to attract experienced or qualified controllers and to retain
our current workforce, the air traffic control system will
continue to lose controllers that will mean flight delays,
runway incursions, and increased chance of aviation disasters.
And don't let the FAA's propaganda bamboozle you. According
to the FAA Regional Administrator, Doug Murphy, 50 percent of
the trainees fail and it takes three years for the controllers
to certify, so hiring one-for-one isn't going to adequately
staff this system.
Just two days ago the DOT Inspector General reported that
approximately 2,563, or 11.1 percent, of the total midnight
shifts they reviewed were staffed with only one controller
before the Comair crash in Lexington last August. As the FAA
has even now admitted, its own policy required two people in
the Lexington facility, and only one was on duty at the time of
the disaster. I firmly believe that was as a result of the
agency's refusal to backfill retirements or to use overtime.
The IG report should be a wake-up call to the agency to
reevaluate its new staffing plan and increase its new staffing
standards, not cut them down to grossly negligent budget-driven
levels.
As USA Today reported yesterday, the IG reported that the
FAA spokesman said the agency has stopped understaffing the
towers. We disagree with this assertion and we have mandatory
overtime stories to prove it. Some staffing facts are
indisputable. The FAA Administrator told this Committee last
week that traffic is up, yet the number of controllers has
fallen by over 1,000 in just three years, and it is going to
get worse. The FAA's new staffing range calls for a reduction
in controller staffing levels of between 9 percent and 26
percent from previously agreed upon safe staffing needs. I
believe this Committee should ask for the supporting
documentation and justification for this change.
In terms of modernization of the air traffic control
system, I want to be clear on one point: no one would like to
see more efficient air traffic control technology put in place
than the controllers using the equipment. With the proper tools
in place, air traffic controllers could handle an increase in
capacity while making the entire system safer and more
efficient. The agency continues to refuse to allow controllers
to be part of a collaborative process for new technology to
ensure its timely delivery and successful implementation. Air
traffic controllers not only want the modernization system;
they need it and they demand it.
As far as the Administrator's FAA reauthorization proposal,
NATCA believes it constitutes an ill-advised user fee financing
system and other precursors to privatization that threaten to
undermine an inherently governmental safety function.
In closing, I would like to remind the Members of this
Committee that, as a controller, my main concern is safety. I
understand the safety implications of losing its most
experienced controllers at a rate that is completely
unacceptable: three per day. As a controller, I understand that
new hires will need three years to certify and fail training at
a rate of 50 percent in New York, according to FAA Regional
Administrator Doug Murphy. As a controller, I understand the
safety implications of an air traffic control system where 40
percent of the controller workforce, by 2010, will have less
than four years of experience.
The safety of the system is severely compromised if the FAA
cannot give its veteran controllers a reason to stay and help
to rebuild the controller workforce of tomorrow before they
take a well earned retirement. The FAA will not give them a
reason to stay and help them keep the trainees.
I would be happy to answer any questions you have, sir.
Mr. Costello. The Chair thanks you, Mr. Forrey.
Mr. Brantley, the Chair recognizes you for five minutes.
Mr. Brantley. Thank you. Chairman Costello, Congressman
Petri, and Members of the Subcommittee, thank you for inviting
PASS to testify today. PASS represents approximately 11,000 FAA
employees working throughout the United States and overseas,
and we appreciate the opportunity to present our views on
issues vital to aviation safety.
Labor relations within the FAA are in a state of chaos due
to the manner in which the FAA has approached contract
negotiations with its unions. Under its interpretation of
current law, if the FAA declares that the negotiations have
reached impasse, the Administrator can send the matter to
Congress. If Congress fails to act within 60 days, the FAA's
terms are unilaterally implemented, a process that hijacks the
collective bargaining rights of FAA employees. Contract
negotiations for four of PASS's five bargaining units have been
at impasse for over four years--four years--and there is no
foreseeable end in sight.
During negotiations over the contract for PASS's largest
bargaining unit, Air Traffic Organization Technical Operations,
the agency's behavior made it clear that it was not interested
in good faith bargaining and was intent on declaring impasse as
soon as possible, so PASS accepted the FAA's proposal in order
to give the employees that PASS represents a voice in the
process. They responded by overwhelmingly rejecting the
contract proposal. Yet, rather than respecting the employees'
rejection of its proposal and returning to the bargaining
table, the FAA has instead chosen to pursue unilateral
implementation of its terms through litigation. Is it any
wonder that the 2006 FAA employee attitude survey showed that
64 percent of FAA employees disagree or strongly disagree with
the following statement: I trust FAA management?
It is clear that a change is needed in order to ensure FAA
employees their right to collective bargaining. PASS is asking
Congress to take action to clarify that the Federal Service
Impasses Panel has jurisdiction over all bargaining impasses
arising at the FAA and that binding arbitration before a
neutral third party is the method used for resolving disputes.
Understaffing is also a major concern for PASS, especially
in our technician and safety inspector bargaining units.
Inadequate technician staffing has resulted in more unplanned
outages, a dramatic increase in restoration times, and a move
toward a fix-on-failure approach where preventive maintenance
and certification of NAS systems and equipment are
significantly reduced. The FAA does not have a staffing model
in place to accurately determine the number of trained
technicians needed to meet the agency's needs. PASS is
requesting that Congress require a study of FAA technician
training and the methods used by the FAA to estimate technician
staffing needs.
By 2010, as you pointed out, Mr. Chairman, almost 50
percent of FAA inspectors will be eligible to retire. Yet,
instead of addressing its staffing problems, the FAA has chosen
to increase its reliance on its designee programs. The agency
has responded to repeated criticisms of its use of these
programs by assigning even more hands-on work to designees that
was once performed by FAA inspectors. The latest example is a
concept known as the organizational designation authorization
program, which would allow a private organization to be in
charge of overseeing the designee. In essence, the industry
overseeing itself.
In order to protect the safety of the aviation system, PASS
is requesting that Congress direct the FAA to put expansion of
designee programs on hold until the National Academy of
Sciences staffing model is implemented and recommendations
issued by the GAO, including the establishment of a program to
evaluate the agency's designee programs can be thoroughly
addressed.
PASS is extremely concerned about several aspects of the
FAA's reauthorization proposal, including outsourcing of key
components of the NAS, the creation of a partisan commission to
justify outsourcing targets and facility closures, and
ambiguous user fees to fund the agency. The United States has
the largest, safest, and most efficient aviation system in the
world. To introduce concepts that would hinder or abandon the
work performed by these professionals would be to risk the
foundation that keeps this Country's aviation system safe. PASS
remains committed to making sure that our Country maintains its
standing as having the safest aviation system in the world, and
turning that system over to private corporations will not
accomplish that goal.
Thank you, and I would be happy to answer any questions you
may have.
Mr. Costello. We thank you.
The Chair recognizes for his opening statement or summary
Mr. Waters.
Mr. Waters. Thank you, Mr. Chairman. Good morning Members
of the Aviation Subcommittee. I am Tom Waters, President of
AFSCME Local 3290. AFSCME is a labor organization that
represents 1.4 million workers, predominantly in the public
sector. Approximately 2,000 of our members are employed in
various professional positions at the FAA Headquarters here in
Washington.
For the past seven years, I have had the honor to serve and
represent the attorneys and administrative staff within the
FAA's Office of Chief Counsel. Today I am especially pleased to
also represent, through my testimony, the AFSCME members within
the other three FAA headquarter locals at the request of their
presidents, my colleagues and friends, who are here today.
Like the other unions, our story deals with the FAA's
conduct in contract negotiations, but rather than repeat the
often cited history of personnel reform and related statutes, I
want to amplify the cost in human terms of the FAA's often
sharp practices under reform. Working without a collective
bargaining agreement for over six years, I have seen how
quickly a workforce can be distracted and demoralized by the
belief that its employer has dealt with it in an unjust and
high-handed manner. After all, the issues at stake for the
employee are no less than the employee's career, livelihood,
and the ability to keep his or her family healthy, safe, and
secure.
Our own ongoing contract dispute with FAA has its origins
in the agency's desire for a pay-for-performance salary system.
In 1996, the FAA sought, and Congress granted, total authority
to revise both the pay and personnel systems. Although we
negotiated a contract under the new reform system, the FAA
reneged and refused to implement, with the result that AFSCME
members are now divided between two separate pay systems and
serve under a hodgepodge of old and new work regulations
negotiated, if at all, under a piecemeal process.
I hasten to add that the employees in the Office of Chief
Counsel--and I believe throughout headquarters--initially had
little apprehension about the concept of pay-for-performance,
called core compensation at the FAA. However, management's
performance monitoring on the specific five-tiered system was
one of failure. So, in one of its first changes under personnel
reform, management implemented a pass-fail system. These habits
and sequence of events became the source of much workforce
mistrust and ultimately led the employees in the Office of
Chief Counsel to unionizing. Other headquarters employees
followed and formed three more AFSCME locals.
From the summer of 2000 through February 2001, a 25-member
negotiating team comprised of members of all AFSCME
headquarters locals negotiated a 75-article contract with a
management negotiating team comprised of management
representatives from all affected lines of business. It was
pursuant to a strict predetermined procedure for signifying
closure for each article that the parties agreed upon each of
the 75 articles. Productivity gains offset any pay raises.
The four AFSCME locals overwhelmingly ratified the
agreement on February 21st, 2001, by a vote of approximately
1,000 to 30. However, the elation was short lived because
Administrator Garvey submitted the agreement to the Office of
Management and Budget for approval and then ultimately refused
to sign and execute the contract, alleging that OMB
disapproved. As you know, OMB approval of an agency collective
bargaining agreement is not--is not--a requirement under
Federal labor law, nor did the union ever acquiesce to OMB
review or approval.
Between Congress, the FLRA, and the United States Court of
Appeals for the District of Columbia, the history of the
protracted litigation resulting from the Administration's
action, which the union lost, is a matter of substantial record
and not repeated here. Worth recounting here, though, is that
under the initial litigation, documents surfaced which refuted
the agency's representation. One document showed that the FAA
asked OMB to change draft language in a letter responsive to a
congressional inquiry. OMB's review made it clear that the FAA
management held the final decision on signing. The change
requested by the FAA was to remove this language for wording
that stressed that OMB did not concur. The agency's intent to
revise the OMB letter is perhaps as telling as the substance of
the revision itself. I have the document with me, if anyone is
interested in reviewing it.
Even if it preferred OMB approval, the FAA shot itself in
the foot by refusing to execute the agreement. After
ratification, the headquarters workforce was satisfied that it
had replaced the sharp edges of a pending unilaterally imposed
pay-for-performance system in favor of a well planned,
bilaterally agreed upon pay-for-performance system. As I said,
employees were enthusiastic to put behind them the fear and
distraction of a new pay system and the concomitant arguments
with and suspicions about management. Instead, today, some
employees are in an FAA-imposed pay system while others remain
in a near exact replica of the General Schedule system. There
is such chaos that even the attorney managers in my office sued
the agency for more money. We have often pointless performance
reviews. We have no meaningful grievance procedure. Litigation
remains the only recourse when third party resolution is
desired. All working conditions must be resolved on a piecemeal
basis through impact and implementation bargaining.
AFSCME has tried every means available to resolve this long
and protracted contract dispute. We requested assistance from
Congress and twice had report language inserted in
appropriations measures directing that the agency implement the
contact. The FAA ignored the directives. Considering the fact
that AFSCME has exhausted all means to resolve this matter and
the FAA has used all means to thwart our efforts and those of
other unions who are in similar unfortunate positions, it is
time for Congress to consider a legislative approach to
resolving FAA's failure to live up to the congressionally
mandated task of legitimate personnel reform.
We want not negotiate, but the fiscal year 1996
appropriations language that granted FAA unfettered discretion
in personnel reform must be repealed because the agency's
version has led to poor morale and distrust. Employees must
believe in the integrity of their employer and that they will
receive a fair shake when it comes to bargaining with their
employer. I urge the Subcommittee to act to eliminate the
flawed and unfair bargaining process that currently exists at
FAA in order to avoid any further misuse by the agency of its
bargaining authority.
In closing, I would like to invite each of you to the FAA
to meet and speak with AFSCME members to fully understand the
impact of the transactions and occurrences discussed here
today. They are humble, dedicated, hard-working, and
conscientious public servants who deserve better treatment than
they receive from their management.
I thank you and I would be pleased to answer any questions.
Mr. Costello. We thank you and all of the witnesses that
have testified so far this morning.
Mr. Forrey, let me ask you, if I may. In your testimony you
indicate that the FAA is not hiring controllers, but they are
hiring trainees, and I wonder if you might explain the
significance of your statement.
Mr. Forrey. Well, I think the agency likes to portray the
fact that they hire a controller for every one that retires,
but the fact is it takes years to train a controller to be
fully certified at any facility. The average is about three,
according to the FAA's own Regional Administrator. And of those
trainees we are finding a huge amount of individuals that are
not making it and they are failing in training, and part of the
reason being they are bringing them right out of these schools
or they are bringing them off the street and they are sticking
them in towers like Atlanta and O'Hare and New York TRACON and
Dallas, and they don't stand a chance.
The military controllers that used to come into the FAA are
now being briefed by their own colonels and generals on the
agency's payroll, jailhouse work rules, and pay system to stay
in the military. So that avenue is kind of drying up for the
agency and we are not getting those experienced controllers
that might even help us in those busy facilities.
So just a perfect example, at Atlanta tower there are 34
certified controllers there; they have 7 trainees, they are
expecting only 2 to make it; and the next year 12 of them are
eligible to retire. There are 23 positions in that tower and
next year, by this time in October, there might only be about
25 controllers working that facility. How do you work the
busiest air traffic control facility in the world with 12
people or with 25 people? That is just ludicrous. They cannot
train somebody in six minutes when they hire them and put them
in the facility and be ready to go, it just doesn't work that
way.
Mr. Costello. Thank you.
Mr. Brantley, let me ask you about the inspector staffing.
You indicate in your testimony that because of the evolving
industry, that the workload on the aviation safety inspectors
have increased dramatically, and I want you to elaborate on
that, explain that.
Mr. Brantley. Well, Mr. Chairman, the nature of the
business for the aviation industry has changed, so they are
going to more regional jets as opposed to their current
practice, which is more flights, more planes. But also things
like the agency implementing its new ATOS system, while that is
not fully implemented and it is not fully developed yet, that
has created a whole different set of work practices for
inspectors. Things like aging aircraft, which Congress directed
the agency to begin looking into I guess about 10 or 12 years
ago now, and it is just coming about, but that creates another
workload. The explosion of outsourcing of maintenance by air
carriers has created a workload because now, instead of just
overseeing carrier itself, you know, it brings in the repair
facilities that are now going to have to be overseen by the
agency.
So all of these things combined just create a lot more
work, but the number of inspectors is not increasing.
Mr. Costello. The number of inspectors, I have been
expressing, as well as other Members of this Subcommittee, the
number that are eligible to retire and may be leaving, is the
figure that I have been giving this morning, that since the end
of September that we have seen 77 safety inspectors leave since
October the 1st?
Mr. Brantley. Yes, sir, and that is a net loss.
Mr. Costello. It is a net loss.
Mr. Brantley. Yes, sir.
Mr. Costello. I wonder if you might just quickly, without
going into a lot of detail, give us an update on the status of
negotiations with the FAA. Is it at a standstill or is there
any indication at all?
Mr. Brantley. Well, Mr. Chairman, as I mentioned earlier,
for four out of the five bargaining units that we represent we
have been at impasse, which is the stage where everything comes
to a halt unless the agency decides to bring that to Congress.
We have been at impasse for more than four years. Not a thing
has happened in those four years by the agency to try to move
these contracts to closure. The one contract that we had
negotiations on in recent times, about a year ago--because we
did not believe the agency was intent on reaching an agreement
but, rather, their intent was to get to impasse so that they
could impose their own terms--we actually accepted their
proposal so we could put it to our Members for a vote. You
know, our hope was, frankly, that seeing the results of that
vote would wake the agency up, and 98 percent of our Members,
in a record turnout, 98 percent voted no. So I think the
message was there. Unfortunately, no one was willing to listen.
So now we are involved in litigation. The agency is trying to
implement the contract terms through litigation. We have a
hearing next week, and I would be glad to keep you updated on
how it is going, but essentially that is where we are.
Mr. Costello. Thank you.
The Chair, at this time, recognizes the Ranking Member of
the Full Committee, Mr. Mica.
Mr. Mica. Well, thank you, Mr. Costello.
I guess last night was American Idol. I didn't miss it;
instead, I--I did miss it. In fact, I never watch it. But I did
stay up reading testimony. I did read all of Mr. Forrey's--and
thank you, it was probably one of the most comprehensive
submissions I have seen--and some of the others. I tried to
catch up before today's hearing. Your pages aren't numbered,
but the subject of the hearing, too, today is actually on, I
guess, financing the system that we have got. Of course, a key
component is personnel, since I asked and just found out that
personnel costs will make up 80 percent of the budget cost in
fiscal year 2008 and do now. But on this page here, Mr. Forrey,
you say, third, a user fee based system is vulnerable to
problems that disrupt aviation and commerce much as 9/11 and
SARS did a few years ago. That is your statement, correct?
Mr. Forrey. That is correct, sir.
Mr. Mica. Well, I venture to say that if we look at the
current system and we go back and look at 2001--we now have a
7.5 percent ticket tax and aviation fuel tax that compose most
of the revenue--that also is subject to the same type of
disruption. And we actually have the documentation to prove the
dramatic affect and loss, so I don't think that that is a very
good criticism on what is being proposed by the Administration
or the position. Which I support as a hybrid system.
Let's see, then I think you also said in your testimony
staffing-to-traffic, is that pretty much your position, trying
to have staffing to the traffic?
Mr. Forrey. I am claiming that the agency is staffing-to-
budget, and not staffing-to-traffic.
Mr. Mica. It is not staffing. But you would prefer
staffing-to-traffic. I have a chart of traffic and staffing.
Can we put that up there? We can go back a little bit. They
are 1999, 2000. Actually, according to staffing-to-traffic, if
we use that model, FAA is still ahead of traffic, unless
somebody could dispute these figures, but these are the
figures. We have 14,618 controllers on board. That is in
employment right now. Well, at the end of 2006. So we are still
ahead of traffic.
In fact, it was interesting. Mr. Kuhl was here just a few
minutes ago, and I visited a number of airports in September
and October. One was Elmira, which brought this to light.
Elmira, New York had a dramatic drop-off in traffic. There are
very few flights in there; you can almost count them on a few
hands. They had 13 air traffic controllers in 2001 and they
still have 13 air traffic controllers, with almost no traffic.
Now, I could cite others here. Just a few: Albuquerque,
Seattle, Columbus, Milwaukee, San Francisco. The list goes on.
So part of the problem appears to be that the staffing has
been left at some levels in some places, and, Mr. Forrey, you
cited in some places we don't have enough air traffic
controllers, is that correct?
Mr. Forrey. That is correct.
Mr. Mica. So part of the problem might be distribution.
First of all, we have more numbers and then we have many
airports--and I will submit a list for the record--that have
more air traffic controllers than needed--all of these
experienced pretty severe declines, and we saw that across the
Country.
Now, let's see, part of the problem, too, is applicants. Do
we have a problem with applicants for these positions?
Mr. Forrey. I believe you are going to run out of
applicants. Right now the agency claims they have got about
3,000 or 3,500 people in the pipeline, and the qualification
level, to what extent we don't know.
Mr. Mica. Actually, there are over 2,000 applicants that
have been ranked and rated as eligible. So there may be 3,000,
but 2,000 applicants. So we have got a little bit more evidence
that we have applicants.
Now, one of the other things is the 10 day--of course, the
people that we have working, I think you stated that--oh, wait,
wait, wait. You did state, too, they are going from the schools
to the towers. And we could play back the tape, but that is
what you said. I don't know that to be the case. Don't they all
go through Oklahoma City?
Mr. Forrey. As far as I understand they go to Oklahoma City
for basic instruction.
Mr. Mica. But isn't that a requirement, that you have to
have those 10 weeks of training?
Mr. Forrey. Yes, that is correct, but then they are putting
them right into the towers, when they didn't do that before,
sir.
Mr. Mica. But there is no one going from the schools to the
towers.
Mr. Forrey. No, they spend 10 weeks at Oklahoma City.
Mr. Mica. And the requirement is still just a college
education, is that right, for those who enter. You can go
directly as an applicant into Oklahoma or you could come from a
school or from the military?
Mr. Forrey. All candidates go through Oklahoma City,
whether you come from a school or whether you come off the
street. And now they are advertising for no qualifications.
Mr. Mica. Well, I just want to make certain for the record
that we have that correct.
And then the issue about 10-hour work days. Now, it is my
understanding that a full-time controller's basic work day is
an 8-hour shift, which includes a 30-minute meal break. The
average controller's time on board actually engaged in
separating airplanes, according to--again, this I get from
FAA--is 4 hours and 30 minutes per shift. That is the average
time. Would that be about correct?
Mr. Forrey. I have no idea.
Mr. Mica. Okay. And the other thing, too, about this issue
of the 10-hour days, anything over that amount of time that is
set now would be voluntary. Is that correct?
Mr. Forrey. I don't know. I don't know what you are talking
about. Could you rephrase your question, because I am not sure
what you are talking about?
Mr. Mica. Well, again, under the terms of the previous
contract----
Mr. Forrey. Well, we are operating under imposed work rules
now, sir.
Mr. Mica. Okay, but under the----
Mr. Forrey. The terms of the previous contract don't apply.
Mr. Mica. But is anyone forced to do more than the 8 hours?
Mr. Forrey. Yes, in many cases they are.
Mr. Mica. But that is voluntary----
Mr. Forrey. They are required to stay for 2 additional
hours than the 8. Yes, it is happening a lot. Including 6 days
when they don't want to.
Mr. Mica. Okay. Was any of this a subject of the questions
in arbitration or in discussions during the contract
discussions?
Mr. Forrey. Absolutely. It was one of the issues that was
at impasse and was unilaterally imposed on the workforce.
Mr. Mica. Well, again, I talked to some of the negotiators
and they told me that it was not, that the union never brought
that into the discussions.
Mr. Forrey. Well, I am telling you that we did. So there
you go.
Mr. Mica. Again, I just talked to one of them. And the
purpose of the hearing is really to clarify this.
Mr. Forrey. I understand.
Mr. Mica. Finally, the period of the past contract was
1998, and then I think it went to about 2003 with an extension
of two years, so over a total of that period of time the pay
increase averaged a little over 10 percent per year, is that
correct?
Mr. Forrey. I disagree with that.
Mr. Mica. On average? Well, they say through the time of
the negotiation it was an 80 percent pay increase, because
during the times----
Mr. Forrey. Who is they?
Mr. Mica. Well, at the end of the second year extension,
which was 2005, I think it was July of 2005 until April, the
terms of the old contract prevailed, so the increase in pay
would be related to the old contract, is that correct?
Mr. Forrey. From 2001 up through the imposition of this
work rule and pay system our controllers have been earning the
same or less than the rest of the Federal Government employees
on their annual increases.
Mr. Mica. Average pay would be--and I have heard three
different figures. Average pay with salary and benefits I have
heard 163, I saw a union document that said 173, and I am told
171. From your standpoint today, before us, what is the average
salary pay and benefits for a controller?
Mr. Forrey. With the existing workforce? I believe it is
probably about 116 with average pay and locality pay. That is
right now. But under the agency's imposed work rules it will
probably be somewhere around 84.
Mr. Mica. That is quite different from what is publicly
pronounced.
Mr. Forrey. By whom?
Mr. Mica. Well, again, last year Mr. Carr put forth a
document that said $173,000----
Mr. Forrey. That is with benefits.
Mr. Mica.--pay, benefits----
Mr. Forrey. Benefits we have no control over, sir. That is
what all Federal Government employees get.
Mr. Mica. But that is the cost to us, which is----
Mr. Forrey. I understand. And I can tell you this, the
cost----
Mr. Mica.--the 80 percent----
Mr. Forrey. And I lost, if we did nothing is flat for the
next----
Mr. Costello. The Chair can interrupt here.
Mr. Mica. Well, thank you. Again, I was just trying to
clarify some things for the record. Appreciate it. Yield back.
Mr. Costello. Let me ask a question for clarification here,
because I am a little bit confused. The Administrator always
says that the average salary with benefits is $170,000, and you
are saying here that that is not anywhere close with the
current workforce, is that correct?
Mr. Forrey. That is correct.
Mr. Costello. Okay.
The Chair, at this time, recognizes, under the five minute
rule, Mr. Boswell.
Mr. Boswell. Thank you, Mr. Chairman. I sense that this is
a pretty important discussion we are having here today, and me
and my colleague across the aisle there, we kind of use the
system.
Mr. Forrey, I think you answered us why we don't have the
pool from the military. I was going to ask you to expand on
that, but I think that is pretty clear. They are being
encouraged, because of things going on, to stay where they are.
I think that is pretty clear.
I would just like for you to--I apologize, I came in a
little bit late, but would you just do two or three things?
Would you just tell us as concisely as you can what is the
shortage today; how many controllers are needed by calendar
quarter over the next year for us to be safe and have trained
controllers; and what does it take, in your opinion, to
interest an individual to apply and train to become a
controller? And if you have a number in mind, if you could,
from your perspective, what would it take cost-wise to fix the
situation in your mind?
Mr. Forrey. Mr. Boswell----
Mr. Boswell. First, what is the shortage today?
Mr. Forrey. The shortage today is about 1100 to 1200
controllers that we had three years ago. We have less than
that. And the traffic is now growing.
Mr. Boswell. Eleven to 1200?
Mr. Forrey. Yes. We had 15,383 in 2003; we now have 14,000,
as the Administrator's fact book told us, 14,200, of which
2,000 are trainees, they are not even certified controllers.
Mr. Boswell. I think the whole listing public ought to be
concerned about that figure. Go ahead.
Mr. Forrey. What we need, probably, at least for a starter,
is to get back to the levels we had, that we all agreed on
several years ago, that we thought would fill the system. Those
were developed by good empirical standards based on traffic
activity, based on number of positions, number of sectors, the
amount of volume of traffic through each of the radar
positions. Those were all calculated and tabulated along with
very scientific how much time it takes to work, how much leave
people get, everything else, to decide by facility what kind of
staffing was required.
The agency just solved their whole problem by just coming
out with some range thing on their staffing standard that
basically says, lo and behold, look at that, all the people we
have on board right now fit within our ranges, so we don't have
a staffing problem anymore. They have not given us any kind of
empirical data to support what they did, just rhetoric.
So at least for a starter we would like to do that. We have
asked the Administrator, I personally have asked the
Administrator on a number of occasions and in writing, to get
together with them and develop our staffing standards, that we
be part of that. I think we have something to offer to that; we
are the experts in the field. She has said that she would be
willing to, but then, of course, at the same time they
introduced this standard. So I am not sure if she is still
willing or interested or not. But I think that is probably a
good place to start, and involve the National Academy of
Sciences in that process.
As far as what it would take to interest controllers to
come into this occupation, I think it would interest them that
they don't hear stories about controllers that call in sick
because they have a fever, are forced to come in because they
are going to get fired if they don't, and end up vomiting on
their radar position. At the same time, finding out that a
supervisor with the same symptoms called in and said I can't
make it, and they said, fine, don't come in, and replaced that
person with overtime. That happened at Jacksonville Center.
That is the kind of stuff going on in the field today.
And until that changes, you are not going to see anyone
really interested in taking this job. That is why they are
passing it up. They are sending these kids to the Oklahoma City
Academy at $18,000 a year, which is just over minimum wage,
without any health benefits for three months, and then they are
saying, you want the job? You go out there and do that. And, by
the way, if you are successful there, we will put you in one of
these facilities like New York TRACON or the Chicago TRACON or
Dallas-Fort Worth TRACON, because we are going to get killed in
those facilities with the staffing in about another 12 months,
and the system is going to come to a screeching halt. And these
kids don't stand a chance. It is like taking some kid out of
high school baseball, pitcher star, and sticking them on the
New York Yankees and saying, all right, buddy, it is the ninth
inning, bases are loaded, two outs, and you are up. That is not
the kind of situation we want.
Mr. Boswell. Well, I appreciate that and I sense your
frustration. Having visited a few control stations in busy
areas, it is a tough job. It is a tough job, and I want to
thank you for staying in there and fighting for what you
believe in to, one, keep the professional life and, two, to
make it safe not only for us that fly and use the system, but
for those many, many thousands of passengers who are out there
flying every day. So thank you.
Mr. Forrey. Thank you, sir.
Mr. Costello. I thank the gentleman.
The Chair recognizes the Ranking Member of the
Subcommittee, Mr. Petri.
Mr. Petri. Thank you very much, Mr. Chairman. Before I
yield a minute to my colleague, the Ranking Member of the Full
Committee, I just wonder if I could ask kind of a general
question of both Mr. Forrey and Mr. Brantley, and that is I am
sure that you and your members are focusing, as we are, on the
rollout of NextGen technology, and this has great promise,
obviously, and it seems to be about time. The industry is
looking forward to it and it is already happening. What is your
attitude on--I mean, this will affect staffing levels and job
descriptions and a lot of changes in the system, and even
locations of personnel and so on. Do you have an attitude
toward all this? You know, some people have likened it to the
difference between switchboard operators and what we have now.
In some ways the job will become much more responsible because
a lot of the routine parts of the controlling, for example, I
guess, will be handled by the technology. Could you comment on
that?
Mr. Forrey. Certainly. I would like to, sir. We are very
interested in Next Generation Air Traffic Control System. I
think it is about time it got done. I don't know that this
funding mechanism has anything to do with it. The agency spent
$35 billion. The Government has given the agency $35 billion on
new technology stuff since the 1980s, and the only thing we got
out of it so far is new radar displays in our centers and
terminals and a few little safety items like ASDX. That is poor
management, that has nothing to do with funding. So this whole
shenanigan about user fees is going to fund Next Generation, I
think what you need is someone who is going to manage the
operation better. That might go a long way towards getting new
equipment.
Secondly, the agency doesn't want to include us for some
reason. I don't know why, but they don't. So I have gotten
myself involved with the JPDO, the RTCA, the IMC, and I am
going to try and get the controller experience and the
professional people that know the system involved in that
avenue. We have been very well accepted and I am looking
forward to it.
But I am very interested in new equipment. We want it. We
need it. But there has got to be more than just new equipment.
The last time I looked, Buck Rogers was a TV show; it is not
here, it is not today. I don't follow those conspiracy theories
that, you know, they are going to take air traffic controllers
and put them out of a job because of new technology. That is
hogwash. We need equipment that is going to be able to provide
the controller the tools to move more capacity in the system in
a safer manner. We are all for that and we want to be part of
that, but we are being shut out of that process right now.
Mr. Brantley. Thank you. Congressman, I would echo, at
least in part, what Mr. Forrey just said, and that is with
regard to not being involved by the agency. You know, as late
as three years ago we were involved in most of what was going
on in the FAA as far as modernization. We had members that were
part of these product teams to help evaluate it and develop the
best possible product.
Under this Administrator, the agency decided to no longer
do that. Today we have no one involved in any modernization at
the FAA. No one.
Mr. Mica. Mr. Petri had yielded to me.
Let me just extend what--well, first, he gave me the
balance of his time.
On the point of the trainees and somewhere between $17,000
and $19,000, they are paid for that 10-week period, they don't
get health benefits. Paying someone to go to school is
unprecedented almost anywhere. With your predecessor, Mr. Carr,
we had talked about actually shortening that course, certifying
the 10 or 12 schools that we could have, and either have two-or
four-year programs where they came out better qualified, as
some of the NATCA personnel I have talked to who went to
private schools versus those that went for the 10-week course,
and then the taxpayer wouldn't have to pick up health care or
that cost. Just like any other profession, they could go to
school and pay it their own. And we have thousands of them
coming through Embry-Riddle that are very qualified.
The other point, both of you are interested in actually
having a say in this. What I am going to propose today is that
we give you a say in this, that we take 80 percent of the money
and that we give it to you, all the money, the personnel
operational money, and we create a not-for-profit ESOP,
employee stock ownership plan, and we let you run it. You run
it instead of FAA. We get rid of the FAA Administrator
overhead. You may chuckle at this, but I am prepared to do
that, to turn it over to you, to the unions and whoever else
wants to participate; give you that 80 percent of the money and
let you run it. We will give you that. And don't think it can't
be done. When I was chairman of Civil Service, I ESOPed 1,000
employees in Mr. English's district. They created a not-for-
profit. They have since made a profit, they are paying taxes,
and they do a wonderful job. There is no reason why we can't do
the same thing and turn it over to you. Are you ready to take
it?
Mr. Costello. Mr. Petri's time has expired.
[Laughter.]
Mr. Mica. Let them answer. That would be an interesting
question.
Mr. Forrey. I think the first thing I would do, Mr. Mica,
is I would invite the agency to join me in that process.
Mr. Costello. The Chair recognizes the gentlelady from
Hawaii under the five minute rule.
Ms. Hirono. I would like to ask all of the panelists I
believe that the agency is moving toward privatizing various
functions, including the running of whole towers. We have some
of these occurring in my State, particularly, for example, at
Kona Airport. I have a question to all of you as to what your
concerns are regarding this move toward privatizing and public
safety issues. Are there any inherent safety issues that we
need to concern ourselves with this move toward privatization?
Mr. Forrey. I will go ahead and start. Certainly, we have a
very big concern about that. I mean, if you look at the FAA
reauthorization proposal, they are talking about contracting
out all the navigational needs at airports to the highest
bidder, or the lowest bidder, I should say, and then selling
those services to the users. They are talking about redefining
VFR tower so they can contract them out more easily.
We are very concerned about that because what happens when
they contract it out is they reduce the employee personnel so
they can make a profit, and that is what is happening in those
contract towers out in the field right now. We don't have any
problem with the controllers, we think they are very good
controllers; the problem is there are just not enough of them
and there is no oversight. The agency says there is, but there
is not the oversight that they have for FAA facilities, I can
guarantee you that.
And if you look at the flight service stations that they
just did, the A-76 process with last year, we have already got
reports now where we are calling the flight service station to
report pirate reports. We have icing and things that are very
urgent need information to know for the pilots, and they are
saying we don't do that anymore, we don't do that service
anymore. So now they are cutting out services so they can make
their profits.
I think privatizing in an inherently governmental function
like air traffic control services is disastrous.
Mr. Brantley. Thank you. Yes, I agree, I think any time
that the bottom line of whether it is making a buck or
balancing the bottom line is the priority rather than safety,
that just has so many inherent risks. I also think, quite
frankly, if there was a way to make money at it, they would
already be doing it. The reality is most airports are not
capable of creating revenue, I believe, that would allow them
to operate safely the way they do today. I think if they were
privatized, they would have to scale back quite a bit, which
means that a lot of communities that rely on the services of an
airport would have to do without many things.
So I don't think it is as easy as just turning it over. I
think part of this is kind of the general public welfare. And I
don't mean welfare as in the usual context here on the Hill, I
mean as in the good of the people.
Mr. Waters. Do you want me to respond to that question?
Ms. Hirono. Sure.
Mr. Waters. I was going to try to avoid it, since I have to
admit that I was the staff attorney on the contract towers
program and still I became president of the union in 2000. So,
I don't know, that makes me kind of uncomfortable with Mr.
Forrey. I wrote the memo on whether air traffic control at that
level is inherently governmental.
I think that the contract tower program, at the level that
it is at, worked okay, if that is how we decided to go. We
tried to write oversight in it, but I can tell you that, from a
legal standpoint, oversight is the issue. I think that a lot of
the--at that time--it was in 2000 that I was in--a lot of the
controllers were former FAA controllers, so I had confidence in
them because they were FAA controllers; they just went to
contract towers. But I think that it ought to be held to the
level that it is at, instead of expanded. You know, the
contract towers program came out of the firing in 1980, so it
was an emergency sort of staffing remedy at that time.
So it has to maintain oversight, our oversight, FAA
oversight. I think a lot of times, having practiced a lot of
government contracts, both at the FAA and for the Marine Corps,
that, you know, it is true that contractors issue is profit
margin and they will cut where they can. I have been involved
in a lot of litigation where the contractor did not give what
the government asked for, what it paid for. A lot of
litigation. So you have got to maintain the oversight.
With Mr. Forrey, I should have pleaded the fifth, probably.
[Laughter.]
Ms. Hirono. One more question. Since the FAA is supposed to
provide the oversight for these privatized entities, etc., and
if they are not providing that, is it Congress that should be
providing that oversight?
Mr. Waters. Me?
Ms. Hirono. Anybody.
Mr. Forrey. Well, I think they need to tighten up what they
do when they oversight these facilities. They go and they do
on-the-spot checks maybe once a year, maybe more often, I don't
know. But the fact of the matter is these facilities, they are
not automated like you have in the major terminals and major en
route facilities, so there is no way to electronically catch
them when they have errors or they make mistakes, and it is in
their best interest not to report those. So, you know, it is
kind of like the chicken guarding the hen house. So who knows?
Mr. Brantley. I personally would love to see Congress step
up and provide some oversight, since it is not being done
adequately.
Mr. Costello. The Chair thanks the gentlelady and
recognizes the gentleman from North Carolina, Mr. Hayes.
Mr. Hayes. Thank you, Mr. Chairman.
Gentlemen, thank you for being here. I get the feeling--I
want to make sure I get this correct--there is some tension
between you all and the FAA.
[Laughter.]
Mr. Hayes. Next Generation--Pat or anybody that would
like--excuse me, Mr. Forrey--ADS-B, is that the answer to all
the ills of air traffic control and congestion and everything
else out there?
Mr. Forrey. I think it is the future surveillance system.
It is not the answer, it is just one leg of the three-legged
stool.
Mr. Hayes. What capabilities are available to us with the
equipment that is in the cockpit, in the towers, in the TRACONs
right now that do a lot of the things that are proposed for
ADS-B? I know that is a big question.
Mr. Forrey. I think there is the opportunity right now for
the FAA to start utilizing ADS-B in the oceans of the world,
where we don't have any radar coverage.
Mr. Hayes. How about here at home?
Mr. Forrey. Here at home, they are doing it in Alaska. I
think they are doing a project down in the Ohio Valley with UPS
or FedEx. I am not sure which. The Gulf of Mexico is another
place where they are trying this new technologies. I think
those are great opportunities and that is what they should be
doing. I don't know that they are doing it enough.
Mr. Hayes. Okay. And those are specific applications. A lot
of flying goes on within the continental United States. Given
the fact that a lot of general aviation aircraft fly outside of
the 3 percent of congested airspace, what does that do to the
cost, as far as you and the controllers are concerned, does
that add a whole heck of a lot to what you are doing?
Mr. Forrey. Well, I guess contrary to popular belief, a
blip is not necessarily a blip. Certain operations have certain
different impacts and costs. Most VFR pilots that are tooling
around out there have absolutely no influence or no impact on
the system.
Mr. Hayes. How about IFR guys tooling around----
Mr. Forrey. IFR guys? It depends, it depends. You know, the
level of service, it just depends what flight strata you are
in, what major airports you are around. Obviously, the more
major the airport you are around or the higher the stratum of
atmosphere, you are going to have a little bit more of an
impact on the system.
Mr. Hayes. Back to the 3 percent rule. I talked to your
guys on the phone, on the radio, and in person, and they wanted
me to get you all to talk about why you wanted to keep talking
about the contract. But I think you have covered that, so I
didn't want them to think I had forgotten.
Last, but not least, you kind of age yourself. You and I
are Buck Rogers. There is some new guy now, I don't know what
his name is. I would love to see, Leonard and I and other
pilots, Sam, we would put a working group together with all the
players here, would certainly encourage--and I will see you
next week in the office, we will see how we get this thing
going.
Mr. Chairman, thank you. I want to yield the rest of my
time to Mr. Mica so he can finish up on his offer.
Mr. Mica. Thank you. You had a couple of minutes here.
Back to Mr. Forrey for a minute here. You separated the
base pay, which you said was about 116, on average, is that
correct? And the rest is benefits and----
Mr. Forrey. Here is the deal. I want to go back to the
table and negotiate fairly. I don't want to talk about what it
was or what it is now. I want to talk about going back to the
table, present the facts to an independent arbitrator who can
delve through those facts. If the Administration is afraid to
do that, the Administrator is afraid to do that, probably
because her facts are not right.
Mr. Mica. Again, what I am trying to do is get to sort of
the money basis of this. You are trying to get a higher income
for your folks, right?
Mr. Forrey. I am trying to protect the system. I am trying
to protect the occupation. I am trying to be able to go back to
the table and negotiate fairly. I didn't have that opportunity,
sir.
Mr. Mica. Well, part of my question also deals with
financing NATCA. I am told, and I don't know if this is
correct, that 1.5 percent of the air traffic controllers' base
salary goes to fund NATCA. Is that the way you all finance most
of your operation?
Mr. Forrey. Well, first of all----
Mr. Mica. Is that the basis?
Mr. Forrey. That is how we primarily finance it, yes.
Mr. Mica. Have you lost money from this contract or are you
on the terms of the old contract? This is an honest question.
Someone told me that you are still on the terms of the 1.5 that
applies to the old money versus that. Has NATCA had a net loss
in money from the terms of the imposed work rules and what is
going on now?
Mr. Forrey. No, we haven't since we corrected the agency's
deduction of our dues.
Mr. Mica. So you still get the same amount.
PASS, how do you get money to finance yourself? Do you get
this 1.5 percent?
Mr. Brantley. No, sir.
Mr. Mica. So if you get more money, then you don't get more
money.
How about AFSCME?
Mr. Waters. I am sorry, can you repeat your question?
Mr. Mica. How do you get your revenue to operate, do you
get 1.5 percent of the base salary?
Mr. Waters. For our union?
Mr. Mica. Yes.
Mr. Waters. Yes, sir.
Mr. Mica. You do.
Mr. Waters. And if I could clarify, Mr. Mica.
Mr. Mica. I am seeing no's in the back.
Mr. Waters. I am sorry, it is .065. I am not sure I am
clear on what you are asking, .065.
Mr. Mica. You guys aren't negotiating very well.
Mr. Waters. Well----
Mr. Mica. Thank you. I yield back the balance of my time.
Mr. Costello. I thank the gentleman. Let me just remind
Members, if I may, that yesterday's hearing was on the FAA's
financing proposal; today is on the operation and safety
programs. And I realize that they are related, but I would hope
that we are not all here to renegotiate contracts here in this
room.
Mr. Brantley. We would welcome the opportunity, Mr.
Chairman.
Mr. Costello. The Chair recognizes the gentleman from New
York, Mr. Hall, under the five minute rule.
Mr. Hall. Thank you, Mr. Chairman.
I don't think that this is the proper place to grill our
witnesses about how their bargaining units are organized or
financed, although I can assume that when an administration
takes a consistently anti-union stance across the board in
every department of government, that it obviously doesn't help
the membership or the funding of the unions.
Unfortunately, as one of you stated this morning, this is
one of those government functions that probably shouldn't be
privatized and also shouldn't be subject to this adversarial
relationship when the safety of the flying public is at stake.
I am offended and upset at the way it seems that all three of
you and your members are being treated.
Having said that, I will say--this is a point of
information for our Ranking Member, Mr. Mica--that there are
schools who pay students to go to school. My daughter actually
was paid as a graduate student by the University of Maryland.
My nephew has several engineering offers to him for a master's
and PhD candidate by very prestigious State schools where he
will be paid, because he is such a desirable candidate, to go
to acquire a master's and a PhD. So, just as a factual thing,
that simply isn't true.
I also would note that many of us up here, Members of this
Committee, have junior or mid-level members of our staff who
are in their twenties, probably, or maybe early thirties, and
who don't have the responsibility of thousands of passengers in
the air at any given time that we are responsible for who are
getting salaries close to just below or just above that $32,000
entry salary that I see in Mr. Forrey's written testimony.
Some of the letters from our military controllers who wrote
rejecting offers of employment, saying that they could not take
a pay cut down to $32,000 a year. I just want you to understand
that I have some very capable--I am not putting my staff down,
but I have some very capable members of my staff in their
twenties who, going by our congressional pay scale that comes
from the Congressional Member Services Office recommendations,
I don't think you can compare them to the skill and the
importance of the job of a controller.
That is the end of my speech and here is my question.
First of all, can you compare the expected impact of
NextGen to the impact of spending a fraction of that money to
fully staff and adequately pay the controller workforce and the
other workforce of the agency? And I will start with Mr.
Forrey.
Mr. Forrey. I don't think you can afford to not staff the
system if you ever want to get to NextGen. NextGen is way down
the road, it is concepts right now. I mean, ADS-B is just one
piece of it, and it is only the air piece, it is not the ground
piece. I mean, you can put all the airplanes you want in the
air, but if you don't have more space on the ground, what are
they going to do?
Same with the controller. If you want to jam twice as many
aircraft into a sector I am working 25 already, and you want to
stick another 25 in there because of the increased capacity,
reduced separation standards, whatever you want to do to get
that capacity, what tools are you providing the controllers to
make sure they can do that safely without causing disaster?
So you need the staffing to keep the system going. You need
the staffing to train the next generation of controller who is
going to be using and developing that equipment. And I think
that is what you need to do, you need to get that----
Mr. Hall. Thank you. I am running out of time, so I will
throw this out there to any or all of you. If you were given
the ear of the FAA, what do you feel are the most important,
the must-haves, the critical technological improvements that
would allow the controller force to do its job, and what things
do you think may be well intentioned but ultimately unnecessary
or counterproductive out of this NextGen program?
Mr. Forrey. Well, I think the most electronic thing we can
get right now is called a human being. We need more of those.
That is what we need right now. I think any kind of runway
incursion devices, things of that nature, that would be great
too, like ASDE-X. We need that deployed throughout the system;
it is only in about 35 facilities right now and we need it in a
lot more places. Controllers are getting fatigued and they are
missing things, and equipment like that is just another backup,
another thing for us to have a bigger safety net on the system.
Mr. Costello. The Chair thanks the gentleman from New
York----
Mr. Hayes. Thank you, Mr. Chairman.
Mr. Costello.--and recognizes the gentleman from Missouri,
Mr. Graves, for five minutes.
Mr. Graves. Thank you, Mr. Chairman. I have got some pretty
quick questions, and I think you can probably answer them
through just providing me with the data later, and I don't even
think we even need to go into, with me, the stuff with the
privatization complete agreement. I think we are in agreement
with this whole funding level for Next Generation. I think we
are.
But when was the last time we did--and, Mr. Chairman, you
may be able to answer this--the last time we did the staffing
set up the way it is now, was it in 1998, was that the last
time we did----
Mr. Forrey. 1998, that is correct.
Mr. Graves. Could you provide me the data on how the
staffing was put together in 1998, how it was designed for that
bill? Could you do that and just provide it to me, or the
Committee, for that matter?
Mr. Forrey. Certainly.
Mr. Graves. And then the next thing is I need to know, you
have talked about new technology and, obviously, we have got
some things out there we don't even know what it is going to be
yet, we don't know what is going to be asked for. You know, we
don't even know what the system is. But what I want to know
from you is what do you need. And be realistic, because, you
know, we have to come up with a system that works, but what do
you need as a controller to do your job.
That is what I want to know. What do you need as a
controller to do your job. If you would provide that to me.
Whether it is one of these new systems which, again, we are not
sure yet what that is going to be. I am talking about right now
reality, what we can do the next thing with.
And the last thing is--and you can start talking as soon as
I get done, but I also want to know how you feel about--you
were talking about staffing levels and having people who are
qualified, but I had a young man in the Kansas City area that
applied, highly qualified. In fact, this was an individual that
was outstanding in obviously his college class where he
graduated, but, yet he got caught up in this thing. They do the
random--and the FAA is the one I know who has implemented
this--it is the random choosing, you know, your name is drawn
out of the hat and that is the first cut; it is not based on
whether or not the kid is good enough or it is not based on
whether or not he can qualify for it, it is this random cut,
and I hate that. If I want somebody controlling an aircraft, I
want somebody that knows what the heck they are doing, and I
don't care who it is. I don't want a random system.
I would like your comments on that. And, again, if we don't
get through it all, please submit it to my office or submit it
to the Committee, however you want to do it. But the
technology, if you can do that real quick, I would be very
interested and also the other.
Mr. Forrey. The technology right now is we could use more
stuff for the runways, we could use more stuff for the en route
facilities and the TRACONs. Newer equipment like the STARS
implementation was a new standard terminal displays. There is a
thing out there called ACDs. They can be installed a lot
cheaper and do the same thing with more functionality for our
controllers. Those could be distributed throughout the system
on all our terminals and TRACONs.
We have facilities that are in disrepair. We have got
facilities where people are getting sick from mold,
infestation. It is destroying their lives and the agency does
nothing about it. We need more staffing, obviously, so that
people aren't getting fatigued, overstressed, overworked. Those
are the kinds of things we need right now.
As far as the--I can't remember your last question.
Mr. Graves. I was talking about the random lottery.
Mr. Forrey. Yes, how they select people. That is based on
what the agency does. I mean, that is their entire human
resources division that is doing that kind of stuff, and we
have absolutely no say in it one way or the other.
Mr. Graves. I want that to change. And it gets right to
your comment on qualified----
Mr. Forrey. In 1998, when we negotiated the last contract,
we negotiated hiring people based on qualifications. The agency
forced us out of that in 2003 and said, no, we want to pay them
all the same, no matter what their qualifications are. I don't
know why.
Mr. Graves. I think we have got an abundance of applicants
I don't like--and I think there are lots of people out there
that will do--I do disagree with the United--I don't know if I
disagree with you or do disagree with you, I am not quite sure
yet. But I do think there is an abundance of applicants out
there. I think there is an abundance of applicants that can do
the job, but cutting them out of the system purely because they
don't make the lottery I think is wrong.
I have got one more. Please write it down and submit it to
me. This goes along with the overall funding plan also, but
what I need to know is if this contract is opened back up, when
we are talking about funding levels, I want to know how much it
is going to cost the taxpayers and the FAA immediately, and if
it is made retroactive, how much it is going to cost them for
the next 10 years. You can submit that to me also or just call
me and let me know or submit it to the Committee. But I want
the overall cost, because that is what we are talking about in
this whole NextGen system.
Mr. Forrey. I will give you something in writing, but I can
just tell you right off the bat, if it just went back to where
it was before it was imposed on it, it would be flat for the
next 10 years, payroll.
Mr. Graves. Because that is different than information I am
getting, and that is the reason I want to get to the bottom of
it, so please go through that with me.
Mr. Forrey. We will do that.
Mr. Graves. Thank you, Mr. Chairman.
Mr. Costello. The Chair thanks the gentleman.
The Chair recognizes the gentleman from Iowa, Mr. Braley,
for five minutes.
Mr. Braley. Thank you, Mr. Chairman.
I want to thank all of the panel for coming today, but most
importantly I want to thank the members you represent for the
role they play every day in keeping our skies safe and allowing
us to get to where we need to go to.
Mr. Forrey, in your testimony you talked about the direct
correlation between controller staffing and safety, and I
wondered if you could elaborate a little bit on that as it
relates to circumstances in the tower when you are dealing with
staffing shortages.
Mr. Forrey. I will try to, sir. When you have less bodies
to work in the tower, you have fewer eyes watching the
operation, you have more distractions on other duties you now
have to do that you normally wouldn't be doing if there were
other people there in the tower; you have less ears listening
to the frequencies and what is being said and relayed back and
forth between the pilots; and you are working longer time on
position because you don't have people to relieve you. You are
doing combined positions because you can't open up positions
because you don't have enough staffing to do it.
And this is a common occurrence happening every day in the
system. We catch more and more near disasters on a common,
regular day basis because we do, at some places, have
appropriate staffing, but what is going to happen as that
starts to reduce and whittle away, that safety net gets
degraded and now the opportunity and chance for some near
disasters can happen.
I mean, just Atlanta, last month, we had a controller that
inadvertently departed an aircraft head-on into six arrivals
coming the opposite direction on that runway. Caught it two
knots before they were going to hit rotation off the ground. It
blew out the tires on the aircraft, but no one got off the
ground and it ended up safely. That individual had worked
overtime six-day work weeks four out of the last six weeks.
That is a facility that is in severe crisis.
Mr. Braley. Well, the last time you and I spoke we talked
about a similar incident over my district, the 1st District of
Iowa, out of your O'Hare unit as well, correct?
Mr. Forrey. Correct.
Mr. Braley. One of the other things that I noted in your
written testimony is how the imposed work rules are causing
strife between employees and management, decimating staffing
levels by driving out veteran controllers at record pace, and
destroying morale at the facilities, and you cite some
additional examples. As someone who has studied human factors,
can you talk about how these types of morale problems can have
an impact on the ability of controllers to do their jobs in the
tower on a day-to-day basis?
Mr. Forrey. Well, first and foremost, I think our men and
women in the field try to not let those distractions get in
their way and they are still providing the safest operation in
the world, and I commend them for that considering all that is
going on and all the abuse that they are taking under these
imposed work rules.
I think some of the human factors you lose is they get worn
out, they get tired, they get fatigued. They are working longer
hours, they get angry. I mean, just at one of my facilities up
in the Northeast last week, there was a confrontation between a
supervisor and a controller in the hallway, where the
controller accuses the supervisor of bashing him and throwing
him up against the wall, and the supervisor accuses the
controller of doing that. Well, the supervisor weighs 300
pounds; the controller works about 150 soaking wet. I mean, it
is causing a lot of distraction and animosity between workers
and the people that supervise them, and that is not a good
thing for anybody.
So, sooner of later, you know, someone is going to get
involved into some kind of a confrontation and they are going
to miss something, and that is what we are concerned about. So
if you can't have a happy workforce--and they are not happy,
they are just leaving. We are losing about three a day through
attrition.
Mr. Braley. And that provides a good transition for you,
Mr. Waters, because in your written testimony on the pay-for-
performance subject you talked about a factor that is very
common in the workplace but nobody likes to talk about, that is
the problem we encounter when there are workplace rules
requiring regular performance evaluations that are never
carried out and that employees never get the type of guidance
and supervision that they are directed to and, therefore,
disputes erupt between labor and management on whether or not
an employee is living up to performance expectations.
You have cited specific examples where an attorney who was
part of your bargaining unit had to write her own performance
evaluation after never receiving one over a three-year period.
I would just like you to have the opportunity to comment on how
that affects morale in the workplace and contributes to some of
the other problems we have been talking about.
Mr. Waters. Oh, it is a dramatic impact on morale because
there is absolutely no trust. When you talk about pay-for-
performance--and I think, you know, attorneys in particular are
willing--and I think I wrote in there that I told Administrator
Garvey myself that we would be leading the charge for pay-for-
performance. In my office, in my division, where we do
government contract litigation, we have cited the taxpayer
billions of dollars. I mean, we have confidence in our
abilities, but what we don't have is two or three performance
appraisals for the last three years.
The answer is to insist that the managers get graded on
giving performance evaluations. I have been in the Marine Corps
for 22 years. We don't have conversations in the Marine Corps
did you get a performance evaluation this year? No, I haven't
had one for three years. You don't have those because the
officers are graded on their timeliness of giving those
appraisals, and they have to be given. It is not even a
possibility.
So when I came to the FAA, I was shocked to see this. The
other system that we had was so simple, especially on the merit
system. You could look at the sheet and see that it required an
initial counseling, and when that was; a mid-term counseling,
and when that was; and then the final, and when that was. And
as I cited, there were people who didn't get them for years. I
have heard stories of people who didn't get them for 10 years.
Sometimes I got them, sometimes I didn't. I never got the
initial or the mid-term. So I guess you could say that, yes,
sir, that definitely breeds mistrust because you can't have a
pay-for-performance system if you are not measuring
performance; it is impossible. And I know that adult
professionals want feedback----
Mr. Costello. The Chair thanks the gentleman from Iowa and
recognizes the gentleman from Texas, Mr. Poe.
Mr. Poe. Thank you, Mr. Chairman. A couple comments, then I
have a question for Mr. Forrey.
I am concerned, of course, about the aging of air traffic
controllers. I have been to the facility at Intercontinental
Airport, and every time I go up there it looks like an AARP
convention, and that concerns me because eventually those guys
are going to quit, you know, they are going to retire.
I am also concerned about the training. I don't know how
long it takes to train an air traffic controller, but I think
however much time is needed, we should not cut back on training
in the name of getting more air traffic controllers. It sounds
to me similar to we need more doctors in the United States, so
we will just cut med school in half and we will get more
doctors quicker. Both of those have to do with public safety.
So however long it takes to train one, that is how long they
need to be trained.
But my concern is consolidation of facilities with
Intercontinental Airport in Houston and also the Beaumont
facility that I represent about 97 miles away. Your testimony,
Mr. Forrey, about the consolidation of FAA facilities, as you
know, I questioned last week Administrator Blakey about the
possible consolidation of the Beaumont and the Houston
Intercontinental TRACON facilities and the loss of personnel,
including air traffic controllers. She told me that
consolidation would ensure that our controllers would have the
best equipment, but both facilities use the STARS system, so I
am a little confused about that, so I look forward to her
answer. But, in your opinion, what is driving this
consolidation of Houston and Beaumont, and what will it mean to
those of us who use this airspace, including me? And do you
have an example, in your opinion, of where consolidation made
sense and was a good idea, and how it differs from what the
Administration is proposing at Beaumont and its BRAC-like
consolidation in their FAA reauthorization legislation?
Mr. Forrey. I hope I can remember all that. I am very
familiar with the Beaumont operation. They are essentially
taking the airspace from the Beaumont tower and the surrounding
area, putting that airspace over in the Houston
Intercontinental facility, the TRACON, and they are not going
to supply any staffing to support that airspace change, and
they are going to downgrade that facility in Beaumont tower a
couple levels, which is going to be about an 8 percent pay loss
to those employees right off the bat, and essentially contract
that facility out. At least that is what I believe they are
going to do, because they are going to fall down to that kind
of traffic.
As far as the user of the system, you now no longer have
people that are familiar with that airspace and the surrounding
terrain and the surrounding weather. When something happens,
they are going to be stuck over in a facility 100 miles away
that has no clue what kind of airspace they are dealing with
over there; now all they have is a tower.
The agency is in the practice now of closing down these
approach controls and these smaller facilities on the midnight
shifts and moving them over hundreds of miles away, the
airspace, to controllers in other facilities and centers, en
route facilities that have no clue of what goes on in that
airspace. They have no up-to-date weather information, they
don't know what the terrain is like, and on many instances they
don't even have standard operating procedures on how they are
going to run the operation because the agency hasn't gotten
around to it.
So we are very concerned about consolidations. We are not
opposed to consolidations. I mean, it does make sense in some
instances, but not when the agency goes out and does a cost
study basis analysis and takes a 7,000 square foot facility and
says, hmm, let's make it a 14,000 square foot facility and see
if it is just as easy and cheap to keep it here or to move it
somewhere else. Well, they don't need 14,000 square feet, they
need maybe 7,000 or 8,000 square feet. Give it an honest
assessment. So those are the things we are looking at.
Does it make sense to move those facilities to consolidate?
In this particular instance, you are right, it doesn't; they
are both using the modernized equipment. You are taking away a
benefit to the users of the system that fly in and around that
Beaumont area.
The New York TRACON and New York Center we are working on
putting together a consolidated facility. That made sense. You
have got two huge facilities out on Long Island. Put them into
one. It consolidated the airspace and it allows you to provide
better transportation routes in and out of that whole New York
complex area. Through the surrounding centers, it impacted
flights out of Boston, out of Cleveland, out of Atlanta, and
Florida. It was a great plan, but we got shut out of that
process too.
So there is a time and place when we can do that. There are
314 FAA facilities out there. Is it reasonable to believe in
the future that they can continue to fund and update equipment
in all 314 facilities? Probably not. But let's make sure, when
you do something like that, it is for the right reason, and
right now we don't believe it is for the right reason, they are
just doing it for cost.
Mr. Poe. Thank you very much.
What time I have left I yield to the Ranking Member, Mr.
Mica.
Mr. Mica. That is dangerous. I only have one quick
question.
The grievances that have been filed--you know, I consider
air traffic controllers a profession and professionals, and you
spoke to them as professionals, but I was told that since
September 3rd, 2006, there have been filed over 248,276
grievances. Now, all of that has to take time. This is one of
the forms that has to be filled out with the documentation,
which obviously is taking a lot of air traffic controllers away
from their responsibilities. But this concerns me. This is a
very serious amount of time.
I really don't think air traffic controllers--now, I know
they have some differences with you call ``work-imposed
rules,'' but this is not my idea--put this up there--this is
not my idea of professionalism. So we have got to stop this and
we have got to stop this and start acting like professionals in
this process. This is not acceptable.
Mr. Costello. The Chair would observe that Mr. Poe's time
has gone over by a minute.
We are going to be called for three votes, but before we
do, I would recognize the gentleman from Oregon, Mr. DeFazio.
Mr. DeFazio. Thanks, Mr. Chairman. I have been enjoying the
debate, but let's get back to some critical safety and
operational issues here.
I think a good case has been made that we need a just
settlement and a contract, but I am going to go to something a
little more specific, and the question goes to Mr. Brantley
with PASS.
I am very concerned to read in your testimony the FAA's
move to a fix-on-failure approach, abandoning periodic
maintenance and certification of NAS systems. Is this true?
Mr. Brantley. Yes, sir, they are moving towards that
approach and where, today, a lot of the maintenance is
preventive in nature, the idea is to----
Mr. DeFazio. But if we have a failure, it is a critical
component, doesn't that mean we suddenly have airplanes that
can't leave, airplanes that can't land, airplanes in holding
patterns somewhere out there, and a lot of turmoil and
potential for not only expensive delays, but also jeopardizing
health and safety?
Mr. Brantley. Yes, sir, absolutely. And, you know, part of
the problem is the way the agency looks at things today is
different than they used to, as well. One of the fundamentals
built into the system is redundancy, and if your primary system
were to fail, you would begin restoring that immediately, even
though you are on a backup, so that you have a safety margin as
well. And one of the things that we are seeing now is as long
as there is a backup that you can go to, in many instances they
don't even start getting someone to work on it until the next
business day or the next time they have someone available.
Mr. DeFazio. I think I read of an instance earlier this
year, it might have been LA, I think, where both systems, both
primary and secondary, went down.
Mr. Brantley. Yes, sir. And there wasn't a person available
that was actually--you know, the person that was assigned to
cover the airport was also covering other airports in the area,
so they weren't there at LAX when it happened.
Mr. DeFazio. Could we call this sort of penny wise and
pound foolish? I mean, has the industry itself complained to
the FAA about this, said, really, this doesn't make a lot of
sense to us here?
Mr. Brantley. Yes, sir, I think one of the factors is that
outages of equipment that are equipment-related are such a
small percentage of the overall agency outages, it doesn't get
the attention that at least I think it deserves. Because even
though it is small, it is preventable to a large extent. So
weather is something we are always going to struggle with, but
that gets most of the agency's attention.
And, yes, I think having the right number of trained people
where they are needed is absolutely critical, and that is why
we asked for a study on a staffing model and on training
because, frankly, a debate right now about staffing is very
hard to have because the agency can't even determine where they
should have people.
Mr. DeFazio. Is there a pending study?
Mr. Brantley. There is not.
Mr. DeFazio. Okay.
Mr. Brantley. We are asking for some help.
Mr. DeFazio. I think that is something the Committee might
want to put into the FAA reauthorization that mandates such a
study.
I note a number of other areas that I think are really
critical. You say we also have a dearth of qualified safety
inspectors. Could this be true?
Mr. Brantley. Yes, sir. And again, you know, the workload
has increased and the number of inspectors has not. You know,
it creates a situation where inspectors are spending less time
doing inspections.
Mr. DeFazio. So they are just checking paperwork that
someone else created, like a designee or something----
Mr. Brantley. Absolutely, sir.
Mr. DeFazio. Or maybe a non-qualified maintenance facility.
Mr. Brantley. Well, unfortunately, many of those they are
not even allowed to inspect unless the sponsor, whoever is
contracting with them, offers to take them in.
Mr. DeFazio. Wait a minute. So we have someone doing
critical aviation maintenance over here, they have been
contracted with by a qualified facility or an airline over
here, this is not a qualified facility. Our inspectors, as few
as they are and as little capability as they have to get around
and inspect these things, they can't go in there without----
Mr. Brantley. Not an unannounced inspection. The sponsor
has to take them in. And, you know, as bad as that is, even
doing an inspection on a carrier or a certificated repair
facility is becoming more and more rare because they are not
allowed to, whether it is for reasons of budget, because they
can't travel to go to the facility, or just because they don't
want anyone going in there and disrupting the work the way they
like to talk about it.
Mr. DeFazio. You mean like overseeing the work?
Mr. Brantley. Exactly.
Mr. DeFazio. Checking the work?
Mr. Brantley. Yes, sir.
Mr. DeFazio. I find those things very alarming, Mr.
Chairman, and hopefully we will have more opportunity to
discuss those next week. But you need an adequate staffing
level for your technicians, you need an adequate staffing level
for the inspectors, and that is something I hope we can
accomplish in the budget and then we will get into those other
concerns next week.
Thank you, Mr. Chairman.
Mr. Brantley. Thank you, sir.
Mr. Costello. I thank the gentleman from Oregon.
The Chair, at this time, would announce we have a little
over nine minutes. We have three votes on the floor.
Immediately after the last vote we will come back and resume
the hearing.
At this time the Chair would recognize the distinguished
Chairman of the Full Committee, Chairman oberstar.
Mr. Oberstar. Thank you very much, Mr. Chairman, and thank
you for your diligence in holding these hearings and thank all
the other Members on both sides of the aisle for participating
today. I regret I stopped in at the beginning, heard your
presentation, then I had other children of transportation to
deal with, like Water Resources Development and Technical
Corrections Act, and a few other things that we are trying to
wrap up here.
We don't need to spend a lot of time discussing--at least I
don't--discussing the concerns of the air traffic controllers.
We had extensive hearings in 1981 and in 1980 about conditions
in the facilities--whether towers, TRACONs, en route centers--
about the state of the art of aviation technology. We went
through all of that. We knew what needed to be done, it was all
laid out in the course of hearings in the Subcommittee of
Investigations and Oversight. And when the government didn't
participate in a cooperative and constructive manner with the
air traffic controllers, they walked out.
My father had card number one at the Steel Workers Union in
1937, he was the first one to join. To establish the right of
workers to bargain collectively and to withhold their services
when the collective bargaining process broke down, that is a
fundamental right. I was there at Farmington on August 4th. The
strike occurred on August 3rd. And I stand with you today. We
need to fix the collective bargaining process. Chairman
Costello said that at the outset. We have got to fix it.
This isn't about what kind of shirt you wear in a darkened
TRACON facility or what type of slacks you wear.
Professionalism is not in your clothes, it is in your head.
Professionalism is in the command you give to the aircraft.
Professionalism is being able to handle 27 aircraft in your
sector at a crisis time.
When a KC-135, for example, is in that airspace and it has
a fire onboard and it is loaded with fuel, and you have got to
get the other 26 aircraft out of that airspace, and you need
every bit of professionalism, I don't give a damn whether you
have got shorts on or a t-shirt on. I do care whether your
commands are right; whether your separation is right; whether
your management is sound. That is what this is about. The FAA
needs to negotiate in good faith and we have to provide you
with the tools to be able to do that, and we will find a way to
do it.
Thank you, Mr. Chairman.
Mr. Costello. I thank the distinguished Chairman.
Let me thank the first panel for their testimony and for
answering our questions. You are dismissed. We thank you for
your testimony.
We will hear from the second panel as soon as the
Subcommittee resumes after the last vote.
[Recess.]
Mr. Costello. If we could ask those who are on the second
panel to please have their seats, we will go ahead and get
started.
The Chair would like to welcome the second panel and make
brief introductions. First, Captain Terry McVenes, the
Executive Air Safety Chairman for the Air Line Pilots
Association; Patricia Friend, the International President for
the Association of Flight Attendants; Robert Roach, the General
Vice President of the International Association of Machinists.
We thank you for being here today and the Chair recognizes
Captain McVenes under the five minute rule.
TESTIMONY OF CAPTAIN TERRY MCVENES, EXECUTIVE AIR SAFETY
CHAIRMAN, AIR LINE PILOTS ASSOCIATION; PATRICIA FRIEND,
INTERNATIONAL PRESIDENT, ASSOCIATION OF FLIGHT ATTENDANTS-CWA;
ROBERT ROACH, JR., GENERAL VICE PRESIDENT, INTERNATIONAL
ASSOCIATION OF MACHINISTS
Mr. McVenes. Thank you, Mr. Chairman, and good afternoon. I
want to thank you all for the opportunity to outline the Air
Line Pilots Association's perspective on FAA safety and
operational programs.
ALPA is the world's largest pilot union. We represent more
than 60,000 pilots in the United States and Canada. The
Association was founded in 1931 and our motto since its
beginning has been ``Schedule with Safety.'' Even today, in
spite of the challenges and obstacles facing the airline
industry, airline pilots remain focused on operating airliners
safely and, as a result, the U.S. safety record is the envy of
the rest of the world. From pilot fatigue to securing funding
for modernizing the airspace system, the 110th Congress will
need to play a pivotal role within the aviation community to
maintain our unrivaled safety record.
Today's air traffic system is under more pressure than ever
to accommodate more airplanes in the same airspace, and we are
all too familiar with the recent media reports of 10 hour
ground delays some of our airlines have experienced. Those
delays are unfortunate, but the broader issue is that these
delays signal a weakness in the system that may eventually lead
to an accident if it is not addressed.
We must take these delays as a warning signal that the
system needs help. We must proactively manage the safety risks
that exist in our industry through safety management systems,
or SMS, before an accident occurs. ALPA is a strong SMS
advocate and Congress needs to monitor the FAA's progress on
SMS implementation to ensure compliance with the ICAO standards
deadline of January 1st of 2009.
The Aviation Safety Action Program, or ASAP, is a critical
element of SMS or in any aviation safety program. It allows
front-line employees to report safety and operational issues
first-hand, enabling the industry to work together to find
solutions to difficult problems.
As an industry, we have seen the value of ASAP go far
beyond the cockpit to other employee groups in the airlines.
Pilots and the airlines they fly for reap the safety and
economic benefits of ASAP. In the air traffic arena, however,
that same culture does not exist, and the front-line
controllers' advice and input is often not welcome. They do not
have a means to report safety or operational issues in the same
cultural environment that many of the pilots at the other end
of the radio do. And even though the FAA has encouraged and
promoted ASAP for our Nation's airlines, they have not done so
internally for the benefit of their own organization.
In order to take that next step in aviation safety, all
components of the system must be involved in ASAP, including
air traffic control. Congress must urge the FAA to
expeditiously make ASAP a reality for air traffic controllers.
And just like the airlines, this requirement requires a
commitment from the very top of the organization; in this case
the FAA, and in this case specifically the FAA Administrator.
The Administration can make this happen and it will have a
tremendous impact on the safety and efficiency of our entire
air transportation system.
Allow me to switch now to transportation worker fatigue,
which is a present and growing problem. FAA duty and roles for
airline pilots are a dated patchwork of regulations developed
over the past 60 years. ALPA recommends that Congress strongly
encourage the FAA to modernize flight and duty regulations
using rational, scientifically based working hour limits. Being
on duty for 15 or 16 hours may make sense in a normal office
environment, but it makes no sense for an airline pilot
operating a complex machine in a complex environment, and it
should make no sense to America's traveling public whose lives
often depend on split-second decision-making.
ALPA has long advocated one level of safety in the airline
industry. Nevertheless, there are several discrepancies between
cargo and passenger carrier regulations that must be addressed
in order to bridge the safety gap between passenger and all-
cargo operations. Cargo airlines often operate in the same type
of aircraft to the same airports at the same times as their
passenger counterparts, and these aircraft need to be operated
to the same safety and security standards, regardless of their
payload. Flight deck door and firefighting requirements, to
name just two of the issues, simply do not provide the same
safety and security for cargo airlines as for passenger
airlines, and legislation can fix that.
To keep our National Airspace System functional, Congress
must secure long-term funding for improvements now.
Modernization efforts must include upgrading computer and
satellite systems to improve operational safety and efficiency.
More effective tools must be developed that will increase
capacity and will also result in lower fuel usage, reduce taxi
times, more efficient gate management, and more efficient
departures.
As a tragic overrun accident at Midway Airport in December
of 2005 showed us, we also need to improve runway safety areas
at all airports. The FAA's own numbers tell us that 45 percent
of our Nation's airports must be improved to meet the
standards. We also need to have more funding of industry
research to develop accurate and reliable means to measure
runway friction and to provide a reliable means to get accurate
runway surface condition reports to the cockpit.
Next week marks the thirtieth anniversary of the disastrous
ground collision of two airliners in Tenerite. While much work
has been done to prevent a similar occurrence from happening
again, we are all too aware of several close calls in Chicago
and Los Angeles just in the last nine months, any one of which
could have had a similar disastrous result. The runway
incursion problem has been thoroughly studied and mitigations
have been devised that can lessen the risk of runway
incursions. However, the Government and industry must be
willing to devote the resources required to achieve long-term
solutions to this problem.
The final issue I want to mention is outsource maintenance
oversight. One way that many of our carriers have cut costs
since 9/11 is by reducing the amount of maintenance they
perform internally themselves. When maintenance is outsourced,
oversight becomes more complex and more difficult. Congress
must ensure that the FAA retains the mandates and the resources
to fill its oversight role in the new economic environment of
outsource maintenance.
For more than 75 years, ALPA has had a tremendous impact on
improving aviation safety. Today ALPA continues to be the
world's leading aviation safety advocate, protecting the safety
interests of our passengers, fellow crew members, and cargo
around the world. Congress must help us ensure that the airline
industry's safety net is not eroded. Together we can advance
the aviation safety in the years to come. As professional
aviators who help keep this industry safe, together with the
strong support of Congress, we are confident of success,
success that is vital to the well-being of our Nation, our
industry, and the traveling public. Thank you.
Mr. Costello. Captain, thank you.
Ms. Friend, your statement, if you can give us a summary in
five minutes or less.
Ms. Friend. Thank you, Chairman Costello, for giving AFA
the opportunity to testify today. Flight attendants, as the
first-responders in the aircraft cabin, have a unique
perspective on a number of the safety programs of the FAA, and
we are pleased to have a seat here today to discuss some of
these issues.
Unfortunately, I must tell you that the FAA has repeatedly
failed to take action on several fronts that would improve the
overall safety of the employees that work under its
jurisdiction. My written testimony highlights a number of
important issues, but in the five minutes allotted today I want
to focus on just two of them: flight attendant fatigue and the
lack of basic workplace safety and health protections for
flight attendants.
Fatigue is a very real and serious concern for the flight
attendant workforce in this Country, just as it is for pilots.
Some air carriers are routinely taking advantage of a reduced
rest provision which allows a rest period to be reduced to
eight hours. It is our understanding that the original intent
of this provision was to accommodate day-of scheduling delays
such as bad weather or air traffic control problems. This
exception has become the rule and flight attendants are now so
exhausted that they have informed us that they have, in some
cases, forgotten to perform critical safety functions.
Using the term ``rest period'' can be misleading because it
involves much more than just sleep. The rest period can begin
as soon as 15 minutes after an aircraft pulls into the gate and
continue until one hour prior to the next scheduled departure.
This rest period must also include waiting and travel time to
the layover hotel; checking in; eating a meal, since many of
our carriers have eliminated flight attendant crew meals;
getting prepared for bed; then getting dressed for work the
next morning; traveling back to the airport and preparing for
the flight. Our members are reporting that the actual sleep
time in an 8-hour rest is in many cases only between 4 and 5
hours.
To further highlight the FAA's turning of a blind eye to
this practice, an FAA spokesperson, in response to a question
from the media on this issue, stated the FAA rules on flight
time and rest for both pilots and flight attendants are
fundamentally sound; they serve aviation safety very well. We
fundamentally disagree.
Congress has recognized this problem and directed the FAA
to conduct a study of flight attendant fatigue with a report
that was due originally in June of 2005. After a year of
stonewalling, the FAA finally released the report in June of
2006. The report concluded that flight attendants are
definitely experiencing fatigue, and it went on to recommend
specific areas for further evaluation. AFA's request is that
CAMI be directed to continue their initial research and that it
receive adequate funding to do so.
Like our longstanding battle to combat flight attendant
fatigue, for well over 30 years AFA has been fighting for the
most basic workplace safety and health protections for flight
attendants. Those pleas continue to fall on deaf ears at the
FAA. Flight attendants encounter numerous occupational injuries
and illnesses while working aboard commercial flights. Their
injuries are at rates several times greater than those for all
private industry workers and even significantly greater than
the rates experienced by construction workers.
The reason that flight attendants continue to experience
such high rates of injuries is that we are not covered under
OSHA. The FAA has repeatedly refused to take any significant
action to enforce standards protecting the occupational safety
and health of flight attendants. The FAA claimed exclusive
jurisdiction over our workforce in 1975. After decades of
inaction by the FAA, AFA filed a petition for rulemaking in
1990, asking the FAA to adopt selected OSHA safety regulations
and apply them to airline crew members. Seven years later the
FAA finally responded, declining the petition, stating that the
issues do not address an immediate safety concern.
After increased pressure from AFA, progress seemed to be
forthcoming when the FAA and OSHA entered into a historic
Memorandum of Understanding in August of 2000. The MOU
established a joint FAA-OSHA team to identify whether OSHA
requirements could be applied to the working conditions of
employees on aircraft. The first report of the joint team
identified five basic OSHA protections that could be
implemented without compromising aircraft safety concerns.
Unfortunately, the team did not meet again until January 2002,
at which time they could not agree on a time line for
implementation of the relevant OSHA regulatory standards.
The DOT Inspector General has issued a report which
concluded that unless FAA and OSHA resume working together, we
have no confidence that industry standards will be issued in
the near future to address occupational hazards. The report
went on to recommend several concrete actions that the FAA and
OSHA should take. It stated ``If these recommendations are not
implemented, it will, in our opinion, be apparent that after 25
years of limited progress, an alternative approach will be
necessary.'' To date, the FAA and OSHA have taken no steps to
implement the recommendations.
In light of the continued stonewalling on the part of the
FAA, we believe it is time for Congress to force the FAA to
relinquish the exclusive jurisdiction over flight attendant
workplace safety and health. Thirty years of inaction is far
too long.
Again, Mr. Chairman, thank you for giving me the
opportunity to testify today.
Mr. Costello. Thank you, Ms. Friend.
Mr. Roach, you are recognized to summarize your statement,
please.
Mr. Roach. Thank you, Mr. Chairman, for the opportunity to
appear before this Committee. I am here representing the
National Association of Machinists and Aerospace Workers at the
request of International president R. Thomas Buffenbarger. We
represent over 100,000 airline employees within this industry,
employees at every classification with the exception of pilots.
Our statement is in the record and we will be very brief here
because, as I stated, the statement is in the record and we
don't want to take up too much time.
Our first situation is the NMB, National Mediation Board
and National Labor Relations Board jurisdiction. While Congress
has been discussing and voted on H.R. 800, the Employee Free
Choice Act, which gives the employees an opportunity to be
recognized by a carrier, we have a large group of employees who
were certified under the National Labor Relations Act under the
existing procedures, signed up for an election, voted secret
ballot, had been represented in some cases for 10, 20, and 30
years, who overnight have lost union representation because of
a change in the interpretation of the law by the National Labor
Relations Board and the National Mediation Board.
For example, in Minneapolis we had well over 200 members
certified in the IAM since 1973. Overnight, in 2006, they lost
union representation because they wanted improvements in their
particular contract. This is creating an unsafe condition
because, instead of having long-term loyal employees working on
the airports, fueling planes and delivering certain items to
the airports, we have a group of employees who are making
minimum wage and change jobs very rapidly. We think that a
change in the law is required to fix this problem.
In addition, the lack of consistency by the National Labor
Relations Board, National Labor Relations Act, and the Railway
Labor Act in terms of express carriers. Under UPS, the
employees, the truck drivers and the mechanics, the ground
mechanics are covered under the National Labor Relations Act.
At Federal Express, because the term ``express carriers'' was
entered in the middle of the night into the law, Federal
Express employees are all covered by the Railway Labor Act,
which means to organize these employees, they must be organized
throughout the entire Country, which is much different than
what has happened at UPS. So there is a lack of consistency and
there is not a level playing field between the carriers.
We represent a large number of flight attendants as well,
and we echo Sister Friend's concerns about flight attendant
fatigue, as well as the fact that OSHA does not have control
over the safety of flight attendants. We also have a concern
about self-defense. Currently, today, self-defense training is
voluntary and the TSA handles voluntary training. We do not
believe that since 9/11 and the tragedy that 9/11 has caused,
that self-defense training, which is designed to protect the
individual flight attendant, as well as the flying public,
should be voluntary. There should be mandatory training for all
flight attendants, all active flight attendants.
Foreign repair stations, there is insufficient oversight.
There is not enough funding to get the proper inspections. A
number of jobs have gone overseas, which every job that goes
overseas is 16 other support jobs that we lose in this Country.
We believe it is a matter of national security, as we export
technology and jobs overseas, at some point in time some of
this technology may come back to the United States to hurt us.
It wasn't that long ago that President Saddam Hussein was an
ally of the United States, until he became a terrorist, a
member of the axis of evil.
Foreign competition, we quickly want to echo the sentiments
of my colleagues here, that we do not believe that any
additional foreign intervention into ownership of airlines
would be beneficial. Increased ownership must not be allowed.
Congress rejected President Bush's Administration plan and that
position should not change. The airports are a very safety
sensitive place to work, it is a very dangerous place to work,
and we believe that more oversight, not less oversight, is
required.
Since 9/11, we believe that because of subcontracting of
work to small operations the safety of the airports and the
employees and the flying public has been compromised. We stand
ready to work with this Committee and the Members of Congress
in providing any input that we can as a machinists union to
improve the conditions.
We are prepared to answer any questions. Thank you.
Mr. Costello. Mr. Roach, we thank you.
Captain McVenes, a couple of quick questions, please. One
is in your testimony you indicate that there is a need to
ensure that the aviation community does not become a culture of
capacity, but a culture of safety, and I wonder if you might
elaborate on that.
Mr. McVenes. Currently, today, there is a lot of emphasis
being placed on increasing capacity and that is a good thing,
it is good for the traveling public, it is good for everyone to
get capacity up. However, we cannot increase capacity just for
the sake of increasing capacity unless we make sure that good
safety safeguards are part of the solution to increasing
capacity.
Mr. Costello. I wonder if you might talk a little bit about
the outsourcing of maintenance. In your testimony you indicate
how there may be difficulty in the distance between maintenance
being done and the people ultimately responsible for its
correct completion, the more complicated the process might be
by outsourcing to foreign countries and so on.
Mr. McVenes. What we are finding, there is a very wide
range of differences in the various repair stations out there
that many of the airlines are using for this outsourcing. Some
are done very well, some are not done so well. The results that
we are getting back when the airplanes come back into service,
a lot depends on the oversight that took place by the
regulatory authorities at that repair station. So we have to
ensure that that oversight continues. If there is not good--you
know, everybody has got budgets that they are trying to work
under, including the FAA, when it comes to oversight, but we
have to make sure that they have got the funding there to have
the right oversight, regardless of where the repair station is,
to ensure that the work coming out of there is done correctly.
Mr. Costello. Well, we share your concern, and if you were
here for my opening statement, that is an issue that we are
going to delve into further.
Let me just say I really do not have questions at this time
for Ms. Friend or Mr. Roach, but let me say that with the
flight attendants, I think you have made a very compelling
case, not just today, but in many instances, the 30 years of
inaction. We hope that, as we move forward with the
reauthorization and other legislation, we can address some of
the issues that you in fact have been working so hard to
address over the years.
Mr. Roach, the issue with the National Mediation Board, I
couldn't agree with you more, and at some point in time I hope
that we can work with you to address that issue as well.
At this time, the Chair recognizes the Ranking Member of
the Subcommittee, Mr. Petri.
Mr. Petri. Thank you very much, Mr. Chairman. Let me just
say, first of all, as a member of the traveling public, I would
like to thank all of your members for the generally high level
of service that you provide. I mainly see the stewardesses or
flight attendants, and they have a lot of challenges and do a
great job almost all the time.
I have a couple of questions, and this one you may not
really want to answer, Captain, it has been a hot potato in the
community for years. The international rules seem to be
changing in the direction of allowing pilots who meet health
safety standards to fly up to age 65 with a co-pilot who is 60
or under. This has been debated, obviously, and I know you have
Members on both sides of this. Do you have any guidance you can
offer to us here in Congress on that issue?
Mr. McVenes. Well, you are absolutely correct, it is a very
divisive issue for all of us, and it is one that we really are
putting a lot of effort into completely understand. As it
stands right now, in light of the FAA's announcement for
wanting to change the rule--and it is going to be placed into
rulemaking--we feel that is the proper venue to deal with the
age 60 question. Through that rulemaking process we can make
sure that all the issues are addressed, safety and operational
issues, to ensure they get addressed correctly, and whatever
decisions are made, that they are done with all of those things
in mind. But we really believe the rulemaking process is the
way to go.
Mr. Petri. Thank you.
In your testimony, Ms. Friend, you strongly urge that we
have legislation to encourage regulations setting bag weight
limits in the cabin, I guess, on the planes. Is there a reason
for that?
Ms. Friend. This is the carry-on bag issue?
Mr. Petri. Yes.
Ms. Friend. Right. There are a number of reasons. First of
all, the excess cabin baggage is a primary cause of a lot of
injuries for our members attempting to get those bags properly
stowed. We also believe if we limit the amount of baggage that
is allowed into the cabin, that it also expedites the security
process because the screeners have less bags that they have to
examine through the x-ray machine, and we believe it increases
the level of safety. I mean, there is just a limited amount of
space in the cabin of that aircraft, and just traveling as a
passenger, I can see how overstuffed those bins are, and I have
no confidence at all that they would hold in any kind of an
accident or incident, that that cabin would be littered with
baggage and impede the safe evacuation of those passengers. So,
yes, we strongly urge a reduction in the amount and size of
baggage allowed in the cabin of the aircraft.
Mr. Petri. Mr. Roach, could you expand on your testimony
opposing foreign investment in U.S. airlines? I am interested
not in control or management of airlines, but just investment
in the American corporate--it is a global world; we are
investing all over the world in a variety of ways. Why wouldn't
it be a two-way street?
Mr. Roach. Well, we are talking about control. The current
investment level as it stands now, we are not trying to change
that. But there is a lot of discussion about increasing
investment from foreign carriers and in some cases some
standards that don't appear to be control but is control. I go
back to my days when I represented people at British Airways
and British Airways invested $450 million in U.S. Airways, and
there was some discussion with the Department of Transportation
that they could not have control, and an executive of British
Airways said to me in the hallway one day, he said, you know,
you don't invest $450 million in anything and don't have
control; we have control.
So the more investment that we allow and the higher the
percentage of this investment, they, at some point, have
control over these airlines and it becomes anti-competitive in
our view. And they have decimated the foreign flags in this
Country. All the foreign flags that used to fly here, they have
all disappeared or been reduced. So we think that foreign
investment could be a very bad thing once control, once a
foreign carrier or a foreign entity takes control of an
American or domestic carrier.
Ms. Friend. Mr. Chairman, may I add a comment to that?
Mr. Costello. Please.
Ms. Friend. I think, Congressman Petri, it is all in how
you look at the U.S. air transportation system. I look at it as
a public service, and in many cases as a part of our national
defense when we provide the civil reserve air fleet and when we
provide military airlift during times of war. It is not an auto
plant or a bank or a telecommunications industry, it is part of
our infrastructure, and I just don't think that control of it
should be in foreign hands.
Mr. Costello. Thank you.
The Chair recognizes the gentleman from New York, Mr. Hall.
Mr. Hall. Thank you, Mr. Chairman, and thank you to all of
our panelists.
I agree, Ms. Friend, with the statement you just made about
critical infrastructure and services that relate to our
national security--at certain times they definitely relate to
our national security--needing to be in American hands.
I wanted to go back to Captain McVenes' testimony that the
fatigue cushion once provided by negotiated work rules has been
completely eliminated. I was curious if you could elaborate on
that.
And then, Ms. Friend, if you would also speak to fatigue
and to the CAMI study on fatigue and what recommendations were
made.
Mr. McVenes. If you take a look at the regulations that
have been developed for flight duty and rest periods, they
really date back 60 years, to a time when we were flying
piston-powered airplanes and sometimes three pilot crews and
very short haul operations. The way we have dealt with the
changes in the industry in spite of those rules has always been
through the collective bargaining agreements, where we were
able to secure more realistic rest periods, more realistic duty
times from those collective bargaining agreements.
After 9/11, when the industry went through a very
tremendous economic downturn, we lost a lot of those--there
were a lot of changes that were made in those collective
bargaining agreements as they applied to flight and duty time
and rest periods. Consequently, we are at a point now where
most of our airlines are operating strictly under the basic
Federal regulations, the FARs, so we are seeing now that we are
having a lot more issues purely from a safety perspective just
on fatigue, and the reason has been because the contracts have
changed.
Ms. Friend. Captain McVenes is right. Those duty and rest
times were intended to be a floor, and a floor that we never
actually had to face and work under until all of the
concessionary agreements made during bankruptcy. We now know
that it is an inadequate floor.
But on your question of the original CAMI fatigue study, in
the initial study, CAMI reported that they only had time to
really review existing literature and do some preliminary
interviews or surveying of cabin crew members or flight
attendants. What they recommended that they do is a more
extensive study, actually follow selected crew members around
and measure their reaction times at certain points in the duty
time or following the reduced rest.
So we have asked or we are asking that they be fully funded
for what they need to complete that study so that we can only
identify that flight attendants are fatigued--we know that--but
we can identify where is the break point, what is the maximum
amount of duty and minimum amount of rest that is required to
maintain the vigilance and the reaction time that is necessary.
Mr. Hall. Thank you. I also wanted to ask, Ms. Friend,
about your testimony about poor air quality in the cabin or
treatment of the aircraft with pesticides and the risks that
you are aware of or that you suspect to passengers and crew.
Ms. Friend. On the question of the pesticides, several
countries require either active pesticide spraying or residual
pesticide spraying. We have a number of our members and we are
aware of some passengers who have suffered continuing health
problems as a result of being exposed to this spray. Talk about
Australia, where we do residual spraying, where the cabin seats
and the crew bunks are literally saturated with a pesticide and
then allowed to dry for maybe 8 hours, and then people actually
are seated. And, you know, whether or not you have a particular
sensitivity, you know, you in fact can be affected by this
spray even though it is dry. What happens with our members is
that they have repeated exposure and they do build up a
sensitivity and suffer from rashes and even from some
neurological damage.
We have been working with the Department of Transportation
on an alternative to chemicals, something that is called an air
curtain, and actually has been tested and does work. We are
actually going to be testing it soon in Puerto Rico. The
government there has agreed to test, and if they are satisfied
that it works, then they will eliminate the chemical spray and
go to this air curtain. So the DOT has been very cooperative in
working with this and are committed with us to try to persuade
other countries to abandon the chemical and go with this non-
chemical approach.
Mr. Hall. Thank you very much, and thanks for all the work
that you do and your members do.
Thank you, Mr. Chairman.
Mr. Costello. I thank my friend from New York.
The Chair recognizes now, under the five minutes rule, the
gentleman from Illinois, Mr. Lipinski.
Mr. Lipinski. Thank you, Mr. Chairman. I want to thank all
of our witnesses for their testimony. I was actually back in my
office listening to all your testimony. I appreciate the work
that you do on behalf of those who are working and putting
themselves in these situations. I know we were talking about
flight attendants, the important safety role that they serve
right now. I think that is especially true.
One thing, quickly, I just want to ask in regard to, again,
a safety question, but safety at airports. I want to ask
Captain McVenes your testimony indicates that much more needs
to be done to ensure the safety of runways and the airport
environment. Right now, Midway Airport, there was an
unfortunate situation where the plane ran off the runway. The
runway safety areas are small there, but right now we are
putting in the EMAS to restrict the planes that may go into the
runway safety area. Are there any other recommendations that
ALPA has in this regard in general?
Mr. McVenes. Certainly, the effects of EMAS installations
are something that can really help at those airports that are
geographically challenged, shall we say, for runway lengths. We
also have to take a look at the operating waves that we allow
some of the airplanes to operate at when they go into some of
these airports to ensure that they can safely be operated. In
the other areas of runway safety, there are tests being done
with runway status lights, for example, that can help in the
runway incursion area. Tests were done in Dallas, also in San
Diego, and I know there are some other airports around the
Country, including O'Hare, I think, that have taken a look at
this system as a means to help that runway incursion problem.
These type of things, along with perimeter taxiways, could
really go a long way to help runway safety. And then we can
start taking a look at some very simple solutions, simple
things like proper markings on the taxiways and runways; hold
short lines, how they are signed and marked can help in that
runway incursion area, too, to help us in this, the runway
safety problem we have.
Mr. Lipinski. Thank you.
A quick question for Mr. Roach in terms of airport workers.
There has been some talk about maintaining safety and making
sure only people who should be in an airport are allowed in
there. Do you have any concerns one way or the other on the
rules or the access right now to the airport? Do you experience
any problems?
Mr. Roach. I think with a lot of the subcontracting of work
that is going out, there are a lot of people coming on the
airports that do not work for airlines, and that has been
increasing over time. I recall some years ago at Continental
Airlines, there were 100 employees who were working on the
overnight cleaning who belonged to a company, not Continental
Airlines, and it was found this company that had brought these
people in had illegal documents and we didn't know who these
people were or what they were doing.
The access to employees coming on the airport, they all
must go through a security check, but access for non-airline
employees, driving trucks onto the airport, is very bad, and we
have a concern for the people that we represent that people
have access to the airports who have not been checked, who
don't have criminal background checks, who have not been
tested, and that these people are allowed to come on the
airports. So we do have a concern about that particular group
coming onto the airport.
Mr. Lipinski. Thank you.
Thank you. I yield back the balance of my time.
Mr. Costello. I thank the gentleman and I thank all three
of our witnesses. We appreciate your testimony here today and
look forward to working with you as we proceed with the
reauthorization. Thank you.
At this time, the Chair will ask the third panel to come
forward, and while you are coming forward I will make the
introductions.
Dr. Gerald Dillingham is back with us today. He was here
yesterday and was very patient yesterday and has been patient
today. He is, of course, the Director of Physical
Infrastructure issues with the Government Accountability
Office. Mr. Steve Baker, who is the President of the FAA
Managers Association; Mr. Warren Kroeppel, who is the General
Manager of LaGuardia Airport, the Port Authority of New York
and New Jersey; Dr. Steve Sliwa, who is the CEO and President
of The Insitu Group; and Mr. James Renninger, who is the
Director of Aviation Center of Excellence, Florida Community
College at Jacksonville.
We would ask that you all take your seats, and we will
proceed with Dr. Dillingham. You are recognized. Again, we
appreciate not only you being here yesterday and today, but all
of your good work. You are always very responsive to the
Subcommittee, both in the past and currently, and we appreciate
all that you and your folks do.
TESTIMONY OF GERALD DILLINGHAM, DIRECTOR, PHYSICAL
INFRASTRUCTURE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE;
STEVE BAKER, PRESIDENT, FAA MANAGERS ASSOCIATION; WARREN
KROEPPEL, GENERAL MANAGER OF LAGUARDIA AIRPORT, THE PORT
AUTHORITY OF NEW YORK AND NEW JERSEY; STEVE SLIWA, CEO AND
PRESIDENT, THE INSITU GROUP, INC.; JAMES B. RENNINGER,
DIRECTOR, AVIATION CENTER OF EXCELLENCE, FLORIDA COMMUNITY
COLLEGE OF JACKSONVILLE
Mr. Dillingham. Thank you, Mr. Chairman, Mr. Petri, Mr.
Lipinski. This FAA reauthorization comes at a very critical
time for the Nation's air transportation system and the FAA.
The current system is under stress, as evident by last year's
record delays and the increasing number and duration of air
traffic control system outages. My testimony this afternoon
addresses three specific questions: What progress is FAA making
with the operation of the current ATC program that will be
essential foundations for NextGen? Secondly, what are the key
operational issues that need to be addressed to help ensure a
successful transition to NextGen? And, third, what are the key
safety areas that need to be addressed for the continued safe
operation of the Nation's air transportation system?
With regard to the current system, over the last few years,
FAA has made significant progress in moving to more business-
like and cost-effective operations of the air traffic control
system. There are, however, some significant challenges that
need to be addressed during this authorization period. One of
those challenges is for FAA to institutionalize the progress
that it has made in managing the operations of the current ATC
system. This challenge is made even more difficult because the
new FAA Administrator and a permanent leader of FAA's air
traffic organization will also need to be selected.
Mr. Chairman, because the next few years are very critical
for implementing NextGen, FAA may want to identify a candidate
for chief operating officer at the ATO who is able to serve the
full five-year term.
There are other significant challenges that need to be
addressed. For example, FAA must address the problem of the
increasing number and duration of ATC system outages.
Maintaining existing systems as it begins to acquire NextGen
systems is critical, since these existing systems will be the
core of the Nation's ATC system for years to come.
Finally, continuing FAA initiatives, such as facility
consolidations and closings, should be based on a risk
assessment and with full involvement of the Congress and FAA's
internal stakeholders, including the controllers and the
technicians.
Now I would like to identify some of the key operational
issues and challenges associated with the transition to
NextGen. One challenge is FAA's ability to maintain critical
acquisitions on schedule and on budget. This will be essential
to meeting the goal of transitioning to NextGen by 2025 and
minimizing any cost increases and schedule delays.
Another challenge is the coordination that will be
necessary between the ATO, which is charged with the operation
and maintenance of the current air traffic system, and the
JPDO, which is sometimes referred to as being responsible for
the visionary component of the system.
The operational evolution partnership is FAA's plan for
providing continuity between the current system and the vision
to come. The challenge is the extent to which the plan is
actually implemented.
Now I want to turn to our last issue and identify the areas
that need to be addressed during reauthorization for continued
safe operation of the air transportation system. First, ground
safety is an area of concern and will continue to be because
air traffic is forecast to grow substantially during the coming
decade. FAA needs to keep on schedule to deploy technologies
that help prevent runway incursions, a safety issue that
remains on NTSB's most wanted safety list.
Second, FAA needs to work with Congress to establish the
appropriate regulatory approach for some system users. For
example, Congress may want to revisit FAA's dual role of both
regulating the safety and promoting the commercial space
industry. In light of the recent spike in air ambulance
accidents, FAA may want to revisit the regulation under which
air ambulances currently operate.
A third safety area that needs attention is improving the
accuracy and completeness of safety data and FAA's analysis of
that data. Accurate, complete information would provide FAA
with the basis for a data-driven risk management safety
approach. Such an approach could give the agency an early
warning of hazards and national trends, thus potentially
averting accidents.
A fourth safety challenge is FAA's ability to manage its
human resources, specifically, the hiring, training, and
deployment of its safety inspectors, engineers, technicians,
and air traffic controllers.
And, lastly, the FAA and the unions must find ways to work
together to minimize conflict and maximize cooperation for
operating the current system as well as transforming to
NextGen.
In the final analysis, each of these challenges that I have
identified has the potential to significantly affect the safety
and efficiency of the Nation's air transportation system and
should receive serious consideration in this reauthorization.
Thank you, Mr. Chairman.
Mr. Costello. Thank you, Dr. Dillingham.
The Chair now recognizes Mr. Baker for his statement, if
you could summarize in five minutes or less.
Mr. Baker. Thank you, Chairman Costello and Ranking Member
Petri. I appreciate the opportunity to come before the Aviation
Subcommittee and provide you with a perspective of the managers
throughout the FAA system on safety and operational programs.
The FAA Managers Association is made up of non-bargaining
unit employees within the FAA from each of its lines of
business. We promote excellence in public service and are the
advocates of managing the skies in a safe and efficient manner
for the flying public and the aviation industry, and adhere and
implement the guidance of Congress.
While we, as an association, represent all managers within
the FAA, today I will primarily be focused on delivering the
perspective of the air traffic managers within the system. I
would like to focus my comments on basically three areas:
first, thank you to this Committee for your leadership and
including Section 226 in the last FAA reauthorization; second,
I will discuss the need for increasing the air traffic front-
line managers; and, third, I will share our perspective of how
the current system is working.
Section 226 expanded accelerated retirement to some second
level managers within the air traffic control field. We
basically have an accelerated system whereby, with 20 years and
age 50, we can retire. With 25 years we can retire at any age.
It was, in the past, limited to simply air traffic controllers
and front-line managers. This Committee, under the leadership
of then Chairman Mica and now Chairman Oberstar, along with Mr.
Costello and Mr. Petri, got language inserted that expanded
that retirement benefit and eliminated a huge disincentive for
our controllers to move up within the ranks, and it is not
often that we get to thank you guys for what you do for us. We
really appreciate it. It was legislation that worked. It was
bipartisan. It did exactly what it was supposed to. Thank you
for that.
My second point speaks to the pressing need for appropriate
levels of oversight at the front-line level. It is important to
emphasize where air traffic managers come from. We are not
plucked out of the sky; we are not hired off the streets. We
are actually air traffic controllers that have moved up within
the organization. It is impossible to be a front-line manager,
an air traffic manager in the FAA without having that
background and experience.
The actual floor set by Congress is currently 1,846 front-
line managers. Unfortunately, that is a level that the FAA has
been unable to attain thus far. In 1995, we had 772 operational
errors, and operational errors, of course, are when aircraft
get below the standards, too close. By 2005, that operational
error rate had risen to 1,506. That is a 95 percent increase in
operational errors. In 1995, runway incursions were 249. By
2005, they were at 336. That is a 35 percent increase.
The only difference between today and 1995 in the way we
staff our facilities is actually in the front-line manager
ranks. We have tried for several years, and Congress has helped
in setting a floor, and we hope that Congress will continue to
help us reach those levels of necessary front-line managers. We
continue to try to work with the FAA to increase those levels
of management. We are hampered by budgetary constraints and
currently undergoing a huge restructuring, which you heard much
about this morning, and I am sure you will continue to hear
much about in the years to come.
The FAA is hiring a brand new workforce. We are turning
over an entire group of air traffic controllers in a very short
amount of time. These are all reasons why we need the proper
amount of front-line managers in there to oversee the changes
that have to do with NextGen, that have to do with hiring a new
workforce, that have to do with bringing on new systems. It all
requires the proper amount of oversight, and I was pleased to
hear all of the unions this morning express the need for proper
oversight.
We want to make sure that the Committee understands that
our association, while independent from the FAA, is not at a
battle with any of the unions over their contracts. We do,
however, have grave concern that we are changing a process that
has already been put in place. To reverse a process now would
have very bad effects on the entire agency in terms of morale,
in terms of cost. I have no problem with setting a set of rules
up for future negotiations, but to go backwards in time now
would have dire effects.
These impasse procedures were developed in 1995, when the
FAA was removed from Title V and a process was put in place to
make sure that Congress maintained control of the budget. To
send a contract to mandatory arbitration by a disinterested
third party, Congress would lose control of that budget, and
that concerns us.
Mr. Costello. Mr. Baker, we thank you for your testimony.
At this time, the Chair recognizes Mr. Kroeppel.
Mr. Kroeppel. Chairman Costello, Congressman Petri,
Congressman Hall, and the other distinguished Members of the
Subcommittee, good afternoon. I am Warren Kroeppel, the General
Manager of LaGuardia Airport for the Port Authority of New York
and New Jersey. On behalf of the Port Authority, I would like
to thank you for organizing this hearing and giving me the
opportunity to testify today and to share with you our thoughts
regarding the management of the Nation's largest airport system
and some of our current challenges. My comments will be brief
and I request that my entire statement be entered into the
record.
The Port Authority of New York and New Jersey operates four
airports that are critical to the Nation's trade, travel,
commerce, and tourism. It is a rapidly growing gateway. John F.
Kennedy International, Newark Liberty International, LaGuardia,
and Teterboro Airports are used by 104 million passengers with
over 2.6 million tons of cargo and 1.2 million aircraft
movements in 2006. LaGuardia is by far the smallest of New York
area's three commercial airports, consisting of only 680 acres
in area. It has two intersecting 7,000 foot runways and four
passenger terminals with 73 gates.
The FAA's propose of NextGen legislation seeks to address a
fundamental and undeniable problem: the scarcity of airfield
resources at LaGuardia. It has been clear since the high
density rule was established in the late 1960s that certain
airports have insufficient runways and taxiways to handle
unconstrained demand without experiencing significant
congestion and the attendant delay and passenger inconvenience.
At LaGuardia, the problem is exacerbated by the fact that
no amount of labor, capital or entrepreneurship, can expand the
constraint on that capacity, which is actually airport land.
The highly constrained facilities at LaGuardia are not capable
of absorbing the demand for access to the airport without the
use of tools to manage the inevitable delay and strain on the
airport infrastructure that would ensue if access were left
unchecked. Managing congestion is just one of the key goals for
LaGuardia in the post-high density rule era.
Congress also had established the goal of creating
opportunities for new entrants and ensuring service to small
communities. In addition, the FAA and Port Authority were
concerned about the efficient use of airspace or throughput. To
address congestion management, the FAA correctly focuses on the
need to continue to place limits on flight activity consistent
with the supply of capacity. The Port Authority agrees that
this is an FAA responsibility; however, the Port Authority
believes that the current limit on operations at LaGuardia may
not be low enough and that now is the time to further examine
this limit to determine whether reduced hourly operations rate
or other measures will prevent delays from accumulating to
excessive levels.
While we agree with the goal of providing new entrants and
limited incumbents access to LaGuardia, we have great concern
about the FAA's approach. The NPRM proposed that starting in
2010, and every year thereafter, 10 percent of all existing
operating authorities would be reallocated. The NPRM, much like
the language in the NextGen bill, are silent on the mechanics
of how this would actually work.
A turnover of this nature would create excessive roiling
for the entire airport community. Airlines that have spent
years building their schedules so that it could provide hourly
service in high demand business markets would be faced with
potentially losing key pieces of their operation. Even if the
airlines were successful in restoring some elements of their
lost 10 percent by repurchasing through whatever mechanism is
instituted, there is no certainty they would be able to restore
their schedules.
As for carriers who may successfully acquire new operating
rights through their forced annual reallocation of the 10
percent of LaGuardia's capacity, there is no certainty that
they will find contiguous gate space which would permit them to
take advantage of the new opportunity in a commercially viable
manner. Both the NPRM and the NextGen bill are filled with
uncertainty that is quite troubling to airlines, the airport,
and the customers we serve.
The Port Authority strongly agrees that in the case of
LaGuardia, where it has been established that aeronautical
capacity is finite and cannot be expanded, the over-abundance
of service to large markets with small aircraft effectively
precludes other services. Both the FAA and Port Authority
differentiate between small planes to large places, which often
poorly serve the traveling public, and small planes to small
places, which is the only way small communities can afford
access.
Although the Port Authority supports the many principles,
doctrines, and tenets that the FAA has articulated, in the Port
Authority's view, the proposed rule and legislation needless
interfere with the airport operator's proprietary rights to
manage LaGuardia. More importantly, it appears that the
proposal would have undesirable impacts on the airport, the
airlines, and ultimately the traveling public due to the
fundamental mismatch between the proposed airfield policy and
the management of the land site infrastructure.
The FAA's proposal is too prescriptive and improperly
assigns to the Federal Government the responsibility of
managing access to the all-important airport gate facilities,
rather than acknowledging the responsibility for doing so rests
with the airport operator as the manager of the facility.
The Port Authority has determined that an alternate
approach is preferable, realizable, and responsive to the
aforementioned goals. The FAA needs only to set the operational
hourly limit and to establish the criteria for service to small
communities. The Port Authority will then exercise its right to
manage utilization of access to LaGuardia's terminal and gate
facilities, which avoids many of the potential pitfalls in the
NPRM proposal and the NextGen legislation.
The Port Authority proposes using its proprietary rights to
effectuate gate utilization measures, in consultation with air
carriers, to achieve the objectives that Congress and the FAA
have articulated. The Port Authority has legitimate interest as
the proprietor of the airport to seek to optimize the efficient
use of limited airport capacity and facilities to promote
competition at LaGuardia.
The FAA acknowledges there is a tremendous uncertainty
embedded in the LaGuardia NPRM, uncertainty as to what Congress
will authorize and uncertainty as to how market clearing
charges will work in its first application in the United States
aviation context. Rather than face this tremendous uncertainty
with the resultant high disruptive effects on airlines,
airports, and the customers, the Port Authority believes that
it would be preferable to use gate leasing policy, which is a
time-tested and common industry practice. The FAA should set
the hourly capacity at LaGuardia, provide for small community
access, and empower the Port Authority to proceed with its gate
leasing policy. We urge Congress to enable the Port Authority
to proceed with a simpler, more simple solution to LaGuardia's
congestion issue: incentive-based gate leasing policy.
If the Administration's provision for congestion airports
are incorporated into legislation, we then urge Congress to
engage gate leasing policy as a potential market-based
mechanism.
Mr. Costello. We thank you for your testimony, and the
Chair, at this time, would recognize Dr. Sliwa.
Mr. Sliwa. Thank you, Chairman Costello. Mr. Petri and
Members of the Subcommittee, good afternoon. It is my pleasure
to be here today in support of your review of FAA operational
and safety programs in our Nation's air traffic system. Thank
you for this opportunity. There are some significant partnering
opportunities which, if taken, can foster and advance
commercial applications of unmanned aircraft system activity
without compromising the safety and established operating
procedures of the National Airspace System.
I am the CEO of Insitu, a small, fast growing company that
develops and produces UAV systems. We received recognition in
1998 as the first company to fly an unmanned aircraft across
the Atlantic Ocean. It weighed 40 pounds, took 27 hours, and
burned a gallon and a half of gas. More recently we are known
as the developers of the ScanEagle system, which we jointly
deploy with Boeing. It is flown over 36,000 hours in Iraq and
from ships on the U.S. Navy, making it the fourth most used UAV
in U.S. history, and is still on a commercial off-the-shelf,
COTS, system.
There are well over 400 small companies in the U.S. that
are involved in unmanned aircraft system development and
component manufacturing at various levels of sophistication.
The situation is similar to the 1930s and 1940s, when many
airplane companies built the legacy of aviation we all enjoy
today. Many predict that the 21st century will be the century
of autonomous aircraft.
However, the commercial unmanned aircraft market is
outpacing the incremental processes which create procedural or
regulatory guidance. Current market analyses assess that the
unmanned aircraft system products and services market will grow
to be $15 billion in annual revenue within the next 8 years. We
need your help to capture this market and, with its capture,
help assure U.S. leadership in aviation.
Although the operations to date have been in support of the
military operations, civilian applications are beginning to
become viable as these systems mature. In fact, we at Insitu
have commissioned for several civilian applications in the
coming year valued in the millions of dollars. We see many
opportunities in the future, ranging from minerals assessment,
search and rescue, resource management, and to homeland
security.
But these civilian applications, and even supporting the
research, training, and production flight testing needs for
military applications, require access to the U.S. airspace
system. In fact, I would say that the foremost challenge in
achieving growth in this dynamic market is a safe, sustained
access to airspace.
The FAA Unmanned Aircraft Program Office is developing
guidance and regulations for the certification and integration
of unmanned aircraft in the NAS and is supported by an FAA-
commissioned industry working group through RTCA which just
completed a compilation of recommended best practices and
guidance material, and trade associations such as the
Association of Unmanned Vehicle Systems, known as AUVSI. We in
the industry applaud this first step and we are proactively
collaborating with this Program Office and with other FAA
offices and with industry working groups and trade
associations.
However, we can't achieve progress rapidly on the current
path. The United States unmanned aircraft industry is sometimes
cast an envious glance at the regulatory practices of our
allies and trading partners like Australia and Canada, which
encourage unmanned aircraft experimentation with flexible risk
assessment, continuous data collection, and continuous
improvement. As a case in point, the FAA has stopped issuing
certificates of authorization for other than government
agencies to experiment with UAVs in the national aerospace
system. This past February, the FAA published policy guidance
in the Federal Register related to unmanned aviation systems
and is viewed by many in our industry as an attempt to create
regulations by policy inference.
We believe that defining industry performance parameters
without first encouraging the industry to demonstrate its level
of performance is comparable to the classic catch-22 paradox.
We applaud the efforts the FAA is making, but it is resource-
constrained when it considers the challenges before it.
Unmanned aircraft range in range from a few ounces to many tons
in gross weight. Some have applications they want to test in
very remote locations and others want to interoperate with
commercial aircraft on instrument flight plans.
Unfortunately, trying to apply rules and regulations to
such a diverse field of unmanned aircraft, with a few pages of
guidance, is problematic, and trying to quickly apply the
current rules developed for the manned aircraft infrastructure
to this class of aircraft is not likely to be fruitful for
broad and rapidly evolving industry. For example, the FAA is
currently using the manned experimental aircraft rules for
unmanned aircraft industry, which has significant flaws as the
industry develops.
I have five suggestions helpful to the industry, to the
FAA, and to our Nation: one, provide sufficient personnel and
financial resources for FAA unmanned aircraft system policy
exploration, development, and application; two, encourage the
FAA to experiment, collaborate with industry, and collect data;
three, reintroduce the use of civil certificates of
authorization for commercial companies with appropriate FAA
safety case reviews and monitoring; four, encourage the FAA to
address huge variations in unmanned aircraft types and risk
factors; and, five, discourage the current regressive practice
of regulating via policy promulgation.
In conclusion, safe access to the airspace requires both a
mix of technology, policy, and regulation, and also judicious
and reasonable experimentation. We encourage Congress to
increase the FAA unmanned aircraft systems program application
funding to equip the FAA with the tools and incentive to
encourage military and civilian experimentation, and we
encourage Congress to support FAA sound policy based upon
knowledge of distinct unmanned aircraft system classes, current
technology, and industry needs.
Mr. Costello. Dr. Sliwa, thank you.
Mr. Renninger, you are recognized under the five minute
rule. Thank you.
Mr. Renninger. Well, thank you, Chairman Costello and
Members of this Subcommittee. I am pleased to be here today to
discuss air traffic controller training, the FAA college
initiative, and suggestions for increasing the number of
qualified air traffic controllers.
As you are probably aware, there is a looming crisis in the
Nation's control towers, as controllers hired in the wake of
the 1981 strike reach retirement age. Not only do these
controllers need to be replaced, but there is also a growing
need to provide additional air traffic control services for the
new transportation systems brought on by things such as very
light jets.
Government experts predict that by 2025 there will be three
times the number of planes in the skies as there are today.
Numerous GAO studies have been warning for years about the need
to better prepare for controller attrition, and FAA's own
projections indicate that approximately 72 percent of the
current air traffic controller workforce will be eligible to
retire in the next 10 years. Clearly, there is a need to
attract and train new air traffic controllers and use all
available resources to provide the technical training they
require.
Currently, there are three sources from which the FAA gets
air traffic controllers: number one is former DoD and FAA
controllers; number two is students from the CTI schools; and
number three is applicants responding to FAA vacancy
announcements.
The percentage of controllers supplied by the CTI programs
varies, but was 33 percent of the total as of November 2005 and
25 percent at the end of fiscal year 2006. Now, these figures
do not reflect the true value of CTI graduates who had required
less time to be certified after the mandatory on-the-job
training for all controllers. Only controllers who have
transferred from another FAA facility require less time to
certify at their new positions. It is clear that the training
and education that controllers receive at the colleges and CTI
schools prepares them to join the air traffic controller
workforce with minimal cost from the FAA.
Now, CTI was started in 1989, when Congress established the
Mid-America Aviation Resource Consortium (MARC) to provide ATC
training in Minnesota. Hampton University followed shortly
thereafter, and was awarded FAA funds for ATC training in 1990.
Interest in this program led to the FAA adding three more
schools in 1991: Community College in Beaver County, UND, and
University of Alaska. Nine more schools were admitted to the
CTI program in 1997. There have been no new schools added since
1997 and there is no process with the FAA to become a CTI
school, although there is a strong interest in joining this
group by well qualified schools.
Graduates of CTI schools earn either an associate's or
bachelor's degree in aviation administration or management that
incorporates basic training courses for air traffic
controllers. Air traffic controllers need this associate's
degree just to be a controller, and they need a bachelor's
degree if they want to move on into management. The cost of
earning a degree varies widely among the CTI schools, from a
low of about $4,000 for an associate's degree from a public
school to a high of almost $100,000 for a bachelor's degree
from a private university. The cost is borne by the student,
who comes to the FAA ready for on-the-job training that is
necessary to be certified.
Once in Oklahoma, they undergo further training before
going to their final FAA facility, where they will have on-the-
job training that is specific to each position. Only after
successfully completing this training are the developmental
controllers certified and able to begin working as air traffic
controllers.
Being designated a CTI school is very important for a
college or university that wants to offer ATC training. Only
graduates from a CTI school can have their names added to the
hiring database maintained by the FAA. It is from this database
that individuals are chosen for further training and
employment. The FAA currently has no process to admit any new
schools to the CTI program. Well qualified schools that offer
other FAA certified training have indicated an interest in
becoming CTI schools and have been rebuffed. The FAA needs to
open the CTI school process that are able to meet the FAA
standards for air traffic control training. If the FAA can
certify training for pilots and aircraft mechanics, there
should be no reason why they cannot certify air traffic
controller training programs and degrees at colleges and
universities.
The benefits of becoming a CTI school are these: they
increase the pool of pre-screened candidates and also the pool
of qualified applicants at little or no cost to the FAA; they
also have applicants in the region where the demand exists the
most. The advantage of the flexibility of community colleges
and universities, who are the experts in workforce education
and training, is that we can do this at a fraction of the cost
of what private schools charge.
Mr. Chairman, this concludes my remarks, and I hope I have
convinced you of the need to open up the FAA's college training
initiative program. I can tell you that Florida Community
College at Jacksonville is currently providing FAA-certified
training in aircraft mechanics, as well as pilot training, and
we see no reason why we couldn't do training in air traffic
control as well. I think we can do this for the betterment of
the air traffic controllers who are going to man our aircraft
control towers, terminal radar facilities, and our traffic
control centers of the future.
Thank you very much.
Mr. Costello. We thank you for your testimony and we thank
the entire panel. I know it is difficult to summarize your
remarks in five minutes, but you all did pretty well.
Let me ask a few questions.
Dr. Dillingham, the FAA recently released an updated
version of their controller workforce plan, and I just wondered
what GAO's impression is of this current version of the
controller workforce plan.
Mr. Dillingham. Mr. Chairman, we think that the FAA has
done a credible job in recognizing that they have had more
retirements than they had initially projected and, therefore,
have made an attempt to bring more people into the pool. We do
have a concern about the fact that there are fewer past DoD
controllers and the fact that even some of the CTI graduates
are finding other jobs.
So what that means, of course, is that you are going to
have a core of people that are going to need more training, you
are going to have less experienced controllers in place for a
while. I think the number is something like 40 percent of the
controllers within the next five years will be there less than
four years, and it usually takes three to five years to be a
full performance controller.
So they have made some steps. You know, it still is a work
in progress, as far as we can tell.
Mr. Costello. And there is still reason for concern. I
mean, we are not here to beat up on the FAA, we are here to
delve into issues and arrive at conclusions and try and provide
solutions.
You heard testimony earlier today concerning the issue of
the controllers, and I think it is a fact that there are fewer
DoD controllers going to work for the FAA and, as you
mentioned, the CTI grads are finding other jobs as they
graduate. What is the primary reason for that. That hasn't
taken place in the past.
Mr. Dillingham. Well, I think it was mentioned earlier that
our research has shown that when the candidates take a look at
what the starting salary is now, as opposed to what it was
prior to, when they understand what the work rules are, and
another thing that was mentioned today that we also found to be
the case is that DoD is offering incentives to keep their
people in. So those are the major contributing factors that we
have been able to discern.
Mr. Costello. In your opinion, what does the FAA need to do
to ensure that there are enough air traffic controllers in the
future to handle the traffic?
Mr. Dillingham. I think what they have started to do is a
step in the right direction, that is, to look at staffing by
facilities and also to get a surge of candidates to take into
account that they are going to be losing more than they did in
the past. I don't know if you want to call it PR, but the
notion that there is such discord between labor and management
probably is something that has to be addressed; otherwise, you
are not going to have people wanting to go into that situation,
so somehow that has to be ameliorated.
Mr. Costello. And you mentioned, I think, in your testimony
that if in fact--and we all, both the Ranking Member, Mr.
Petri, and the Ranking Member of the full committee, Mr. Mica,
Chairman Oberstar, and myself, we have all encouraged the FAA
and the unions to try and come together and work out their
differences and to reach an agreement. You mentioned in your
testimony that if in fact relations between the FAA and their
unions improve, it could have a positive effect on safety. I
wonder if you might elaborate on that.
Mr. Dillingham. Yes, Mr. Chairman. I think it is a pretty
well understood and accepted principle, and I think somebody
mentioned it earlier today, the idea about a happy workforce,
and I think it is a little bit more than a happy workforce. I
think, you know, if people can concentrate on their jobs,
particularly a job such as an air traffic controller job, you
have got to have a focus on that, you can't be concerned about
other things. So that is one of the things.
We also, at the Government Accountability Office, are
trying to think about how we can do a study to actually look at
labor management relations at FAA because it is clearly a
unique situation in government. We recognize that we don't
think either the majority or the minority will ask us to do any
work like that, so we are going to try to work with the
Comptroller General to get permission to do that kind of work.
Mr. Costello. Very good. I thank you.
The Chair recognizes the Ranking Member, Mr. Petri.
Mr. Petri. Thank you very much. I have several questions,
first for Mr. Kroeppel.
I get the impression--I mean, LaGuardia is under a lot of
pressure. You are at capacity and you have a very huge market
to serve, and your customers, both the traveling public and the
airlines, spend a lot of years developing their shuttles and
all of that sort of thing. Will you be developing some specific
proposal or something that we can put our teeth into as we
analyze the FAA's proposal, to kind of have a managed capacity
situation? They are trying to develop a national plan and you
obviously have a lot of stakeholders and a huge problem and
could be affected by it a lot; and there are control issues and
uncertainty issues, and people have invested a lot in
developing various programs. Could you expand on that or could
we work with you on this?
Mr. Kroeppel. Yes. That is actually the gist of the issue,
Congressman. As we had mentioned, the real issue here that we
have, we agree with most of the FAA proposals, except for the
one as far as just how to do it. The real key to this is we
have to match the airspace capacity to the available ground
resources. We actually did look at different market-based
scenarios. We found that it didn't work.
So while we agree with the FAA that they should set the
limit of airspace and also assign small community access, the
way to really do this to make it work at an airport would be to
give us the tool to use our own gate leasing and management
system, and the best example I can give you is this: What
really concerns us is in the proposal there is a proposal with
10 percent reallocation per year, and a good example of that
would be, for example, if a Delta on the east side of the
airport, in a terminal on the east side of the airport would
lose 10 percent of its capacity, if, for example, an American
Airlines on the west side of the airport, through some
mechanism, would gain those, it really wouldn't work for them
because they wouldn't have contiguous gates and economically it
would not work for them.
So we feel the only way we can actually match the land site
resources to the air site capacity made by the FAA would be by
giving the airport proprietary right of having this gate
management system, which would allocate those scarce resources
properly.
Mr. Petri. Is there a money issue in this too? If you
auction off obviously a scarce resource, one way to allocate it
is by charging more or having people bid. Is there an issue as
to who gets the money from some sort of a queue management
system like that?
Mr. Dillingham. Well, that is one of the issues, but,
really, we felt that if it does go to some type of auction-
based solution or some type of peak period charge use, it
really wouldn't solve that issue. Where it breaks down for the
airlines and the customers is how does that 10 percent, how do
these resources on the ground, how do you match that, how does
it become realized and how does the operation run smoothly.
So the real key of that is the control would be us having
control of the gates and basically managing the resources and
making that available to new competitive services and allowing
new entrants to come in. With the way the system is now,
airlines can have gates and not utilize them to the proper
capacity. So this solves a lot of issues.
Mr. Petri. Well, this is a complicated issue that requires,
I suspect, much more extensive analysis and discussion than we
can do in this particular forum, but thank you for raising it
and for your testimony.
I just wonder if I could talk with Mr. Baker for a minute.
I don't know if we should be alarmed or how we should deal with
the situation of the quarter of a million grievances in the
FAA. Is this a sign of bad management, or is this a tactic, or
what is going on here?
Mr. Baker. Well, if you look at the makeup of the
grievances, Mr. Petri, you will find that many of them are
grievances because my manager told me I couldn't wear shorts to
work. So many of them are frivolous. We actually have a huge
concern about what so many of those types of grievances in the
system, that we look over grievances. They all matter, but
there are real grievances out there and we don't want to miss
those. Those grievances have overwhelmed the system.
I believe they are under control now, off the facility
level, which was my concern. The union has every right to
grieve anything within the statute, and they did so. Now we
have gotten it off the facility level and it is up at the
higher levels, where it always should have been anyway. We did
as good a job as I think we possibly could have, taking the
distraction of the contract, imposed work rules, whatever you
want to call what we have, out of the workforce so that our
actual facilities can focus on safety, which is what we are
there for, and I think we are doing that.
Mr. Petri. Thank you.
Mr. Costello. I thank the Ranking Member.
In fact, the LaGuardia question, I was going to delve into
that a little bit, but I think Mr. Petri covered it. I think it
is an issue that is not going to be resolved today, but we are
going to have to work with you and others on it.
I have no further questions, and if the Ranking Member does
not, I want to thank you, all of you and all of our witnesses
today. I think it has been a very productive and comprehensive
hearing. So we thank you. We look forward to working with you
as we move forward with the reauthorization.
With that, the Committee stands adjourned.
[Whereupon, at 1:39 p.m., the Subcommittee was adjourned.]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
HEARING ON THE FEDERAL AVIATION ADMINISTRATION'S AIRPORT IMPROVEMENT
PROGRAM
----------
Wednesday, March 28, 2007
House of Representatives
Committee on Transportation and Infrastructure,
Subcommittee on Aviation,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2167, Rayburn House Office Building, the Honorable Jerry
F. Costello [Chairman of the Subcommittee] presiding.
Mr. Costello. The Subcommittee will come to order. The
Chair will ask that all Members, staff, and everyone in the
room turn off electronic devices or put them on vibrate.
The Subcommittee is meeting today to hear testimony on a
review of the FAA's Airport Improvement Program. As we all can
see, we have three panels of witnesses, I think a total of 15
witnesses to hear from today, so I would ask Members to take
that into consideration and consider placing their opening
statements in the record so that we can get to our witnesses.
I will give an opening statement and then recognize the
Ranking Member, Mr. Petri, for his opening statement or
remarks, and then hopefully go directly to the witnesses.
I want to welcome everyone to the fourth of our hearings on
the FAA reauthorization. This hearing focuses on the FAA's
Airport Improvement Program.
The FAA estimates that during the next five years there
will be $41.2 billion of AIP-eligible infrastructure
development, an average of about $8.2 billion a year. The
Airport Council International-North America believes that total
airport capital development costs, including the cost of non-
AIP-eligible projects, to be about $17.5 billion per year from
2007 through 2011.
While the FAA acknowledges that airport capital needs are
up, the FAA's new three-year proposal provides approximately
$1.5 billion less for the AIP program than what the FAA
requested for the first three years of its last reauthorization
proposal, the Centennial of Flight Aviation Authorization Act.
I want to repeat that. While the FAA acknowledges that capital
needs are up, the FAA's new three-year proposal provides $1.5
billion less for the AIP program than they requested for the
first three years in the last reauthorization.
I believe that we will need a more robust program than what
the FAA has suggested. I am concerned about the impact of these
cuts on smaller airports. AIP grants are generally a larger
source of capital funding for smaller airports. The GAO will
testify today that 64 percent of the capital funding for
smaller airports comes from the AIP program.
The FAA is proposing a number of interesting changes to the
AIP program that the FAA believes would help target more active
smaller airports. However, even with the FAA's programmatic
changes, there would be less total funding for programs
traditionally and specifically associated with small airports
when compared with the current structure and funding levels.
Further, under the FAA's proposal, there may be some
winners and losers when it comes to small airports. For
example, while the busier smaller airports would receive larger
non-primary entitlement grants than they now receive, the FAA
estimates that several airports that are eligible to receive
non-primary entitlement grants would no longer be eligible. I
look forward to hearing from our witness today from the FAA as
to why the FAA believes these airports should no longer be
deserving of AIP eligibility.
The FAA believes that cuts to the AIP program would be
offset by raising the current $4.50 cap on the PFCs, raising it
to $6.00. The PFC cap has not been raised since 2000, and many
in the airport community believe that inflation and
construction cost increases have eroded the PFC's value.
The FAA believes that an increase in the PFC cap to $6.00
would generate an additional $1.5 billion for airport capital
development. I believe the PFC has been an important tool in
improving and expanding our airports, and I agree that we
should increase the cap of $4.50. There is no question that
there has been a loss of purchasing power, and we must increase
the cap to adjust for inflation.
In addition, the FAA proposes to greatly expand the PFC
eligibility for airport capital projects. More specifically,
the FAA's proposal would expand the PFC eligibility to
encompass any airport capital project that is eligible to be
funded with airport revenue, provided that the project is not
anti-competitive. I have concerns with expanding the
eligibility beyond its current scope.
Some have argued that the PFC is essentially local money
and, therefore, there should be more local control over how
PFCs can be spent. Since a significant portion of PFC revenue
comes from interstate passengers, I believe that PFC revenue
should be used to promote national policies and goals, such as
increased capacity, safety, and competition, within an
integrated system.
With that, I again welcome our witnesses here to testify
before the Committee. Before I recognize the Ranking Member,
Mr. Petri, for his opening statement, I would ask unanimous
consent to allow two weeks for all Members to revise and extend
their remarks and to permit the submission of additional
statements and materials by Members and witnesses. Without
objection, so ordered.
At this time I would call on and recognize the Ranking
Member, Mr. Petri, for his opening statement or any remarks.
Mr. Petri. Thank you very much, Mr. Chairman. I would like
to thank our many witnesses this morning for coming and sharing
their viewpoints on the important topic before us this morning,
airport improvement funding and airport noise issues.
The FAA proposal regarding funding of airport
infrastructure raises several important issues which I look
forward to hearing about today. A major portion of the proposal
worthy of discussion is the proposed increase of the passenger
facility charge and the impact of inflation and construction
costs on the purchasing power of that charge over time. The
expanded PFC project eligibility and streamlining of project
approval processes are also obviously of interest to this
Subcommittee.
To many of the small airports in my district and around the
Country, the airport improvement program is a significant
source of funding for capital projects. For the past few years,
Congress has authorized between $3.5 billion and $3.7 billion
for that program, which has helped our small hub and non-hub
airports grow and therefore provide more capacity within the
national airspace system.
That level of investment has also greatly benefitted our
reliever in general aviation airports. Therefore, I would like
to hear about the Administration's explanation as to how the
lower AIP levels fit into their overall airport infrastructure
financing proposal.
I am also interested in the impact of the AIP formula
changes on airports of all sizes.
Part of that proposal is the new tiered non-primary
entitlement program. I think it is an interesting idea,
responsive to need, and look forward to hearing more about the
specifics of that particular proposal.
The link that currently exists between airports turning
back AIP money to the FAA and the receipts of PFC money by
those airports is an interesting topic. It is particularly true
given the way it links small airport financial interests to
those of large airports. The agency's proposal seems to de-link
the financial interests, which raises questions as to what the
impact on airports, both large and small, will be. Is it a
necessary link?
Also, the Administration's proposal sunsets a number of 9/
11-related provisions or programs from Vision 100. The agency
states that it does this because, by and large, airports have
recovered from 9/11. I look forward to hearing about this
aspect of the proposal and of the state of airports in our
Country.
Once again, I would like to thank this panel and the other
panels that we will be hearing from for coming today and look
forward to your testimony, and yield back the balance of my
time.
Mr. Costello. I thank the Ranking Member.
The Chair would now introduce our first panel of witnesses.
First, Mr. D. Kirk Shaffer, Associate Administrator for
Airports at the Federal Aviation Administration; Dr. Gerald
Dillingham, Director of Physical Infrastructure Issues with the
U.S. Government Accountability Office, who has been in this
room as many times as I have been in the last two weeks, but we
welcome you back as always; Mr. Charles Barclay, President of
the American Association of Airport Executives; and Mr. Greg
Principato, President of the Airports Council International-
North America.
The Chair would recognize Mr. Shaffer under the five minute
rule.
I mentioned earlier to Members and to witnesses we have
three panels. We are attempting to hear from all of the
stakeholders and everyone who, of course, has an interest in
the reauthorization bills. We are trying to be as inclusive as
possible, and that is why we have 15 witnesses today. So I
would ask you to take that into consideration and try and, with
the exception of the GAO, who has, I think, a slide
presentation that will go a little bit longer than five
minutes, I would ask you to summarize your statements in five
minutes, if that is possible. And if you go a little bit over
that, I will remind you and let you know.
So, at this time, the Chair recognizes Mr. Shaffer under
the five minute rule.
TESTIMONY OF D. KIRK SHAFFER, ASSOCIATE ADMINISTRATOR FOR
AIRPORTS, FEDERAL AVIATION ADMINISTRATION; DR. GERALD
DILLINGHAM, DIRECTOR, PHYSICAL INFRASTRUCTURE ISSUES, U.S.
GOVERNMENT ACCOUNTABILITY OFFICE; CHARLES BARCLAY, PRESIDENT,
AMERICAN ASSOCIATION OF AIRPORT EXECUTIVES; AND GREG
PRINCIPATO, PRESIDENT, AIRPORTS COUNCIL INTERNATIONAL-NORTH
AMERICA
Mr. Shaffer. Good morning, Chairman Costello and
Representative Petri, Members of the Subcommittee. This is my
first appearance before the Subcommittee since joining the FAA,
and I look forward to working very closely with the
Subcommittee in the months ahead as you consider the
Administration's airport financing reform proposal.
While my written testimony provides many details of our
proposal, I would like to take my time this morning to
highlight some of the changes that we propose for the Airport
Improvement Program affecting small airports and also address
our proposals for PFC reform. I know that our proposal has
generated a number of questions and concerns with our
stakeholders and with the Members of this Subcommittee, and I
look forward to addressing those issues with you today.
Before I get into specifics, let me give you a little
background of how we developed this proposal and the data that
supports it.
During the past two years, we reached out to all of our
stakeholders, to the airports, the consultant community, to the
airlines and others, to find out the state of the industry. We
also contacted the financial community because, as you know,
AIP pays for only 25 airport to 35 percent of airport capital
development needs nationally. We reviewed engineering and
planning data, and we reviewed airport financial data as well.
Our review showed that capital needs are up. Our latest
published report on airport needs, known as the NPIAS, is up
about 4 percent over the prior NPIAS. Even that figure is low
since it did not account for the jump in construction costs and
fuel surges in the summer of 2006.
Airports have recovered financially from the financial
shocks of 9/11. Passenger and traffic operations are up at many
locations, approaching pre-9/11 levels. Across all sizes of
airports, net operating results--that is revenue minus
expenses--are up. Large airports have returned to
profitability. In contrast, while small airports have recovered
financially, many operated at a deficit before 9/11 and
continue to do so. In other words, small airports continue to
depend on Federal AIP dollars to meet their capital needs.
The municipal bond market and rating agencies told us that
airports remain much better financial risks than their airline
tenants. For this reason, airports that have developed strong
revenue streams independent of the airlines are especially
favored. PFCs are viewed as just such a revenue stream because
they depend on the underlying demographics of the markets that
the airports serve, not on the health of the individual air
carriers. However, PFCs would be even more effective financial
tools if airports had more flexibility in the kind of capital
projects they could finance with PFCs.
Finally, current developments in air transportation, the
transition to the NextGen air traffic control system, the
introduction of very light jets, the growth of fractional
ownership and point-to-point air traffic services, and
continuing congestion at large airports mean that secondary and
reliever airports, as well as other high activity general
aviation airports, will face increasing investment needs.
Based on these findings, our proposal is designed to do the
following: assure a stable source of AIP funding for small
commercial and GA airports; assure sufficient AIP funds
available for the FAA to distribute and for the States to meet
critical safety capacity and security priorities; convert the
non-primary entitlement into a strategic investment tool that
will help secondary and reliever airports, as well as other
high activity GA airports, meet the new demands that will be
put on them; and enhance PFCs as a local airport financing tool
through an increased maximum PFC, broaden PFC eligibility and
administrative streamlining.
With regard to the non-primary entitlements and State
apportionments, there is no doubt that the non-primary program
enacted as part of Vision 100 helped a number of smaller GA
airports upgrade and maintain their facilities, do
comprehensive master planning, and construct revenue-producing
facilities that help them become more self-sufficient.
We fully support continuation of the NPE program, but with
modifications that make sense for the entire spectrum of
airports. Beginning in the summer of 2005, we looked at each
and every GA airport in the system. We looked at the smallest
and the largest. We looked at the types of aircraft that use
these airports and what kind of infrastructure airports need to
serve them safely and efficiently. We looked at it from an
engineering perspective and a planning perspective. The data
confirmed what common sense tells you: not all GA airports are
created equal. Airports with more activity or with higher
performance aircraft require more elaborate airfield
infrastructure.
When we then look at the GA community of airports, we see
two major themes: different roles and different needs. In that
context, we are proposing a four-tiered system of non-primary
entitlements. The busiest, largest non-primary airports would
be granted $400,000 per year. This category includes commercial
service and reliever airports. The smallest GA airports, those
with less than 10 based aircraft, would not receive an annual
entitlement. But let me be absolutely clear. We are not saying
that these airports have no capital needs or that AIP should
not support those needs. These airports will continue to
qualify for State apportionments and discretionary funds. Also,
we propose to preserve the 95 percent Federal share for these
airports. All we are saying is that these airports' capital
requirements are intermittent, they do not require annual
infusions of cash to sustain their infrastructure.
We are proposing that about 750 airports would end up in
this lowest tier under our proposal. We have heard people say
that these 750 airports are going to lose money. That figure is
simply, plainly wrong. We went into our grants database to look
at what has been happening at these airports, and we had to
focus on the airports that are not located in block grant
States. We can't track the grants in the block grant States.
But in the 42 States that do not have block grants, nearly half
the airports in the lowest tier either did not receive a non-
primary entitlement or did not spend the non-primary
entitlement money they got by taking a grant in the last four
years. So the number of airports that will actually lose
guaranteed annual money is a far more modest figure, around 300
locations.
Let me please address one other aspect of our AIP proposals
affect small airports. We have heard people characterize our
proposal on the Federal share for small airports as FAA cutting
the Federal sharing from 95 percent down to 90 percent. That
assertion also is plain wrong. Vision 100 sets the expiration
date for the 95 percent Federal share as September the 30th.
All the FAA is proposing is that we let that entitlement expire
as Congress intended it to.
Let me briefly address the PFC program, Mr. Chairman. PFCs
do remain fundamentally a local revenue, and after 17 years a
very good track record has been amassed in the imposition and
the application of PFCs. We are proposing, as you have noted in
your opening comments, three principle changes to the PFC
program: we want to raise the cap to $6.00 in recognition of
the increased construction costs and the impacts of inflation
over time since the last adjustment; we want to broaden the
eligibility so that airports can use this revenue for more
projects and produce even more revenue; and, finally, we want
to administratively streamline the PFC process by essentially
eliminating all the bureaucratic paperwork, with the exception
of an annual report that looks a year back and a year forward.
That having been said, Mr. Chairman, I know that these are
some substantial changes that we are proposing. Change is never
easy, particularly change of the magnitude that we are
suggesting. The undeniable fact is that we face a billion
passengers coming through the system by 2015, and we have got
to begin to prepare now to meet that challenge.
This concludes my prepared statement. I would be happy to
take your questions.
Mr. Costello. We thank you.
The Chair now recognizes Dr. Dillingham.
Mr. Dillingham. Thank you, Mr. Chairman, and thank you for
your consideration, Mr. Petri, Mr. Duncan, Mr. DeFazio, and
Members of the Subcommittee.
You asked GAO to examine four issues related to the
reauthorization of the AIP program. The first issue focused on
the nature and scope of airport capital needs. To address this
issue, we compared estimates of capital development needs that
were prepared by FAA and Airports Council International
organization. Our analysis showed that ACI's estimate of
developmental costs is considerably higher than FAA's.
This graphic shows that for 2007 through 2011 FAA has
estimated that annual development costs, in 2006 dollars, that
is, will be a little bit over $8 billion. For the same period,
ACI estimated that development costs would be slightly more
than $15.5 billion. This is a difference of about $7.5 billion
annually. The primary reason for the difference between the
estimates is that FAA's estimate only includes projects that
are eligible for AIP grants, while AIC includes both eligible
and ineligible projects.
When we compared only AIP eligible projects in both
estimates, ACI's estimate still exceeded FAA's by about $1.5
billion annually. The difference between the two estimates was
accounted for because of differences in the definition,
measurement, and timing of the projects.
The second issue we addressed was how much money have
airports received for capital development and where is that
money coming from. This graphic shows that between 2001 and
2005 airports received an average of about $13 billion a year
for capital development from a variety of sources. Overall, the
primary source of airport funding was municipal bond proceeds,
which is shown here in green. Bonds accounted for about half
the total funds, followed by AIP at 28 percent, shown in
yellow, and PFC, which is shown in orange and which accounted
for about 17 percent of the total. State and local funds
accounted for the remaining 5 percent.
As you can see, smaller airports depend much more on AIP
grants than larger airports. This graph shows that larger
airports obtained only 14 percent of their funds from AIP
grants, compared to 64 percent for smaller airports.
A third issue that we examined was the extent to which
current funding levels would be sufficient to meet capital
development needs between 2007 and 2011. The bar on the left
side shows that FAA has received about $13 billion for capital
development in each of the last five years. The bar on the
right shows that if airports continue to receive a similar
amount of money over the next five years, it would cover all
the projects in FAA's capital development plan.
To get a more complete picture of the potential demand on
capital, we combined FAA's planned development cost and the
cost of ACI's ineligibility projects. As you can see, the bar
on the right shows that the combined development costs for the
next five years exceeds historical funding levels by about $1
billion annually.
A more detailed analysis of this issue shows that the
differences between past funding levels and future development
costs is different for larger and smaller airports. For the 67
larger airports, the shortfall would be about $600 million
annually, and for all other airports, including general
aviation airports, the shortfall would be about $400 million
annually.
The last issue we examined was the potential effect of the
Administration's reauthorization proposal for airports. We
concluded that the Administration's proposal to increase the
PFC ceiling from $4.00 to $6.00 will enhance funding for larger
airports despite an overall reduction in AIP funding. However,
the impact on smaller airports is more uncertain because these
airports depend much more on AIP. The proposal would also
reduce AIP by $750 million, or more than 20 percent of its
current level. The proposal would also increase the amount that
airports can collect from PFCs, potentially by as much as $1.1
billion annually. For smaller airports, which have far less
capacity to collect PFCs, increasing the PFC ceiling may not
compensate for the overall reduction in AIP funds.
As a separate issue, our analysis raises questions as to
whether the new fuel taxes that have been proposed to fund AIP
will be as much as anticipated and whether additional sources
of revenue may have to be found. This would certainly be the
case if Congress appropriated more than $2.75 billion for AIP.
In conclusion, Mr. Chairman, we expect that the demand for
air travel will continue to increase and airports will need to
make capital improvements to meet the capacity challenges in
today's system, as well as those of the NextGen. AIP will
continue to play an important role in meeting those challenges
and some elements of the Administration's proposal are to be
commended, such as simplifying the funding formula and giving
FAA more discretion to fund high priority projects. However,
other parts of the proposal raise concerns about its impact on
smaller airports.
Thank you, Mr. Chairman.
Mr. Costello. Thank you, Dr. Dillingham.
The Chair recognizes now Mr. Barclay.
Mr. Barclay. Thank you, Mr. Chairman and Members of the
Committee. It is always a privilege to testify before the T&I
Committee.
I would just like to make several points in addition to our
written testimony. The first is that airport executives are
very concerned about their ability to meet the demand that is
coming at this system with adequate airport capacity. We have
the particular challenge, as you know, that it takes 7 to 10
years, sometimes more, for any major capital development at
airports, so we need to be starting right now for things we
want in this system and operating in the middle of the next
decade.
But regardless of any challenges we face, we know we are
going to add one-third the number of passengers that we
currently have to the system in the future, almost half, as a
matter of fact. It is the equivalent of adding the population
of the United States to the airport system that we currently
have. Any of you that travel at busy times in the system know
we don't have the capacity at the present time to meet that
kind of coming demand. And it is not just the issue of
constraining an airport system. As this Committee also well
knows that not meeting demand for air travel has broad
ramifications for the economy in general. So we are here asking
for the Committee's help for our Members to be able to meet
those demands that are coming at the system.
Second point is that the existing elements of financing for
capital development of airports have been absolutely ravaged by
construction inflation. This is not your 2.7 percent CPI
increase that the public understands. The latest figures are
that in the last three years, in the 30 major markets,
construction inflation has been just under 25 percent. It has
been a huge increase in our projects and, as a result, we are
recommending to the Committee much higher funding levels than
are in the Administration's plan, specifically, $3.8 billion
with annual increases for AIP and a $7.50 cap on the passenger
facility charge with indexing for future inflation, rather than
today's $4.50 or the $6.00 recommended by the Administration.
We do appreciate their recognizing the need for an increase.
In all candor, Mr. Chairman, I know people on the Committee
have said, well, gee, a $3.00 jump is kind of a long reach that
the airports are recommending. Let me, with all respect, remind
the Committee that in 1999, eight years ago, the Committee
voted for a $6.00 PFC overwhelming. The House of
Representatives voted for a $6.00 PFC at that time, and it was
only in negotiations with the Senate that it was cut back to
$4.50. If you went back and took that $6.00 PFC and added
inflation to it, you would be well over $8.00. The very first
PFC was a $3.00 PFC that went up from zero to $3.00. This
Committee recommended $3.00 to $6.00. So we think that both the
history of this program makes a $3.00 increase reasonable by
what has been past practice and, more importantly, the needs
make it a reasonable increase.
The Administration proposal on AIP is one that we have
great respect for the professionals in Kirk's office. They have
done their best, were given too low a level by OMB for AIP, in
our opinion. We start from current law, frankly, as the test as
to whether a change in AIP would be good or bad. This Committee
has, for 37 years, been balancing out the needs of different
categories of airports in the system and where money needs to
flow, and that is a high hurdle to overcome for any new ideas
in the system. We are certainly open to those, but we find a
lot of merit in making sure that we continue the benefits of
the current system and the balances that you have made in law
in the past, but that we make sure we increase for all
categories of airports the capital needs, because they have all
been met with these challenges of construction inflation.
We would also recommend that the Committee continue to keep
in mind, as it always has in the past, that the Trust Fund was
developed to do capital development first, operations second.
To some extent, I think the Administration is trying to switch
that priority.
A final brief comment. We would like to work with the
Committee on small community air service provisions. We think
they need to be strengthened over what is in the
Administration's program.
I would be glad to answer any questions, Mr. Chairman.
Mr. Costello. The Chair thanks the gentleman and recognizes
Mr. Principato.
Mr. Principato. Chairman Costello, Congressman Petri,
Chairman Oberstar, Members of the Subcommittee, thank you for
this invitation to testify.
As President of Airports Council International-North
America, I am testifying on behalf of the local, regional, and
State authorities that own and operate commercial service
airports. Our members enplane more than 95 percent of the
passenger and cargo traffic in this Country, domestic passenger
and cargo traffic, and nearly all of the international
passenger and cargo traffic. Nearly 400 aviation-related
businesses are also members of ACI-North America.
Passenger growth has returned and the stakes are high. As
airports prepare their capital development strategies to meet
these needs, they employ a variety of tools, including bond
financing, PFCs, AIP, and airport-generated revenue. For a
variety of reasons--ranging from the impact of construction
cost inflation, to an outdated PFC cap, to unfavorable tax
treatment for airport bonds, to the annual fight over proposals
to cut AIP--it increasingly difficult for airports to meet
increasing needs. Simply put, if Congress does not act to
address these issues in reauthorization, airports will be left
without the tools and financial resources needed to play their
role in developing and maintaining a strong national air
transportation system.
To put this into context, as the Chairman said before, ACI-
North America's latest capital needs survey estimates over
$17.5 billion in capital needs each year over the next five
years. Given that the current Federal annual appropriation to
meet those needs is $3.5 billion, the reliance of the airport
industry on locally generated funds, including PFCs and revenue
bond financing that is often backed by PFCs, is obvious.
The industry needs the full array of tools to finance the
capital development necessary to support a growing, competitive
air transportation system. For this reason, the airport
community is advocating policy changes to permit greater
airport access to capital, combined with the continuing and
strong Federal investment in airport development.
Based on construction cost inflation alone, we believe the
PFC ceiling should be raised to $7.50, an index to return
purchasing power. This change would simply allow airports to
account for construction cost inflation and nothing more. It
would keep the PFC whole, in other words. We also support the
FAA's proposal to streamline the program. PFCs have been in
place for 17 years and are well recognized as a success.
Airports have utilized their PFC authority diligently and
in a balanced way to promote important national aviation
priorities such as additional capacity, the promotion of
competition and choice, noise mitigation, and safety and
security enhancements. It is also important to note that more
than 95 percent of PFC-backed projects have been implemented
without airline opposition, and because PFCs are an efficient
and effective way to finance projects, they often have the
effect of reducing overall airline costs while providing needed
capacity.
I know there has been a great deal of discussion about how
PFCs are used. Airports pursue a balance in their efforts to
increase capacity. No airport would forego investing in
potential air side capacity simply to build excess non-air side
facilities. In Atlanta, 55 percent of the newly opened runway
was built with PFCs, providing huge capacity benefits not just
to that airport, but to the Nation as a whole. The new runway
in St. Louis will be 59 percent built with PFC funds. Those are
clearly capacity-enhancing projects.
Yesterday, I spoke with the director of the Sacramento
California Airport. He told me he has far more air side
capacity than he is currently using, and he would like to bring
more service in, but that his terminal couldn't handle it. He
needs to do a terminal project, which in this case I would
argue is a capacity project.
I also spoke with the director of the Asheville North
Carolina Airport. He does not have any big air side projects
right now, but needs to do work on his terminal in order to
provide price and service competition for his community. He
can't do it without the combination of PFCs and AIP.
With regard to AIP, we believe that the funding needs to be
increased and the program strengthened. Applying the same
construction cost inflation analysis to the AIP program, the
authorized levels should rise to $3.8 billion, $4.0 billion,
and $4.1 billion in the next three years. PFCs were meant to
supplement, not supplant, AIP, and both need to be strong.
It should also be mentioned that we believe air traffic
control modernization will have enormous capacity and
environmental benefit, and we fully support efforts to achieve
that goal.
Mr. Chairman, the members of ACI-North America and I thank
you for this opportunity to testify, and we are at your
disposal to work with you to promote the success and the
expansion of the Nation's air transportation system. Thank you
very much.
Mr. Costello. The Chair thanks the gentleman and recognizes
the distinguished Chairman of the Full Committee, Chairman
Oberstar.
Mr. Oberstar. Thank you very much, Mr. Chairman. This is
perhaps, of all the hearings we are holding, the most important
on the future of aviation in the reauthorization. We have
received--I spent a great deal of time last night and this
morning reading through the testimony--some of the best
documentation I have seen in many years, and I think that is
because the stakes have been raised by the Administration's--I
will be kind--proposal. I won't put an adjective on it.
Dr. Dillingham, as always, you provide us with very
thorough, thoughtful, detailed, well supported documentation.
Let me ask should AIP funding for terminal purposes be
expanded? And for which purposes and what types of limits
should be put on it? We have gone along for years saying AIP
has all these limitations; one of them is terminals, one of
them is activities that generate revenues. When I was in the
position of Mr. Costello, chairing Aviation years ago, we sort
of went along, just made assumptions and lived with those
assumptions. Maybe we ought to reconsider. What do you think?
Mr. Dillingham. Chairman Oberstar, I think that the
rationale for the funding decisions that were made some time
ago still are valid; however, I think we also should b e open
to looking at new opportunities in terms of making changes.
Mr. Oberstar. And that means?
[Laughter.]
Mr. Oberstar. You don't want to just continue doing studies
for us, you want to make some policy recommendations. This is
your opportunity.
Mr. Dillingham. Well, Mr. Oberstar, you know that the GAO
is sort of prohibited from making policy recommendations. That
is why I had to answer the way that I did.
Mr. Oberstar. Well, that is why, over the years, we have
hired some of your people to come on the staff. They have the
substantive knowledge and then they come with all those hidden
agendas that they had for years that they were repressed.
Mr. Dillingham. Yes, sir.
[Laughter.]
Mr. Dillingham. That is very true, sir.
Mr. Oberstar. Well, I am not suggesting that we make a
change, but I am saying we need to rethink a great deal of what
we have ben doing in aviation. Mr. Barclay, who has a long
history of--goodness, gracious, he goes back to the Wright
Brothers in aviation----
Mr. Barclay. Don't keep going, Mr. Oberstar.
[Laughter.]
Mr. Oberstar. Your documentation is just filled with
specifics, but you get to the PFC and funding that--wait, I had
this marked here. A $7.00 PFC the Administration proposes for
up to 10 medium or large hub airports if they agree to operate
and maintain terminal area navigation equipment such as ILS and
approach lighting systems and so on. Where did that wacky idea
come from? This is a big cost shift. They have stuffed their
hand into the pockets of the airport and say, all right, you
pay for the things that we have been paying for, you increase
the cost on passengers, and then we are going to say we got a
budget cut. That is what that smells to me like.
Mr. Barclay. I agree, Mr. Chairman. The notion--first of
all, let me step back and say experimenting with ideas in
general with pilot programs is something this Committee has
done effectively over the years to find that balance you found
over 37 years for an airport program, but one of the concerns
that has always been there is if you start shifting nav aids
into AIP, some future OMB is going to have a great incentive to
start funding as much F&E as it can out of the AIP program, and
you don't wind up having enough money then for construction
costs at airports.
So we would agree with being very cautious about those
ideas.
Mr. Oberstar. Doesn't this amount to double-charging of air
travelers? They are paying out of the ticket tax for--of
course, the FAA has this scheme of changing the whole financing
structure, but if you keep it as it is and you shift it to PFC
costs for a function that is an F&E account, you are already
paying for the F&E, now we are going to pay again for the F&E
account for airport lighting.
Mr. Barclay. In fairness to the Administration, there have
been some airports in the past that have wanted to use AIP when
they couldn't get on the list for an ILS.
Mr. Oberstar. Oh, yes, I know. Time and again they have
bought other equipment because they couldn't get it through the
F&E account and they were trying to use AIP funds.
Mr. Barclay. But normally the airports turn the operations
of those facilities over to the FAA to then operate out of its
account. So we share the concern that is being expressed.
Mr. Oberstar. There are lots of these little treasure
troves that are hidden deep inside that FAA budget proposal.
You have, on the same page a little earlier, airports typically
unable to refinance their debt take advantage of lower interest
rates for 10 years. How did that come about? You were probably
there when the original tax was done. You were probably over in
the Senate staff when that was written.
Mr. Barclay. Tell me again what I am talking about here?
Mr. Oberstar. On page 12 of your testimony you make what
seems to me a very reasonable proposal or request, to allow
airports to refinance debt, take advantage of lower interest
rates and have more revenues available.
Mr. Barclay. That is a Finance and Ways and Means----
Mr. Oberstar. Why was the 10 years put in the first place?
Mr. Barclay. I don't know, Mr. Chairman.
Mr. Oberstar. Why don't you find out and come back to us?
Mr. Barclay. We will get back to the Committee with that.
Mr. Oberstar. It may have just been 10 years because some
staffer at OMB said 10 years or some staffer on the House or
Senate Ways and Means Committee said 10 years. But if there is
a rationale behind it, we ought to understand that so that we
can make an appeal to the Ways and Means Committee on your
behalf. I think this is a sensible idea.
Mr. Barclay. If I can add, Mr. Chairman, we are
fundamentally asking for airport bonds to be treated the same
way that highway bonds are treated.
Mr. Oberstar. Yes.
Mr. Barclay. We want identical treatment; nothing more,
nothing less.
Mr. Oberstar. Why not? Why was this difference made?
In PFC-funded projects there is a creeping move, and it is
sort of growing by increments, of airlines wanting to have a
veto over PFC projects. What do you think?
Mr. Barclay. Bad idea. The airports have moved strongly
since deregulation to get rid of mutual air--not mutual aid,
but majority and interest clause agreements and things that
give airlines the right to veto projects that competitors will
want to come in and use. So we should keep independence for
airports for those projects.
Mr. Oberstar. That was one of the six points I wrote down
in my discussion from that chair with Secretary Skinner in
1990. I said they were not going to have veto. They should have
a strong consultative role. FAA, DOT have an oversight role.
Maybe we strengthen that role so some questionable projects
could be filtered out or modified. And also the requirement for
a competition plan by airports so that we ensure that, as we
increase capacity, we also increase opportunities for
competition.
Mr. Barclay. Well, in the history of the PFC program, there
have only been two turned down, and only one of those was
objected to formally by the airlines. So the rhetoric that this
is a highly contentious program is really not met by the record
that most of these projects are worked at. Airports should
consult. The airline opinions are important, but they shouldn't
have a veto over the programs.
Mr. Oberstar. I have just a couple more points, Mr.
Chairman
Mr. Principato, 17 percent, for a very long time, of the
PFC was going into capacity, the rest was going into other
terminal needs and on-airport ground needs. If there is to be
an increase in the PFC, would you agree to a requirement also
that a higher percentage of the PFC go into capacity projects
and runway, taxiway, parking apron improvements?
Mr. Principato. Well, as I said in my testimony, we believe
that certainly when you allocate the amount of PFC that has
gone into interest, the number is much higher than 17 percent.
I think we spoke the other day. It is really more like 30.
Mr. Oberstar. In the last two or three years it has gone
into 40 plus percent.
Mr. Principato. Right. And airports always seek a balance,
as well. I used the Sacramento Airport example earlier, where
they have the air side capacity they need, but they can't bring
in the service they would like because their terminal can't
handle it. So they need to use PFCs to do a terminal project to
make the most of their air side capacity.
Mr. Oberstar. One of the reasons that I wrote that language
into the PFC, because the airlines don't give a hoot how you
get there or what you do when you get to the airport, they just
say this is the time we are going to take off, and you are here
or we leave without you. They don't care how you get there.
Mr. Principato. And then you would have someplace to let
the passengers out and pick them up.
Mr. Oberstar. So airports worry about that. You are the
advocates for the public.
Mr. Principato. Right. And the airlines need to have
someplace to let the passengers off and pick them up and so
forth.
I also think that those statistics may understate a little
bit the capacity benefit. I used the Atlanta example before,
which had capacity benefits throughout the entire Country, and
55 percent of their new runway was built with PFCs. So I think
we are seeing, as you said yourself just a minute ago, a trend
for more and more PFC financing for important projects like
that.
Mr. Oberstar. By my estimate--it is my own horseback
estimate of keeping track of canceled projects after September
11--airports diverted $3.4 billion, roughly $3.5 billion to
security needs at airports. I have advocated that airports
should be compensated for these through the AIP program or the
Defense account or out of general revenues. Have you folks in
the ACI done some discussions about those diversions of funds
to security needs?
Mr. Principato. We certainly agree with you that this is a
national defense, national security priority and that it ought
to be handled that way, but whether through Defense or Homeland
Security or whatever, we generally agree with you on that.
Mr. Oberstar. Mr. Shaffer, does FAA have an opinion on
expanding use of AIP funds or PFC funds for terminal
requirements?
Mr. Shaffer. The FAA is comfortable with the limitations
that presently exist, Mr. Chairman, but, of course, as I have
spoken about earlier this morning, we do believe that the
eligibility for PFCs as a form of local revenue should be
expanded.
Mr. Oberstar. Thank you. Appreciate it.
Thank you, Mr. Chairman.
Mr. Costello. Thank you.
The Chair recognizes the ranking Member of the
Subcommittee, Mr. Petri.
Mr. Petri. Thank you very much, Mr. Chairman.
I wonder, Mr. Barclay, you referred briefly in your oral
testimony to the small airport program, ideas that you might
have for strengthening that program. Could you expand on that a
bit?
Mr. Barclay. Well, it is fundamentally expanding, adding
funding to the programs that the Committee has already
established. We think there is a lot of merit in the current
small airport fund, compared to the recommendation of the
Administration to create a new discretionary account, because
it ties together the interest of large and small airports and
the PFCs. Entitlements are given back; that money goes to
smaller airports. Expanding that program as we expand the PFCs
seems to us to be a good idea.
Smaller airports, as you noted in your opening statement,
small airports are heavily reliant on a robust AIP program. If
they are going to have capital development that is needed for
the future, they get the majority of their funds from that kind
of program, and we really need to have--airports shouldn't be
looked at as individual facilities; airports are a network.
Every passenger that takes off from a small airport, virtually
everyone is bound for a large airport somewhere in the system.
Many of the people that get on airplanes at large airports are
bound for small airports. So we need to look at a network
approach to the financing, which means PFCs for large airports,
increases in those, and AIP increases for smaller airports. So
we very much want to work with the Committee to expand the
current programs and make sure small airport needs are met.
Mr. Petri. This next question kind of follows up on that
both for you and for Mr. Dillingham, and that is if you could
talk a little bit about the Administration's proposal to expand
the discretionary AIP program. When we look at it, we think,
well, the appropriators will earmark it all, so what impact
would this really have on the air industry if it is supposed to
be a network and kind of balanced improvement, and is there
some way to achieve that objective? Could you kind of discuss
the merits of expanding that discretionary program?
Mr. Dillingham. Mr. Petri, as I understand it, the
Administration's proposal does not change the national priority
system in terms of what discretionary monies would be spent
for, that they would still be spent for safety and security and
environment and capacity. I think that the larger airports
receive a higher score for those same projects, and also that
the larger airports would tend to have more of those projects.
It is not clear to me that the smaller airports will benefit
from that kind of change.
Mr. Barclay. Overall, in the Administration's program, they
would cut the total funding for airports by that $765 million
and $430 million of that would come out of the accounts that
are aimed at smaller airports. So it is both an issue of
allocation and are the programs the right ones to be shifting.
I assume the Ranking Member is talking about the non-primary
entitlements, where the tiering of non-primary airports has
merit to look at that. But taking away the guaranteed
entitlements from the smallest airports in the system is again
something we would question unless it is replaced by a
guaranteed discretionary pool or some other new idea that would
get over the accounting problems that we think the
Administration is legitimately trying to figure out, how can we
not allocate lots of money to smaller airports that aren't
going to draw on it. That has got merit, but so does
guaranteeing these smaller airports that the money will be
there when they need it.
Mr. Petri. Thank you. We would like to work with you
further in this area in particular. Thank you.
Mr. Costello. Thank you, Mr. Petri.
The Chair recognizes the gentleman from Colorado, Mr.
Salazar.
Mr. Salazar. Thank you, Mr. Chairman.
Mr. Dillingham, I was noticing the comparison here that you
have compared to FAA and the comparison that talks about the
planned development costs. Could you expand on that a little
bit? And maybe Mr. Shaffer could also talk about that a little
bit.
But, also, how do you define small airports? What is your
definition of small airports?
Mr. Dillingham. The analysis that we tried to present that
show the difference between what ACI was estimating as planned
capital development and what the FAA has in its national
integrated plan for airports, the NPIAS, basically, FAA
produces a document of airport needs that sort of is a bottoms-
up approach from which they get the needs from the airport, and
they move towards a national system of airports being concerned
primarily with making sure that safety, security, capacity,
standards, those things are met based on the forecast of
traffic for the Nation's system. So that is what generates the
amount from FAA. And it is all for projects that are eligible
for funding by Federal grants, the AIP.
Whereas, ACI includes projects that are not eligible for
funding by Federal grants, AIP, and oftentimes they are money-
generating projects, as such, or projects that they would be
able to fund with private sector money. So that is the
difference that we were making, and that accounts for the
difference in the planned development costs between the two.
Small airports, we are talking about small hubs and non-hub
airports is what we define as small airports in our
presentation.
Mr. Salazar. Mr. Shaffer?
Mr. Shaffer. Mr. Salazar, further in regard to what Dr.
Dillingham was just saying, the precise definition that you are
requesting is for a small hub, that is an airport that enplanes
from one-quarter of one percent down to five one-hundreds of a
percent of the total national enplanements on an annual basis.
A non-hub is one that enplanes less than five one-hundreds
percent of the national total, but more than 10,000 per year.
And then you drop below that even to the non-primary commercial
service airports. Those are, as I say, non-primary airports;
they have between 2,500 and 10,000 enplanements per year.
Mr. Salazar. Thank you.
Mr. Dillingham, in your estimate or your analysis, I think
Mr. Barclay referred to the inflationary costs or construction
inflation of 25 percent. I think that is the figure that he
used. Did you take into account that inflationary cost?
Mr. Dillingham. No, we did not. That clearly would raise
the cost, and I am not sure that the FAA took that into account
in their development of their numbers as well.
Mr. Salazar. So, Mr. Barclay, would you say that the
Administration's proposal is the correct way to follow, or
should we try another angle?
Mr. Barclay. No, sir, the Administration's proposal doesn't
have enough money in its to build the capacity we need to meet
the demand that is coming at the system, so that is why we say
we sort of start from the wisdom of current law that has been
worked out over many years, and we need to move up from there.
Mr. Salazar. Thank you, Mr. Chairman. I yield back.
Mr. Costello. The Chair at this time recognizes the
gentleman from Tennessee, Mr. Duncan.
Mr. Duncan. Thank you, Mr. Chairman.
Mr. Shaffer, at one point we were losing general aviation
airports at a rate of one per week. Is that trend continuing?
And how important do you consider the more active general
aviation airports to the entire national aviation system?
Mr. Shaffer. Congressman Duncan, I don't have the exact
figures on the tip of my tongue. There are a couple of airports
out west that I am aware of that the local community is
presently debating keeping open or not, and some of the
advocacy groups in the Country are working very diligently to
keep those open.
Honestly, in regard to the second part of your question,
general aviation airports, that is where my heart is. That is
where I grew up, on an airport with grass runways. So that is
part of my focus. But, of course, I have to put that cinnamon
aside and do exactly what I think you are suggesting, and that
is look at the system as a whole and evaluate each airport in
that system as a part of that integrated whole.
Indeed, general aviation airports, particularly with the
advent of very light jets, more point-to-point air taxis, more
fractional ownership of aircraft will become more and more
important to the national system, and that is one of the
primary motivations of the Administration's proposal to free up
more money so that we can focus that money on the small
airports and the general aviation airports, to help them
prepare for the advent of more traffic and congestion.
Mr. Duncan. All right. Thank you.
Dr. Dillingham, you mentioned in your report that the FAA
wants to expand the privatization program for airports, and, of
course, they have done that in other countries to a much
greater extent than we have here. You know, there has been very
little activity so far in the five airport pilot program that
we authorized. Do you think it can be expanded quite a bit by
removing this airline veto and the other proposals that they
are making?
Mr. Dillingham. Mr. Duncan, just as you said, the pilot has
been around for a number of years and there hasn't been very
much interest in it. As we go around the Country, we don't hear
a clamor for airport privatization.
Mr. Duncan. Okay.
Mr. Barclay and Mr. Principato, let me ask you this. The
FAA estimates that we are going to have 300 million more
passengers in the next seven or eight years. How far behind are
we and are we reaching a crisis point at some of these
airports? Also, in your studies, have you taken into
consideration the tremendous growth areas? And what I am
talking about, for instance, the Knoxville metropolitan area,
for instance, is growing by leaps and bounds. There are places
in the northeast and other parts of the Country that are losing
population or just barely staying the same. How much have you
taken that into consideration, that the needs might be growing
faster in certain areas than others?
Mr. Principato. Well, you mention Knoxville. Bill Marston,
who runs the Knoxville Airport, is on our board and keeps our
attention focused on that, and does a great job, by the way.
Certainly, we are looking at that. The service patterns are
changing. As I stated before, airports look at their own
circumstances and are working very, very hard to meet the
expanding and changing needs in their communities and trying to
expand the reach, but this 300 million new people is an
inescapable fact. I have yet to find anybody who doesn't think
that is going to happen. That seems to be the one number
everybody agrees on.
Mr. Duncan. Have we been able to speed up some of these
projects? I remember years ago they said it took, for the big
main runway at the Atlanta Airport, it took 14 years from
conception to completion. That is part of what I am getting at
when I say how far behind are we. If we are going to take a
long time for some of these projects----
Mr. Principato. We have made a lot of progress in the last
10 years, but we are still behind. And if we don't update the
tools at our disposal, the PFCs, keep AIP strong and growing,
then we are just going to fall further and further behind.
Mr. Duncan. What effect would it have, Mr. Barclay, if the
Senate did to you again what they did before? You know, the
Senate messes up a lot of things.
[Laughter.]
Mr. Duncan. I agree with you, Congressman, that they did
this last time. You know, you are making the point that one of
the beauties of the PFC is that it is a ceiling, it is not a
requirement, and it has got restrictions on it. And airports,
their local government, they don't have a profit incentive,
they don't have the incentive to go build things that aren't
needed. But where you do have the needs, if you provide the
room that airports can utilize, an increased PFC, they can go
build things where they need them.
We are not at a crisis now. Post-9/11, as you know, that
gave us some extra time. We were going to reach a billion
passengers by 2011, before 9/11 occurred. But we then also
turned around and started spending a lot of money on security,
and we are still spending a lot of time on security at the same
time we are trying to add capacity. So when you balance all
those issues out, our members tell us we are not in a crisis
now, but we will be if we get that population the United States
added to the system and we haven't started building this year
and next year.
Mr. Duncan. I will just end with this. In some ways we are
going overboard on this security and shortchanging the
expansion of capacity efforts.
Thank you, Mr. Chairman.
Mr. Costello. Thank you.
The Chair, at this time, recognizes the gentleman from
Oregon, Mr. DeFazio.
Mr. DeFazio. I thank the gentleman.
Mr. Shaffer, are you familiar with the history of PFCs?
Mr. Shaffer. Very much so.
Mr. DeFazio. Are you? Okay. So you are familiar with the
period during which PFCs did not exist and the reasons why they
didn't exist?
Mr. Shaffer. Yes, sir, I am.
Mr. DeFazio. Okay. And that had to do with?
Mr. Shaffer. Revenue diversion, sir.
Mr. DeFazio. Okay, that is good. You don't think that,
potentially, your rather broad expansion of the license for
PFCs could lead to what many people might consider revenue
diversion?
I have one other question. Do you know the breakdown on PFC
revenues between what is collected at origin versus what is
collected en route?
Mr. Shaffer. I don't.
Mr. DeFazio. Okay.
Mr. Shaffer. I would be glad to get that for you if it
would be of assistance to you.
Mr. DeFazio. It would be very useful, because my point is
that I really think it is hard to make the case that an en
route fee is a local revenue. You know, I fly from Eugene to
Denver, I pay a PFC in Denver. I have never even been outside
the new terminal on the grounds, never. And I think there are a
heck of a lot of other people in that situation at Chicago or
anywhere else. I have been outside in Chicago twice in 20
years, I think.
So I think making the case for a local revenue is hard, and
I am concerned, as the original Democratic author of PFCs, that
we may be headed back down that route where we are making it
more controversial than it needs to be. My position would be,
yes, you may be able to make a case--you certainly, I think,
can make a case for terminal construction in some airports, but
I am worried about the latitude you are proposing and would
urge you to rethink that, with your knowledge of the history.
Mr. Shaffer. I believe I understand your concern,
Congressman, and I will see if I can't get that en route PFC
data for you.
Mr. DeFazio. That would be very helpful.
Dr. Dillingham, I know we have plowed this ground many
times, but as I understand the Administration's fee proposal,
it presents us with a deficit, basically, in terms of our
capital needs for our airports as we move toward a billion or
more passengers in the not-too-distant future, is that correct?
Mr. Dillingham. Yes, sir.
Mr. DeFazio. Now, if we kept the current fee structure and
that many people really flew and airline ticket prices stayed
about where they are, all things considered, would that create
enough revenue to fill that deficit?
Mr. Dillingham. Yes, sir. Based on our analysis and based
on our understanding of the CBO analysis, it would provide
enough revenues.
Mr. DeFazio. I mean, that is assuming other things are
pretty much held the same.
Mr. Dillingham. Yes, sir.
Mr. DeFazio. But we could fill that deficit.
Mr. Dillingham. Yes, sir.
Mr. DeFazio. Okay. And, again, not asking you to pass a
policy judgment or talk about the inequities that some of us
feel are created by the Administration proposal, particularly
the burden on GA, the Administration proposal would produce
revenues that would not be adequate to meet that capital
deficit, is that correct?
Mr. Dillingham. I am sorry, would you say that again, Mr.
DeFazio?
Mr. DeFazio. Well, I mean, their proposal, unless you were
to further increase the gas tax or something else, would not
produce revenues sufficient to meet that deficit.
Mr. Dillingham. We have some concerns about that based on
the way, as we understand, FAA computed their numbers, not
taking into account the potential lessening of purchasing of
gas tax and the elasticity issue.
Mr. DeFazio. Okay.
Mr. Barclay, I would just like you to sort of give us where
do you see--we talked a little bit, when I saw you yesterday,
about the need to streamline PFCs. I don't want to create an
unnecessary and redundant paperwork process, but just be real
candid here. Is what the Administration is proposing just
getting rid of unnecessary paperwork or is it really creating
the potential that we won't be adequately monitoring how PFCs
are going to be spent?
Mr. Barclay. I honestly think you can streamline and go to
a certification and auditing kind of procedure, because you
have got experience in the system that, as I say, there has
only been two PFCs turned down in the history of the program.
So that gives you a track record to go on. And you know you
have got the local checks and balances on these projects and on
the levying of fees that are at least locally looked on as a
local fee once they elect to put it on.
So the Administration recommendations, putting aside
eligibility for the moment, but just streamlining, is one that
is well worthwhile. We have done some experimenting with that
at the smaller airports, and it seems to have worked pretty
well.
Mr. DeFazio. Okay, thank you. My time has expired.
Thank you, Mr. Chairman.
Mr. Costello. Thank you.
The Chair recognizes the gentleman from Missouri, Mr.
Graves.
Mr. Graves. Thank you, Mr. Chairman.
I am just trying to clarify where we are in this whole
proposal, in the FAA's proposal in terms of AIP. It is a
network, as Mr. Shaffer pointed out, and wheels don't work
without spokes, and our aviation network doesn't work without
general aviation facilities, that is all there is to it. But it
is not just about GA airports; there are a lot of jobs out
there, there are a lot of small businesses out there that
completely depend on those airports to function.
What I am trying to figure out, the FAA's proposal is going
to cut the AIP program considerably. In fact, in Missouri,
which is obviously the State I am looking at, we are talking
about $2.1 million to the State for the Airport Improvement
Program. Is that correct, is that the direction we are going to
go? I hear talk about discretionary funding. This is just
vitally important to many of our States and to GA. The program
is designed to get GA pilots off the bigger airports. I mean,
obviously, it works in conjunction with the bigger airports,
and, just like you said, it is a network, and it is a network
that is important. We don't want those delays at the larger
reports; get GA off of those airports and get them onto the
smaller airports.
But where are we in this process? Is the program being cut
considerably? Are those funds going to be discretionary? I want
to keep that guaranty there. Somebody answer the question. I am
trying to figure out where we are at.
Mr. Shaffer. I couldn't agree with you more, Congressman,
in terms of the critical nature of general aviation airports,
not only on a local level, but as a part of the national system
of airports. What we are proposing the AIP level plus the
modifications that we are proposing to AIP and the passenger
facility charge program includes things like this: a standalone
State apportionment fund, and now with a minimum of $300
million per year in that fund; raising the discretionary
account from $148 million, I believe it is, which is a number
that is almost 20 years old, up to $520 million, preserving the
95 percent Federal share for that smallest tier of the nine and
fewer based aircraft, preserving the 95 percent Federal share.
In making a lot of common sense changes, as you know, as a
general aviator, one of the things that enables those airports
to generate the most revenue is fuel sales. The other one is
hangar rental. Well, right now, if one of those airports wants
to spend AIP funds to add a credit card reader to their
existing fuel farm, they can't do it, and that just makes no
sense at all. Same result with regard to putting new skin on a
bunch of T hangars. It is not eligible; you have to knock them
down and start from scratch, and that just makes no sense. So
we want to remove, frankly, silly restrictions that disable the
smaller airports from being more sufficient.
Mr. Graves. Well, at my airports, my GA pilots are
extremely frustrated. They are being told that their taxes are
going to go up 300 percent and they are going to lose money to
fix their airports at the same time, and it is extremely
frustrating to them.
But this program is absolutely vital, and I hope that the
Members of the Committee are paying close attention to this
because those small airports out there depend on it. I would
love to see some changes in it, some changes that make sense.
We need to keep that money there and we need to make sure that
it is always going to be there. We don't want to cut it.
Mr. Dillingham, I don't know if you had anything or not.
Mr. Dillingham. No, sir.
Mr. Graves. Thanks, Mr. Chairman.
Mr. Costello. I thank the gentleman.
The Chair recognizes now the gentleman from Wisconsin, Mr.
Kagen.
Mr. Kagen. Thank you, Mr. Chairman.
And thank you to all of you for your presentations, they
have been very enlightening. As a new Member on this Committee,
there is a great deal to learn. For many years I have been a
great fan of the GAO. They have tremendous work and my reading
of their product is that they have very little bias to add. So
without getting Dr. Dillingham to be political, I will just ask
you yes or no questions, and you can plead the fifth, if you
would like.
[Laughter.]
Mr. Dillingham. Thank you, sir.
Mr. Kagen. Isn't it true that the proposal by the
Administration is really attempting to do more with less?
Mr. Dillingham. Yes.
Mr. Kagen. So I got that right.
Mr. Dillingham. Do you believe that the funding level
proposed by the Administration for AIP is adequate to meet the
current needs and future needs of our airport system?
Mr. Dillingham. According to FAA's estimates, it is.
Mr. Kagen. And according to your own analysis and years of
experience?
Mr. Dillingham. I think there is some value to looking at
what the airports propose in terms of what they think they
need. I mean, I think there is a balance in there. I think one
of the things that needs to be considered is that the FAA
proposal is a very complicated, integrated proposal where one
element of it sort of is dependent on another element and you
sort of have to take it as a whole to make some sense of it.
And if you start pulling it apart, you start to see things
where there is not enough money here or this shouldn't be done
this way. So I think they intended it to be taken as a whole
rather than the parts of it.
That is a little bit more than yes or no. Sorry.
Mr. Kagen. So much for yes or no questions. Thank you.
[Laughter.]
Mr. Kagen. Mr. Barclay, the current level of funding
proposed would have a significant effect on small airports like
where I am from in Northeast Wisconsin, Green Bay and Appleton.
Can you comment, please, upon what you would recommend the
level of funding be for AIP and others?
Mr. Barclay. Well, the current appropriated level is just
over $3.5 billion. The current authorized level is $3.7
billion. We are recommending really a modest increase from the
authorized level, start it at $3.8 billion and then take it up
over the years of the authorization. Frankly, that is trying to
be cognizant of the difficult budget decisions the Committee
and the Congress have to make. And we have the advantage of
having this leverage that the PFC can be used primarily by the
larger airports. We can then shift more of the AIP to smaller
airports, and you can get a balance that way. You don't have to
entirely rely on the Federal budget for everything in the
airport system.
So we would like to see at least that $3.8 billion level
met for the first year of the program.
Mr. Kagen. Mr. Principato, you mentioned in your opening
statement that you would like to see a more creative and more
functional contribution from bonding.
Mr. Principato. Yes.
Mr. Kagen. What specifically do you have in mind?
Mr. Principato. That tax treatment of bonds?
Mr. Kagen. Correct.
Mr. Principato. On the tax treatment of bonds, about 60
percent of airport bonds--as Dr. Dillingham's slide showed
before, over half of airport finance comes from bond, and about
30 percent of that, by the way, is backed by PFCs. So the PFCs
have a utility well beyond just the dollar that you bring in.
But about 6 percent of airport bonds are treated as private
activity bonds, so subject to AMT; they can't advance refund
them, so that adds to the cost of putting airport capital
projects into place.
Our modest proposal would be simply that any project that
is eligible for AIP or PFC be counted as a public purpose
project and be treated by the tax code that way. I know that is
not this Committee's jurisdiction, but that would be our modest
proposal. And if you like that idea, we would like to work with
you on seeing if we can follow up on that.
Mr. Kagen. We do have friends in other committees.
Thank you very much, Mr. Chairman. I yield back my time.
Mr. Costello. The Chair recognizes at this time the
gentlelady from Oklahoma, Ms. Fallin.
Ms. Fallin. Thank you, Mr. Chair.
Mr. Dillingham, when I was viewing your charts that you
were showing earlier, you talked about your difference in
estimates on the FAA's and the ACI's average annual plan
development costs that are coming up, and you showed a
difference of $5.8 billion and what you anticipate the needs
would be compared to the FAA's estimates, and then you
segmented that out to ineligible and eligible AIP costs. Can
you explain what an eligible cost would be and why the FAA does
not include that in their estimates of needs for the future?
Mr. Dillingham. An eligible cost is defined by statute. The
statute says what is eligible for PFC. So that is what we mean
when we say eligible AIP. Ineligible AIP are projects that are
not included in the statute, and in large measure these are
oftentimes that are income-generating projects such as a
parking garage or some other income-generating project on the
airport grounds.
I don't want to speak too much for FAA in terms of why they
don't include them, but I think their estimate is based on what
the statute allows them to include. Therefore, they wouldn't
have something that couldn't be paid for by Federal grants as a
part of their estimate.
Ms. Fallin. Well, I guess that was my question, Mr.
Chairman, if I could follow up. Your estimate costs are a lot
higher than the FAA's, so if they are ineligible, why would we
include that as something that is part of the costs?
Mr. Dillingham. Well, actually, it is the airport
organization's estimates of what their cost would be, and,
again, not wanting to speak too much for the airport, since
they are sitting close by, I think the airports see the needs
differently than FAA in terms of they may see that some
projects that--like it was explained earlier this morning, like
if FAA concentrates on the air side--runways and taxiways and
things like that--it is also important from the airport's
perspective that passengers have someplace to pick up their
bags, someplace to get on the airplane and that kind of thing.
So they have a different perspective on sort of what they think
is needed to enhance the system.
I think the airport people can probably speak better to
that than I can.
Mr. Principato. That is our organization's estimate, and we
look at the entirety, the terminal, the gates, and everything
else, because they are all really capacity projects when you
think about it. You can have a lot of runways and the all work
really well, but if you only have a couple of gates, you have
no place to put the people. So that is one thing, we look at
the whole picture.
The other is airports pursue a variety of strategies to
raise capital for projects and so forth, particularly smaller
airports are looking at the parking garage issue and so forth.
So we really look at the entirety of what is going on at the
airport.
If I could say one other thing just about the difference in
our number and the GAO number--I was talking to Dr.
Dillingham's staff beforehand and we are going to work with
them--our number is--we put an inflation adjustment into our
number. Not construction cost inflation, a smaller inflation
number, to get to our $17.5 billion over the next five years,
and theirs are in constant 2006 dollars, so they are in
deflated dollars. Also, we need to work with them, but we think
they may understate the cost of repaying bonds that are out
there. Again, about 60 percent of airport projects are financed
with bonds, and it may understate that, but we need to sit down
with their staff and work that out
Ms. Fallin. Well, I have got a few minutes left, so I am
going to ask you a question, Mr. Shaffer.
In light of them saying that there are some things that
they believe should be eligible, have you had a discussion with
the airports about changes that might be made to allow things
that they need that would enhance service at the airports?
Mr. Shaffer. We have, and that discussion is ongoing. More
fundamentally, we have also been and continue in discussions
not only with the airports, but with Dr. Dillingham's staff in
terms of getting down to a common understanding of which
projects, for what period of time, and under what eligibility
is included in these needs estimates.
Ms. Fallin. Thank you so much.
I yield back my time.
Mr. Costello. The Chair thanks the gentlelady.
At this time, the Chair recognizes the gentleman from
Washington State, Mr. Larsen.
Mr. Larsen. Thank you, Mr. Chairman. I will just take a few
minutes to ask some questions. Mr. Costello will be back in a
few moments.
The first question is for Mr. Shaffer and has to do with
comments on page 11 of your testimony. Mr. Oberstar asked some
questions about one of the pilot projects you propose. The
other pilot project you propose is use of AIP dollars
specifically to install ADS-B equipment. Relating back to the
hearing we had last week, I think the testimony last week was
on the Next Generation ATC program. There were estimates
anywhere from $12 billion to $15 billion from FAA, $10 billion
to $14 billion from private airports. I may have those numbers
wrong, but the magnitude is still the same. So you are looking
at $22 billion to $29 billion over the next several years from
user fees, from increased gas tax, and from some bonding
authority in the second ten years, paid by potential
surcharges.
So the question I would have is with that amount of money
going potentially into the Next Generation ATC system, which
would include ADS-B, why do you think it makes sense to use AIP
dollars for ADS-B when, again, previous testimony to the
Committee shows there is going to be a lot of money,
potentially, flowing into Next Generation ATC?
Mr. Shaffer. Congressman, that pilot program is directed
toward those areas of the Country where either the ADS-B
installations would not be included in the NextGen rollout or
where, for example, either a community or an airport wants to
install ADS-B in advance of the Administration's F&E schedule
and budget. So it is really a supplement to the NextGen system
as we have proposed it.
Mr. Larsen. In addition to that, in your pilot project,
does it not include the control over that particular portion of
ADS-B system by the installer, or would this be part of the FAA
system run by the FAA, staffed by the FAA?
Mr. Shaffer. It would be part of the system, Congressman.
Mr. Larsen. Would it be run by the FAA and staffed by the
FAA?
Mr. Shaffer. Yes, that is my understanding.
Mr. Larsen. That is your understanding. How much do you
anticipate would come out of the AIP to finance this pilot
project, have you done an estimate on that?
Mr. Shaffer. I don't have it on the tip of my tongue,
Congressman, and I apologize for that; I will get it for you. I
will also add that there is interest already in the system for
doing things of this nature. For example, the State of Colorado
has already begun installing ADS-B there because their terrain
is such that there is really no amount of radar that can cover
and provide the sort of air traffic control that a lot of
general aviators, for example, need and desire.
That tells us that there is a lot of interest in that.
Mr. Larsen. [Presiding.] Are they doing that out of AIP
dollars?
Mr. Shaffer. No, they are doing that on their own
presently.
Mr. Larsen. Doing it on their own.
Dr. Dillingham, in your analysis of the FAA versus AIP
funding structure, did you take into account, did you make any
estimate on the amount of AIP dollars that would be used in
this pilot project to finance an earlier roll-out or
supplemental roll-out of ADS-B?
Mr. Dillingham. No, we did not, Congressman Larsen.
Mr. Larsen. So those numbers are not included in your
analysis?
Mr. Dillingham. Not specifically. No, sir.
Mr. Larsen. Not specifically. So if they were, that would
mean, in my mind, I guess it would mean there would be fewer
AIP dollars on your bottom line analysis.
Mr. Dillingham. Yes, sir.
Mr. Larsen. Mr. Barclay or Mr. Principato, have you looked
at that particular pilot project and the impact that spending
AIP dollars and the availability of AIP dollars for ADS-B roll-
out and what that means for AIP dollar availability?
Mr. Barclay. That goes back to my earlier answer. We are
hesitant to endorse giving AIP dollars going to nav aids,
rather than F&E dollars going to nav aid. So some
experimentation with the issue, let me step back and say we are
big fans of ADS-B and the next gen system. We agree that is the
right pattern to go with. It is a fundamental part of that
system. There are a number of things about this pilot program
we question. The money is not going to the airports and it is
coming out of AIP, rather than F&E. So we would be happy to
work with the committee to redesign that.
Mr. Larsen. Okay.
Mr. Principato. Actually, we have many of the same
concerns, certainly with the last point Mr. Barclay made about
some of the money not going to the airport. On the ILS
question, I just wanted to put one more issue on the table. If
we do move in the direction of a pilot program, a lot of
airports have concern about the liability issue, if they are
going to take that on. If the Congress in its wisdom puts it in
place, we need to look at the liability issue moving forward.
Mr. Larsen. I noted that in one of your testimonies, the
liability if you were to take responsibility.
That takes my time. Where is the list here? The Chair
recognizes Mr. Hayes of North Carolina.
Mr. Hayes. Thank you, Mr. Chairman.
A question for Mr. Barclay and Mr. Shaffer together, and
thank you all for being here today.
How does the FAA count aircraft? If you were at a towered
airport, obviously the arrivals and departures are counted, but
many airports do not have towers and operate very safely, and
have lots of traffic. In terms of AIP money, can you help me
with that?
Mr. Shaffer. Congressman Hayes, that is a great question.
We put a lot of effort into figuring out the best way to count
it. As you point out, if you have a tower, then obviously you
have the log books and the radar tracks and you know exactly
what is going on.
We also analyzed whether fuel sales might be a way of
figuring out the number of based aircraft at a particular
airport. For a variety of reasons, we concluded that was not
likely to yield an accurate result, so we settled on the idea
of getting the end numbers off of the aircraft at each
particular airport.
Honestly speaking, the results in collecting that data up
to this point have been spotty across the Country. Some areas
we have gotten pretty high percentages of response, and others
pretty low. As I sit here, I am open-minded, and if you have a
better way to figure out that number of based aircraft, I would
love to talk to you about it.
Mr. Hayes. Of course, based aircraft is important, but the
folks that are coming and going to do business at that airport
is equally important. I am thinking in my District, Salisbury
is a non-towered airport. A tremendous of commerce goes in and
out of there, not based traffic. Concord has the data. As you
say, tracking information is available. The aircraft are, I am
not a computer guy. Can you punch a button and say who went to
Salisbury that day, Mr. Dillingham?
Having this conversation, Congressman Graves reminded me of
a Phil Boyer quote, ``Give me a mile of highway and you can go
a mile. Give me a mile of runway and you can go anywhere in the
world.'' And that is crucial as we face the future.
Do you want to comment on that, Mr. Barclay? Do you have
some idea from an airport standpoint of how we might painlessly
and properly count aircraft in and out?
Mr. Barclay. Well, I think it is currently done by
estimates. We will get back to you. I have forgotten the
details of exactly how they estimate those numbers, but your
broader point is exactly right. To use a larger airport
example, the Atlanta Airport recently did a cost/benefit
analysis of their impact on the local economy. It was $18
billion a year at one airport. We are talking about investing
for all 550 airports in the country that get air carrier
service, 3,500 airports that are eligible, a lot less money
than that for the entire country.
Hong Kong spent $25 billion to build one airport for their
country. It shows the importance to the economy in general of
making these investments and what a wise investment it is for
the, frankly, modest amount of money that we are investing in
large and small airports, because the small ones are just as
important to their communities as the large ones are to theirs.
Mr. Hayes. Okay, if you will help us track that going
forward.
Mr. Dillingham was talking about all these additional
passengers for airlines and general aviation. In the next
generation equation from your perspective, has the revenue
stream from these additional passengers, which we basically
agree are going to occur, has that been taken into account as
to what the present system is going to generate in terms of
revenue dollars?
Mr. Dillingham. I think when you look at the overall FAA
proposal in terms of its move to user fees or the necessity to
move to user fees for adequate revenues, it has not been taken
into account, although the proposal does address some of the
other issues that are of concern to the aviation community.
Mr. Hayes. Thank you.
So Mr. Shaffer, again welcome. The necessity for the next
generation, I don't think we have come to that determination
yet in terms of dollars, but you all make sure as this cost
accounting system, which I am trying to match with something,
doesn't quite measure up. Let's make sure we know how many
dollars are coming in. If we take something that doesn't appear
to be broken, then don't try to fix it until we need it. If you
could kind of keep us up to speed on that.
Mr. Chairman, with time left, I yield back. Thank you all
again.
Mr. Larsen. Thank you.
Mr. Hall of New York?
Mr. Hall. Thank you, Mr. Chairman.
Thank you all, our illustrious panel.
First, I wanted to ask Mr. Barclay what the most common
landside projects are that PFC's fund?
Mr. Barclay. It is primarily gates. Again, if you have your
airside build-out, and you want to maximize the utilization of
that, PFCs were designed to be able to fund gates and
particularly gates that would allow more competition into the
airport.
Mr. Hall. Thank you. In your testimony, you indicated the
changing of the Federal share for airfield paving and
rehabilitation projects for runways and taxiways at large and
medium airports, and from 75 percent to 50 percent would be
hardship. Could you elaborate on that, please?
Mr. Barclay. Well, if the purpose in general is to provide
more funds for construction at airports, reducing the amount of
money in the Federal share doesn't seem to make sense to us.
That was, we think, driven primarily by the much lower number
in the Administration's program. They are trying to make the
dollars go farther so they reduced the Federal share of those
programs.
If you pull an extra 25 percent away like that, you are
just going to have to find it somewhere else in the airport
financing system. So we think it makes sense to leave the
percentages where they are.
Mr. Hall. Okay.
Mr. Shaffer, three quick related questions here. The FAA's
proposal would eliminate the Military Airport Program
discretionary AIP setaside. Could you explain the reasoning for
that?
Mr. Shaffer. Yes, sir. The Military Airport Program is
presently 4 percent of the discretionary fund. It is about $35
million a year. But the number of airports coming into that
program has dwindled to almost, well, it is single digits on an
annual basis. Most of the airports that are presently in the
program are second time entrants, and the new entrants are just
ones and twos. So we want to leave the criteria in place, but
the level of traffic there, or participation if you will,
simply does not any longer justify the setaside, and it causes
the setaside mainly to be an accounting exercise. But we are
not removing the criteria. When an airport comes up that wants
to go through that program, that will be available to them and
we will have the money to fund it.
Mr. Hall. The setaside will be available?
Mr. Shaffer. Not the setaside, but the program, the
criteria to fund the types of projects like hangars and
passenger terminals and things that a military airport
ordinarily does not have, but are needed to convert to a
civilian airport.
Mr. Hall. Okay. The proposal would sunset the 95 percent
Federal AIP contribution to small airport projects and return
it to 90 percent. What is the logic there?
Mr. Shaffer. That is a great question, Congressman. It is
simply this. When Congress established that 95 percent
participation level by the Federal Government, it was in
response to the impacts of 9/11. We are now six years down the
pike almost from 9/11. As I testified earlier this morning,
those impacts financially, traffic-wise, passenger counts, are
largely now gone and airports have recovered. So we are simply
suggesting that Congress let the sunset, which you put in the
provision in the first place, go ahead and occur.
Mr. Hall. Okay. The last question would be, well, there are
two parts to this. Why has the FAA proposed to eliminate the
reliever airport setaside? And also, the new tiered approach to
non-primary entitlements which handle funding to the bigger
small airports, I was curious if you could let me know either
now or later in detail specifically how that would affect
airports like Stewart International Airport which is in my
District.
Mr. Shaffer. Sir, the reliever setaside is presently two-
thirds of 1 percent of the discretionary account on an annual
basis. That translates into about $5 million a year. In
actuality, we spend something in excess of $22 million every
year on reliever airports. So this is a classic example of a
true accounting exercise. The setaside really has been overcome
by our actual commitment to assisting those airports. So we
think that the setaside is no longer necessary.
I don't know where Stewart falls out. I am very familiar
with that airport, having flown in there many times when it was
still an Air Force base, but I will have to get the response to
you on that. I don't know which tier you would fall in.
Mr. Hall. Thank you. I appreciate it.
I yield back. Thank you.
Mr. Costello. [Presiding.] I thank the gentleman.
The Chair at this time recognizes the gentlelady from
Florida, Ms. Brown.
Ms. Brown. Thank you, Mr. Chairman.
Mr. Shaffer, I want to follow up with your discussion about
the FAA proposes to eliminate the Military Airport Program. You
all brought this program elimination up the last time, and it
was my amendment that reinstated it. You indicated that it was
for hangars and other things. What the communities use that for
is for those runway expansions, and most communities cannot
afford to keep it up. But after 9/11, the military continued to
use those runways in those communities, even though BRAC had
done away with the major portion of what they were for.
So I don't understand. Do you not talk to the military?
Mr. Shaffer. Actually, Congresswoman, we consult with them
directly and often. Let me clarify what I said earlier just so
everybody understands. We are not eliminating the program. The
criteria for entrants and participation in the Military Airport
Program will remain on the books for airports that want to go
through that program. All we are suggesting is that the number
of airports that now would be eligible is so small that FE
Ms. Brown. What is it? About six? Is it about six a year, I
think.
Mr. Shaffer. That sounds about right, ma'am.
Ms. Brown. Well, that is what it was before.
Mr. Shaffer. Well, I understand what you are saying. We are
simply saying that we have the money to put those airports
through the system, but that number continues to decline. Six
may not be exactly right currently, but it is a single digit
number. So the setaside as a financial matter really doesn't
have----
Ms. Brown. Maybe we can talk and work on some additional
language so that I can be assured that it will be available for
those communities that want to continue these programs, in
conjunction with the military.
Mr. Shaffer. I would be happy to do that.
Ms. Brown. Okay. My next question, the FAA proposes
changing the Federal share of airfield payment and
rehabilitation projects for runways and taxiways at large and
medium hub airports from 75 percent to 50 percent. How are the
airports going to finance these significant increases
particularly given the additional security issues that the
airports have had to step up to the plate with?
Mr. Shaffer. The obligation to maintain the airfield that
is paid for in part by the Federal Government has always
resided with the airport owners and operators, Congresswoman.
Our proposal to adjust the level of participation on
rehabilitation going forward is in part a recognition of that
preexisting obligation on the part of the airport owner and
operator, but likewise, a recognition on our part that that is
still an asset in the national system of airports, so the
Federal Government should continue to have an investment in
that.
I recognize exactly what you are saying with regard to the
security burdens that have been placed on the airports. For
example, in our proposal in-line EDS systems would be an
exception, if you will, compared to prior practice, where even
if an EDS system was being built for a sole user, just one
airline, that would still be eligible for Federal participation
because as you point out there are big dollars involved, and of
course it is a critical priority. It is safety, security, which
one of them is first?
Ms. Brown. It is there together.
Mr. Shaffer. They are together.
Ms. Brown. They are twin babies. Would anybody else like to
respond to that?
Mr. Principato. I think the point about security is a good
one for two reasons. As we talked about before, airports have
been called upon to do more in the security area, and this is
obviously a national and homeland security issue. And also, as
we talked about the cost of building capital projects at
airports and so forth, even construction costs, inflation
understates it because there is a whole security component to
that project you have to provide for that security. So I am
glad you brought that up. We really start from the proposition,
as has been said before by both Mr. Barclay and myself, that
capital needs are going up. Everybody recognizes that, and so
we start from the proposition that we should be increasing
resources rather than decreasing them.
Ms. Brown. Thank you very much.
Thank you, Mr. Chairman.
Mr. Costello. I thank the gentlelady.
The Chairman at this time recognizes the gentleman from
Florida, Mr. Buchanan.
Mr. Buchanan. Thank you, Mr. Chairman.
Mr. Shaffer, what impact would the Administration's
proposed increase in the AIP discretionary $520 million have on
the various airport communities? Where is that money going to
be primarily spent? Or where would it be used?
Mr. Shaffer. Sir, it will be spent on safety, security,
capacity, those high priority projects that the smaller
airports will be confronted with, given the advent of the
various different types of transportation that I have already
enumerated. We need to get out in front of that, if you will,
and that has a benefit for the rest of the system as well
because if we can put the very light jets, the air taxis and
transportation modes like that at the smaller airports, that
helps relieve congestion on the large and medium hubs.
Mr. Buchanan. Okay.
Mr. Dillingham, and I know you have said it a couple of
times in your presentation here, how do you define small and
large airports?
Mr. Dillingham. We consider medium and large hubs as larger
airports. And the smaller airports were the small hubs and
below. I think Mr. Shaffer has the exact number of
enplanements, the technical definition of them, if you would.
Mr. Buchanan. In our community, I am looking at Sarasota,
and I have Tampa, which I know is a large airport, and Atlanta
is a big airport. But is Sarasota considered a small airport in
your definition? Or would you know that?
Mr. Shaffer. Yes. It is a small hub, I believe, sir.
Mr. Buchanan. Okay. And just in the way of history, I am
new to the committee, too. The PFCs, there has been a lot of
discussion about increasing that. But why do we look at that
just strictly as an option for large airports, or the top seven
or eight airports? And why isn't that an option for little
smaller airports if they felt that they needed that capability
or something?
Mr. Barclay. Congressman, if I could answer that. One of
the important values of PFCs is you don't have to just spend
them as you collect them. You can use them to back bonds. So
even at an airport the size of Sarasota, if they have projects
that are bondable, they get leverage off the PFC revenues that
they collect, and they can use them together with other
revenues to back bonds.
Mr. Principato. If I can just add to that, that really
makes them the most effective, efficient, flexible financing
mechanism for these kind of projects. Not all airports have
gone to $4.50. I think 25 percent of medium and large hubs are
still at $3.00. They don't have a PFC; 35 percent of small hubs
have not gone to $4.50, but 65 percent have gone there. If we
do convince you to raise the PFC ceiling up to $7.50, as has
been said before, not all airports will go to $7.50. Airports
in communities can have flexibility within that to really set
their own rate and plan their own capital projects. It works
for airports of all sizes.
Mr. Buchanan. But you talked about the growth in terms of
passengers in the next decade or so, and everybody believes
that it could be very much a reality. Do you think $7.50 makes
sense? I know you touched on that as well, that that is
something that we should consider?
Mr. Principato. I think the $7.50, the argument we have
made is that $7.50, if you apply construction costs and
inflation to the $4.50 PFC, that would be almost $7.50 in 2008,
the first year of this authorization. So we didn't pick the
number really out of the air. We analyzed it and came up with
that number.
If I might offer one small idea, there has been some fear
that all airports may go to $7.50 and some folks, the airlines
and others, multiply it out and say it will be $2 billion or $3
billion, whatever. If you put a set of rungs in there, maybe in
25 percent increments, airports in communities would have the
flexibility to maybe do a $5.50 or $5.75, whatever works for
that community. It is a very flexible tool that really gets you
much more than a dollar's worth of value.
Mr. Buchanan. Once last comment for just any of the panel
members. I look in our community. Tampa is our largest airport
by far, but we have three or four other airports around it that
have a lot more capacity, but yet we are looking to do a
massive expansion in the one airport. Why is that? Why do we
have airports that are under-utilized in the surrounding area?
In our area, and I am sure it is in different areas of the
country, but yet we keep plowing the money into the major
airport that is there. Is it just because that is where people
want to go, or the marketing? What drives that? Because we have
other airports that could probably do five, ten times the
business they are doing, but yet we keep expanding. I am all
for Tampa Airport getting bigger, but I just want to understand
the rationale.
Mr. Barclay. You have seen very strong growth at the
airports surrounding Tampa, in addition to Tampa's growth. At
airports, part of the challenge is you want to meet the
marketplace demand, so people obviously want to keep going to
Tampa. Our job is to build out the capacity there to meet that
demand, but also make sure it is available. Because we have a
seven to ten year time horizon, we want Sarasota to have the
capacity to pick up more AirTran service, more other kinds of
new services when Tampa is not the right market for them.
We need to build out as much capacity in this Country as we
can. A lot of us who have been around Washington for a while
remember when Dulles was described as a white elephant. More
capacity then was needed, and today it is one of the most
valuable resources on the whole East Coast.
Mr. Buchanan. I wasn't just thinking of Sarasota. I was
thinking of St. Pete-Clearwater. Those other airports have a
lot more capability.
I thank you. My time is up. I yield back.
Mr. Costello. I thank the gentleman.
The Chair has just a few questions, and then we will move
on to the second panel.
Mr. Barclay, let me ask you. You heard me mention in my
opening statement my concern about the Administration's
proposal to replace the small airport fund with a small airport
setaside program. I wonder if you would comment. Are you
supportive of the Administration's proposal?
Mr. Barclay. We are not, Mr. Chairman. First of all, it is
much less money in the Administration's proposal. And second,
on the philosophy, we think there is an advantage to continuing
to tie together the interests of large and small airports in
the PFC Program. The entitlements that are given up there go to
the small airport fund. That has been a reason why all airports
in a network system see an advantage to the two different kinds
of funding. So our inclination is to continue to support the
small airport fund and continue to build that.
The Administration plan would mandatorily take the large
and medium hub airports out of the entitlement program. We see
an advantage to continuing to let them elect whether they get
out of that or stay in AIP or increase the PFC.
Mr. Costello. So you clearly are opposed to the
Administration's proposal.
Mr. Barclay. We agree with the Chairman.
Mr. Costello. Dr. Dillingham, let me ask you again
concerning small airports and the Administration's proposal.
How would small airports compete for discretionary funds under
the Administration's proposal?
Mr. Dillingham. Small airports would compete in the same
way that large airports compete, basically on the criteria by
which discretionary funds are allocated in terms of safety and
capacity and environment and security. However, large airports,
their scores are higher for those same projects. Large airports
tend to have more of those projects. The bottom line is, small
airports will be disadvantaged.
Mr. Costello. So there is no question there would be
winners and losers?
Mr. Dillingham. Absolutely.
Mr. Costello. Very good.
Last question, Mr. Barclay. As you know, the
Administration's proposal calls for increasing the fuel tax
both on commercial and general aviation. At least part of the
revenue would fund the AIP Program, research and development,
and the EAS Program. I wonder if you would comment, does it
really matter where the source of the revenue comes from to the
AIP Fund? If so, why?
Mr. Barclay. It does, Mr. Chairman. We would not agree
philosophically with the notion that AIP should be funded out
of one very narrow set of taxes mostly on one part of the
industry, general aviation. We think that all of the users of
the system get a benefit out of airport capacity and what we
fund in AIP, and we should continue that kind of broader base
of funding.
Mr. Costello. I thank you.
The Chair thanks all of the witnesses on the first panel
for being here today.
I would recognize Mr. Petri for any comment that he might
have.
Mr. Petri. Our colleague, Mr. Coble is hurrying over
because he had a question. There he is. Mr. Coble had a
question. You go ahead and ask it. I don't know what it is.
Mr. Costello. We are holding the whole show up for you.
Mr. Petri. Go to a microphone. Here it is.
Mr. Coble. First of all, Mr. Chairman, I apologize to you
and the Ranking Member and all in the room. We had a Judiciary
markup and I couldn't get away. I am not even sure whether my
question has been asked or not, but let me go into this.
Mr. Shaffer, if I may?
Mr. Shaffer. Yes, sir.
Mr. Coble. A number of general aviation airports in my
District are dependent upon the dollars from the AIP, the
Airport Improvement Program, to meet market demands and make
necessary upgrades. Would you elaborate for me, if you would,
how the proposed tiered system would be more effective than the
current entitlement-based system? And what, if any, reaction
have you received from the airports that may be adversely
affected by these changes?
Mr. Shaffer. Sir, the tiered system that we have proposed
is a recognition of the fact that not all general aviation
airports are created equal. There is a broad range of
operational levels, some have very simple airfields, others
very complex airfields. They have different levels of need on
an annual basis and on a long-term basis.
So our tiered proposal is our best effort to allocate the
funds where they are most needed to meet oncoming safety,
capacity, and security projects amongst these airports.
With regard to the reaction that we have received, it will
come as no surprise to anyone that those that are in the lower
tier, the nine or fewer based aircraft, are not very happy
about that because no one likes to lose something that they
already have. But as I pointed out in my earlier testimony, for
the last, and this is just one example, over the last four
years, there are 114 of these airports across the Country that
have qualified for a non-primary entitlement, but have not
taken a grant for four years.
We can only conclude from that that they simply did not
have a need for the money during those years. That is not to
say that they won't eventually have a need, because they
certainly will. It is just that they don't need it year after
year after year.
What we are proposing positions us to meet their
intermittent demands, for example, every 10 or 15 years,
whatever it works out to be, if they need to overlay a runway
or expand a ramp or whatever the project happens to be, we will
be in a position financially to pay for that project from the
Federal side just like we always have.
Mr. Coble. I would like to talk to you in more detail about
this.
Dr. Dillingham, good to have you back up here.
Mr. Chairman and the distinguished gentlemen from Illinois
and Wisconsin, we are all subjective. That is to say, I am
hoping that my airports will be beneficiaries of good things to
come. I think I speak for all of us up here. We are that
parochial and we are that selfish about our places back home.
I had good folks in my office last week. Two were from my
counties. A third was not. And I said to the third one, I am
going to treat these other two better than we will treat you.
He said, well, all 100 counties are important to me. I said,
six counties are important to me. We are guilty of that.
Mr. Chairman, thank you, and Mr. Petri. I apologize again
for my belated arrival.
Mr. Costello. I thank the gentleman.
The Chair would recognize another Member who came in after
a markup. This will be the final round of questions for this
panel.
The gentleman from Illinois, Mr. Lipinski, is recognized.
Mr. Lipinski. Thank you, Mr. Chairman.
Just helping take care of those things in the Science
Committee, the Chair there, and was not able to do, chairing
this panel here this morning.
I just wanted to really go down a general road here,
looking at PFCs. I certainly think PFCs are an important piece
of the funding for necessary capital improvements at airports.
But now we are looking at expanding PFCs, increasing the amount
that can be charged for PFCs. So I just wanted to take a step
back, first of all, and ask you what types of capital
improvements are being funded right now, and then take a step
forward, are there improvements that are not being done right
now at the airports that you believe that the PFCs need to be
expanded in order to cover these types of improvements, or
further capital improvements?
I just want to throw that question out there because I
think we really need to look at, when we are talking about
increasing PFCs, what are they being used for and what more do
you think they should be used for with this increase.
Whoever wants to start out.
Mr. Principato. Well, I think the part of your question
about the expansion of the eligibility. What we are really
looking for is for the $4.50 PFC to be made whole against
construction cost inflation because after all, we are not
buying a loaf of bread with it. We are buying construction with
it. Construction costs have soared. There is a table in my
testimony that talks about that.
Certainly, major runway and airfield projects are being
funded by PFCs. The Atlanta runway, 55 percent of that runway
was by PFCs. It increased their arrival rate from 88 flights an
hour to 117 just in the last year since that runway was opened,
just huge capacity benefits. I told the Chairman the story
yesterday. My wife flew to Bloomington, Illinois just south of
where you are from, through Atlanta, and everything was just
right on time and worked really well. So Bloomington was
benefitting from that project. The St. Louis runway, 59 percent
was PFC.
Again, a lot of PFC dollars are going into terminal
projects as well because once the plane lands, you need to
place to bring the people and take them of. In Charleston, West
Virginia, they put PFCs into an expansion of the runway safety
area. It is a smaller airport, but they also added four gates
and a hold room so they could handle the additional flights
that that smaller community is being able to generate.
So it has really been a wonderful tool for airports of all
sizes.
Mr. Barclay. When we talk about the passengers increasing
by 50 percent or adding 300 million passengers to the system by
2015, 90 percent of those passengers are at the large and
medium hub airports. The top 80 airports have 90 percent of
those passengers. They are the most reliant on passenger
facility charge increases to meet that growing demand.
So you have two issues involved. One is should you expand
eligibility for PFCs. We have a split opinion among our members
as to whether or not you should expand eligibility. We have
unanimity among the members that we have to increase that level
if we are going to meet the demand coming for new facilities at
airports.
Mr. Dillingham. Mr. Lipinski, I take it from a slightly
different angle. We don't have any disagreement with the fact
that construction costs have increased and that there should be
some consideration of raising the cap on PFC. However, we would
caution that when you look at changing what is eligible for
PFC, when you look at indexing PFCs, we would just caution that
there should be due consideration for congressional oversight
and accountability when we look at those aspects of it.
Mr. Principato. On the expansion of the eligibility, as Mr.
Barclay mentioned, there are some different views, but
particularly the smaller airports, and both our memberships are
very interested in seeing if we can work something out here to
expand eligibility. They have less ability to go to the capital
markets, and some projects that are not now eligible are really
an important way to raise revenue for their capital program. So
some of the smaller airports are interested in the eligibility
expansion issue. I think as we go through this, perhaps we
could work together on seeing if there is a way to help them.
Mr. Lipinski. Dr. Dillingham, could you just briefly expand
on your thoughts on increased congressional oversight?
Mr. Dillingham. Well, for example, if you index PFCs, it
could mean that that airports and/or FAA does not have to come
back to Congress on an annual basis or reauthorization basis
for raising the PFC. Also, if the eligibility for PFCs is
expanded, it is quite possible that PFCs will be spent for
things that could be financed from the private sector market.
Again, Congress's role is to sort of set the criteria by
which PFC-eligible projects are identified.
Mr. Lipinski. Thank you.
Thank you, Mr. Chairman.
Mr. Costello. I thank the gentleman from Illinois.
Again, we would like to thank each of our panelists on the
first panel for your thoughtful testimony. We look forward to
your continued input as we go forward with the reauthorization.
So thank you very much.
At this time, the Chair would invite the second panel to
come forward please. As they are coming forward, I would like
to introduce them and yield to some of my colleagues to make an
introduction as well.
The first panelist on the second panel will be Mr. James E.
Bennett, President and CEO of the Metropolitan Washington
Airports Authority; the Honorable Nuria Fernandez, the
Commissioner of Aviation in the City of Chicago; Ms. Elaine
Roberts, President and CEO of the Columbus Regional Airport
Authority; Mr. John Clark, the Executive Director at the
Jacksonville Aviation Authority.
I would yield at this time to my friend from Florida, Mr.
Buchanan, to introduce a witness from his area.
Mr. Buchanan. Thank you, Mr. Chairman.
I want to take a moment to introduce Rick Piccolo. Rick is
the President and CEO of the Sarasota-Bradenton Airport, which
sits right in the middle of our two counties, two of the bigger
counties I represent.
Rick is also the Chairman of the Airport Council
International-North America. We are proud of that, Rick. Rick
and I have had an opportunity to work together for probably six
to eight years for economic development. We talk a lot about
airport issues because I have also been in the aviation
business.
So I want to thank the Chairman of the Council. We are
proud of that, for taking his time to come to the committee
today. I look forward to hearing about your testimony.
Thank you, Mr. Chairman.
Mr. Costello. I thank the gentlemen from Florida.
Next, I would introduce Ms. Karen Ramsdell, who is the
Airport Director, Santa Barbara Municipal Airport; Mr. Doug
Kimmel, who is the Airport Manager from the Williamson County
Regional Airport in the southern part of my congressional
District. Mr. Kimmel, we are pleased to have you here to offer
your testimony. Mr. Kimmel is a graduate of the Southern
Illinois University. The President of that university is a
former colleague of ours, and was on the Transportation
Committee and on this Subcommittee. So we welcome you here
today and we look forward to your testimony.
The Chair would now yield to my friend from Oregon to
introduce a witness from Oregon.
Mr. DeFazio. Thank you, Mr. Chairman.
I want to thank the next witness for making the long trip.
He even had one more leg than I have, and it is as far away
from Washington as you can get, which is often a blessing.
So Mr. Gary LeTellier, who is the Executive Director for
the Coos County Airport District at Southwest Oregon Regional
Airport. We have renamed it, so I had to read that. I am not
quite up on the name yet. He comes to Oregon with extraordinary
experience in major airports. He has a professional education
in aviation from Embry-Riddle and a master's from the
University of Washington. He flew with United Airlines. He was
a military aviator. I don't think you could have a broader
experience. And Gary might not agree with this, but I am going
to say that in a way, you look at his past experience and you
wonder how did he end up in Coos Bay? And I would say it has to
do with the water. It is on the Pacific Ocean. It is a
beautiful, beautiful community. I think Gary chose to move
there when he could have had what would be considered by many,
not those of us from Oregon, but others, much more prestigious
positions in major urban areas around the country, but he has
chosen to honor us with his work. I really appreciate you being
here today.
I do have to say, Mr. Chairman, I have a markup in Homeland
Security and also a hearing in Resources. I am going to have to
absent myself at this time, but I leave it in your able hands.
Mr. Costello. We trust that our friend from Oregon will
protect the interests of this committee.
Mr. DeFazio. There are a few aviation issues that we will
be discussing in the markup.
Mr. Costello. We thank you.
The Chair now recognizes Ms. Brown from Florida to
introduce a witness from Florida.
Ms. Brown. Thank you. I want to thank you again for holding
this hearing.
I want to take a moment to introduce Mr. John Clark, one of
today's distinguished panelists, who is from my home town of
Jacksonville, Florida. He is a life-long aviation professional
and is currently the Executive Director and CEO of the
Jacksonville Aviation Authority, which includes Jacksonville
International, two general aviation airports, and a former
military airport that is being transitioned to civilian use. In
2006, the airport handled over 6 million passengers and 140
million pounds of air cargo. John is a past board member of the
American Association of Airport Executives and is currently the
Secretary Treasurer of the Airport Council International Board.
Prior to his time in Jacksonville, he was Detroit Airport
Director and held management positions in Sacramento.
John will testify about the tremendous population growth in
our area and the anticipated need for nearly $500 million in
capital programs over the next 10 years. This can only be done
by reauthorizing and enhancing the Airport Improvement Program
and providing all our airports with the funding they need to
continue to serve the flying public in a safe and efficient
manner.
With this, I want to welcome John Clark and the other
distinguished panelists to today's hearing. I am looking
forward to hearing your ideas on strengthening the Airport
Improvement Program.
Thank you.
Mr. Costello. The Chair now recognizes the gentleman from
Colorado, Mr. Salazar, to introduce a witness who will be
actually on the third panel.
Mr. Salazar?
Mr. Salazar. Thank you, Mr. Costello, and thank you for
indulging me.
It is my honor today to introduce someone who is from
Colorado and has been with the Colorado Department of
Transportation for over 15 years. He worked under both the
Democratic and Republican Administrations in Colorado. It is my
honor today to introduce Travis Vallin who has been the
Director of the Colorado Division of Aeronautics for 10 years
in the State of Colorado. He is now the current Chairman of the
National Association of State Aviation Officials. Although he
is on the third panel, and I apologize Mr. Chairman because I
have to run off to another committee hearing, Travis, welcome.
Mr. Costello. I thank the gentleman from Colorado.
Let me announce to everyone that we expect to have four
votes on the floor of the House right at 12:30. What we intend
to do is when we get down to about five minutes, we will
recess, go to the floor, vote and we will come back
immediately, which should be about approximately 30 minutes
from the time that we recess. So I will just put you on notice
that we will be coming right back.
The Chair recognizes, and again as you can see, we have
eight witnesses on this panel. We have your written statements.
I can tell you that I sat up late last night and early this
morning reading some of the testimony. So we would ask you to
summarize your written statement in five minutes or less.
The Chair recognizes at this time Mr. Bennett.
TESTIMONY OF JAMES E. BENNETT, PRESIDENT AND CEO, METROPOLITAN
WASHINGTON AIRPORTS AUTHORITY; THE HONORABLE NURIA I.
FERNANDEZ, COMMISSIONER OF AVIATION, CITY OF CHICAGO; ELAINE
ROBERTS, A.A.E., PRESIDENT AND CEO, COLUMBUS REGIONAL AIRPORT
AUTHORITY; JOHN CLARK, EXECUTIVE DIRECTOR, JACKSONVILLE
AVIATION AUTHORITY; FREDERICK J. PICCOLO, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, SARASOTA MANATEE AIRPORT AUTHORITY; KAREN
RAMSDELL, AIRPORT DIRECTOR, SANTA BARBARA MUNICIPAL AIRPORT;
DOUGLAS KIMMEL, AIRPORT MANAGER, WILLIAMSON COUNTY REGIONAL
AIRPORT; GARY W. LETELLIER, AIRPORT MANAGER, SOUTHWEST OREGON
REGIONAL AIRPORT
Mr. Bennett. Chairman Costello, Ranking Member Petri and
Members of the Aviation Subcommittee, on behalf of the
Metropolitan Washington Airports Authority I want to thank you
for inviting me to testify today.
I am President and Chief Executive Officer of the Airports
Authority, the operators of Ronald Reagan Washington National
Airport and Washington Dulles International Airport. In
addition, I wear a hat today as Chair of the Airport
Legislative Alliance Policy Roundtable. The ALA is comprised of
119 airports large and small located throughout the United
States.
I had the privilege of attending FAA's annual forecasting
conference here in Washington, D.C. just the other day. Among
the distinguished speakers was FAA Administrator Marion Blakey.
In the course of her remarks, she reminded the 600 assembled
guests that Washington Dulles International was going to be one
of the fastest growing commercial airports in the United States
between 2006 and 2020, with a projected growth in aircraft
operations of 68 percent, and a 112 percent growth rate in
passenger enplanements.
The Airports Authority utilizes quite effectively the two
financing mechanisms that are part of the FAA reauthorization
legislation before the Subcommittee, namely the AIP and PFC
programs. Together, these financing tools are important
components of our ability to expand and maintain the
infrastructure to keep pace with the significant growth that
Administrator Blakey referred to in her remarks.
In that regard, any legislation or proposal that would
affect either of these programs is of great interest not just
to the Airports Authority, but to airports nationwide. The
Airports Authority has a $7 billion capital construction
program planned through 2016. The program is funded with $4.7
billion in bonds, $1.7 billion in PFCs, and $600 million in AIP
grants.
In the execution of the current program, we are spending
roughly $2 million per day on construction and related services
at Dulles Airport. We agree with the Administration's
recommendation to increase the AIP discretionary fund to $520
million to meet the need of letters of intent.
LOIs are important financing tools for airports. As a
matter of fact, in 2006, the Airports Authority received a $200
million letter of intent from the FAA to fund the construction
of our much-needed fourth runway at Dulles, which we plan to
open in October of 2008. This LOI represents approximately 56
percent of a total project cost of $357 million. By having this
LOI available, we are able to construct this much-needed
capacity enhancement to the airport in a cost-effective manner.
Of equal importance to the Airports Authority is the issue
of passenger facility charges and the proposal to increase
them. Since PFCs were authorized by Congress in 1990, they have
become the second largest source of financing infrastructure at
the Airports Authority, following only behind bonds. PFCs have
not kept pace with the rate of construction inflation. Most
airports have committed their PFC authority well into the
future. For example, at Dulles our PFC authority is used
through the year 2017. PFCs originally authorized airports to
collect a maximum of $3 per enplanement. This increased to
$4.50 in 2001. However, because of the inflation and the
increased cost of construction, PFCs do not have the buying
power that Congress authorized. Today, they should be
increased.
I support the Administration's proposal to increase the PFC
to a level of $7.50 in lieu of $6.00 per enplanement, which has
been proposed by the FAA. At the $7.50 rate, the construction
buying power of the PFC will return to about the same rate as
when it was authorized at the $4.50 level in 2001. To further
prevent the erosion of the buying power of the PFC, we believe
that it should be indexed to construction inflation.
I also would like to, in the interest of time, speak very
briefly about bonds sold through the capital markets. We
believe that bonds sold through the capital markets should be
classified as public bonds, and not subject to the alternative
minimum tax. Because most airport bonds are considered private
activity, they are subject to the AMT and the penalty of the
AMT is between 20 and 30 basis points on each of our bond
sales, which amounts to about, we have over $4 billion in debt.
That AMT penalty adds nearly $10 million annually to our
airline rates and charges at the two airports.
Chairman Costello, Ranking Member Petri, thank you again
for inviting me here to testify.
Mr. Costello. We thank you, Mr. Bennett.
Commissioner Fernandez?
Ms. Fernandez. Good afternoon, Chairman Costello, Ranking
Member Petri, and the honorable and distinguished Members of
this committee. On behalf of the City of Chicago, its 3 million
residents, our two airports, I want to thank you for the
opportunity to present our views on this very important
reauthorization proposal.
As a large airport hub, we are facing some very significant
challenges as it relates to upgrading, and we are not alone.
All the other large airport hubs are in the same place that we
are. What we foresee is that in the coming years, it will take
billions of dollars to maintain vital infrastructure and
billions more to increase capacity. If you add the FAA's need
to modernize the air traffic control system, you will see that
a very robust and dependable funding for the air transportation
network is an urgent national priority.
Airport financing is the key element to meeting the needs
of growing demand for air travel. The FAA has projected, as has
been mentioned here, that air traffic will reach 1 billion
enplanements per year, 300 million additional enplanements by
2015. Moreover, FAA's forecast for O'Hare International is
expected to increase in traffic from 37 million enplanements
that we experienced in 2006, to 53 million in 2020. Similarly,
Midway International Airport anticipates increase from 8.9
million to 16.3 million. That is a significant increase.
Without adequate financing for capacity-increasing
projects, it will be very difficult for our airports to safely
and securely accommodate the substantial growth in air traffic.
So therefore, the ability of airports to find a reliable source
for their capital is going to continue to be critical for the
future of aviation.
I want to thank this committee for its support of the
O'Hare modernization program, which is a prime example of how
crucial the different funding sources are now and they are
being used to finance capacity enhancements at airports. Over
35 percent of the funding for phase one of the OMP is comprised
of AIP grants and PFC funding. As we work towards the phase two
of this very important program, AIP and PFC will play a
significant role in funding the completion of the modernization
of our airports.
First, I would like to discuss the importance of the PFC
provision in the reauthorization proposal. We believe that the
FAA's decision to increase the cap to $6.00 is a step in the
right direction, but it does not go far enough. We recommend
that Congress set the PFC cap at $7.50 and index it to
inflation, because the effects of the inflation have diminished
the power of current PFC levels to adequately finance airport
construction projects.
Additionally, we note that the increasing PFC cap is merely
that, a ceiling. It does not require airports to adopt the
$7.50 PFC, but rather it gives airports the flexibility to
select the level that best addresses their needs. Market
principles, we believe, and agreements with airlines will
determine the level of PFC that their passengers are willing to
absorb.
We appreciate the fact that FAA was receptive to the
airport's concerns at the existing PFC application process,
which was overly bureaucratic and burdensome. Their proposal
for new measures will help streamline the PFC process and get
us the dollars quicker.
Second, a balanced capital investment strategy for airports
requires a strong AIP program. AIP is important to airports of
all sizes, and we are encouraged that there was an increase
included in the AIP discretionary account, and that all
existing AIP letter of intent commitments will continue to be
honored.
For large airports, a robust AIP discretionary program is
critical. These funds are being used by airports for very
important safety, security, expansion programs for capacity,
and more important, to address some of the environmental needs
of our airports, as we continue to strike the right balance
between the airport and its compatibility with the surrounding
community.
I would like to just once again thank the committee for
this opportunity to come before you and express our gratitude
for all the important work that you have done, as we continue
as a large hub, and all airports in this Nation, to look for
funding sources and the flexibility that we need to continue to
be implementing safety and security to the aviation industry.
Thank you.
Mr. Costello. We thank you for your testimony, Commissioner
Fernandez. I would note that the Administrator and I both came
to Chicago not too long ago and had a briefing on the O'Hare
modernization, as well as the proposal to privatize Midway
Airport, which of course I have expressed some concerns about.
But let me say that both the Administrator and I were impressed
with how well the project is going as far as the expansion of
O'Hare.
The Chair recognizes Ms. Roberts at this time.
Ms. Roberts. Thank you, Chairman Costello, Ranking Member
Petri, and Members of the House Transportation and
Infrastructure Subcommittee on Aviation. Thank you for inviting
me to participate in this hearing on the Administration's
proposal to reauthorize the Federal Aviation Administration's
Aviation Improvement Program.
As the CEO for the Columbus Regional Airport Authority, I
am also wearing a second hat today. I am the Chairperson of the
American Association of Airport Executives this year.
Just briefly, we operate three airports, all different
sizes, with unique roles. Port Columbus is our passenger,
commercial airport, a medium hub. Rickenbacker is a cargo
airport, also jointly used with the military. And Bolton Field
is a general aviation airport. The latter two are relievers to
Port Columbus.
You have heard the forecast for continuing growth in our
industry. We have seen similar growth in Columbus over the last
few years. Not only have we rebounded from the impacts of 9/11,
but even more significantly, we suffered a 25 percent reduction
in all of our scheduled departures just in mid 2003 by America
West, when they closed their small hub in Columbus. We have
fully rebounded now from that cutback as well, and have had
record passenger growth in four of the last five months.
Traffic for the first two months of this year is also up
over 10 percent, and projected to continue to climb, largely
due to new air service being brought to our market. Southwest
has also continued to grow and became our largest airline last
year and grew 18 percent in terms of passenger growth.
Our cargo traffic has also been up significantly at
Rickenbacker. We saw a 20 percent increase in cargo tonnage in
December, and ended the year with over 250 million pounds of
cargo, as well as over 37 percent more landed weight. Our
general aviation airport has over 110 based aircraft and has
also seen steady growth in terms of operations.
All of this just means that we have an increased demand for
continued infrastructure development at our airports. We have a
$1.2 billion capital program for the next 12 years in Columbus
for our airports. Due to rising construction costs and the rate
of inflation, we also are not convinced that the current
resources we have are adequate to cover this program. We ask
your help in helping secure more resources to accommodate that
increasing demand as costs are also rising.
I also appreciate the fact that the Administration has
proposed to increase PFCs to $6.00, but would urge you to
consider increasing it further to the $7.50 rate that you have
heard a lot about this morning. Also, by increasing AIP funding
to at least $3.8 billion for fiscal year 2008, we think those
two primary funding sources will help airports of all sizes.
Although we are a medium hub airport in terms of Port Columbus,
and we are not totally reliant on the AIP funding, we are still
looking to receive over $110 million of AIP funds for a
proposed new runway that is currently in the EIS process. We
are looking to have about one-fourth of that runway project
covered by PFCs and the remainder we would have to go out and
issue new debt and pass on the cost to the airlines.
AIP funds are also critical for us at Rickenbacker in
particular. It is in the Military Airport Program and has
significant capital needs, including $15 million to
rehabilitate one of our 12,000 foot runways. The airport is not
self-sufficient yet, due largely to the large investment
required in infrastructure.
One-fourth of our entire capital program for the next 10
years is projected to be paid for with PFCs. So a $7.50 PFC is
really important to our long-range requirements. It would
generate about $10 million per year right now at our current
level of enplanements, which is around 3.4 million enplanements
per year.
We have used PFCs, like many airports, largely for airside
capacity projects, extending runways, airfield improvements, as
well as about 10 years ago, adding some gates to our terminal
for needed capacity.
In summary, although over half of our capital program will
be paid for with airport-generated funds like parking revenues
and concession fees and issuing new airport revenue bonds, AIP
funding and PFCs are essential for us to be able to operate all
three of our airports and keep up with the growing demand for
infrastructure.
I thank you again for the opportunity to be here today. I
hope you will continue to provide airports of all sizes in this
Country with the tools that we need to be able to keep up with
the increasing demand and to help offset the rising cost of
construction.
Thank you very much.
Mr. Costello. We thank you, Ms. Roberts.
The Chair now recognizes Mr. Clark.
Mr. Clark. Thank you, Mr. Chairman and Congressman Petri
and Members of the committee.
I represent Jacksonville Aviation Authority. It is a system
that has four airports, the primary airport being Jacksonville
International Airport, which we saw 6 million passengers in
2006.
Since you have the written testimony, I would just like to
take the opportunity to emphasize three points in my written
testimony. That is in support of the increase of the passenger
facility charge from $4.50 to $7.50. This has become very
important to the Jacksonville Aviation Authority as we are
faced, like other airports, with many capital demands. But the
PFC allows a greater level of flexibility in being able to
respond more timely than any other mechanism that we have at
this point. So we highly encourage an increase of the PFC to
$7.50 and more flexibility with that funding mechanism.
Also, we would like to speak to the military assistance
program. Having been in a community that was part of the BRAC
process and bringing on an airport into our system that
actually adds considerable capacity, the military assistance
program has provided a level of funding which otherwise we
would not have been able to move forward on the development of
Cecil Field.
To this day, Cecil Field is now in consideration for a
commercial space port. It provides activity and capacity for
air cargo, as well as maintenance and repair and overhaul. So
we would like to extend and encourage this committee to
consider the continuation of the military assistance program.
Additionally, we rely on AIP funding and would encourage
that the committee would consider levels that are at least of
current authorization levels. To decrease it would only hurt
our system and our ability to meet the capital needs of the
airport system.
Our final point, in trying to recognize the continuous
demands on the need and infrastructure at the airports, we,
too, are looking at the possibilities of privatization, and
therefore would encourage in the Administration's proposal
increasing the number of privatization opportunities. As we try
to address in an innovative way the way we will provide funding
and grow the system in Jacksonville, we have begun to look at
the alternatives. One of those alternatives is airport
privatization.
Having spent several years now looking at the models, both
in Europe and Australia and in Canada, we believe that there is
opportunity here in the United States to consider airport
privatization as the community continues to grow. Jacksonville
happens to be one of the fastest growing communities in the
Southeast, and therefore we are trying to determine what are
the best ways that we can continue to fund our capital programs
and meet the growing needs of our region.
Mr. Chairman and Members of the Committee, I will end my
remarks there.
Thank you.
Mr. Costello. Mr. Clark, thank you. I am pleased to hear
that the Military Airport Program has worked for you. It was my
first year in Congress and first year on this committee and
Subcommittee that Congressman Henry Nowak and I offered the
amendment that created the Military Airport Program. So we are
pleased that it has worked for you.
The Chair now recognizes Mr. Piccolo.
Mr. Piccolo. Chairman Costello, Ranking Member Petri and
Members of the committee, thank you for the opportunity to
appear and speak to the issue of AIP.
I would also like to thank Mr. Buchanan for your kind
introduction.
I appear today wearing two hats, first as Chairman of
Airports Council International-North America. Our member
airports enplane over 95 percent of the domestic and virtually
all the international airline passengers and cargo traffic in
North America. I also wear my hat as President and Chief
Executive Officer of the Sarasota Bradenton International
Airport, a small hub facility on the west coast of Florida.
This year is critical for aviation in the United States.
The expiration of the Federal Aviation Administration's
programs, taxes and fees provides an historic opportunity to
make needed changes that enhance and strengthen our national
air transportation system for decades to come.
Main Street and downtown were the centers of commerce and
economic growth prior to the construction of our Interstate
Highway System. When the Federal highway system linked our
Country from coast to coast, economic expansion ensued that
created a large middle class with increased educational and
economic opportunity for millions of Americans.
Airline deregulation and the creation of the computer have
made the term ``global economy'' a part of our lexicon. The key
component of our Country's ability to compete successfully in
this global economy has been a robust and expanding aviation
platform, not just from the major hubs like Atlanta, Chicago,
New York and Los Angeles, but from smaller facilities that have
made global markets accessible and cost-effective, places like
Louisville, Kentucky; Greenville-Spartanburg; and Flint,
Michigan, which are located near major automobile manufacturing
facilities; or Rochester, Minnesota, home of the world's
renowned Mayo Clinic; or wonderful tourism destinations like
Palm Springs, California or Sarasota, Florida. These facilities
provide critical access for our citizens and visitors.
The FAA has taken some innovative first steps in their
proposal and they are to be applauded for their effort. With
that said, there are some areas of concern for smaller
airports. The AIP funding source must be stable and
predictable. We are concerned that dedicating just
international arrival and departure taxes, along with some
portion of gasoline taxes and general fund contributions, will
lead to a very unstable funding source for AIP.
Small and non-hub airports are much more dependent on this
program for their capital funding needs. It would seem fair and
prudent that whatever tax and fee program is devised should be
used to fund all facets of the aviation system, rather than
reserving specific parts of each program. This cross-financing
of the system ensures that during difficult times, all sections
must sacrifice equally.
The Passenger Facility Charge ceiling should be raised to
$7.50 and the application process must be streamlined and
eligibility rules aligned with airport needs. The PFC program
is a way for local communities to make direct decisions on how
to build infrastructure and compete in the global marketplace.
This increase in the flexibility for its use as the local
governing body deems appropriate is a critical element in the
future of our Nation's airports.
The Small Community Air Service Development Program should
be preserved, not eliminated, as proposed by the
Administration. Sarasota Bradenton International Airport is a
shining example of the success of the program. Before receiving
that grant, the airport had lost 50 percent of its passenger
traffic and was bleeding 1.6 million passengers annually to
Tampa International. In 2005, SRQ received a grant of $1.5
million that was used to attract a low-cost carrier, AirTran
Airways, which started with three daily flights to two cities.
In 2006, AirTran carried almost 400,000 passengers and provided
nine daily departures to five nonstop destinations during peak
season, and five daily departures to three nonstop destinations
off season.
SRQ has been one of the fastest growing airports in the
Nation since that time, and the economic health of the airport
and the community has been helped many times over by this
investment. Not only did this result in increased ridership,
but the introduction of low-cost service injected competitive
pricing into the community.
We all know that airlines have been pushing their prices
higher in an effort to become profitable. At SRQ, the average
fare increase from 2004 to 2006 is 15.5 percent. However, in
markets where AirTran was introduced, fares have risen less
than 1 percent over those two years. This has resulted in a
saving of $17 million for our local consumers. In addition, the
additional 400,000 passengers have additional economic impact
on the community.
Finally, small airports are feeders to larger facilities.
They help feed the hubs and provide efficiency. If small
airports fail or cannot remain competitive, those passengers
must drive to larger facilities. In 2000, the Airport
commissioned an environmental study that measured the effects
of that bleed of 1.6 million passengers annually. It resulted
in the following environmental impacts.
There were 224 million miles of additional road travel;
11.2 million additional gallons of fuel were consumed; and the
added carbon dioxide in the air was 1.28 billion grams. There
were 203 million additional grams of nitrous oxide, and 2.24
million additional grams of particle matter. As you can see,
these figures cover only one small airport. The support of the
Nation's small and non-hub airports is not only good economic
policy, but it is good environmental policy.
On behalf of all our members, and small airports in
particular, I want to thank you for the opportunity to comment
and look forward to working with you to strengthen our national
aviation system.
Thank you, Mr. Chairman.
Mr. Costello. Thank you, Mr. Piccolo.
Ms. Ramsdell?
Ms. Ramsdell. Chairman Costello, Ranking Member Petri, and
Members of the House Transportation Infrastructure Subcommittee
on Aviation, I thank you for inviting me to participate in this
hearing today.
Santa Barbara Municipal Airport is a small hub airport on
the coast of California. Last year, the airport had over
400,000 enplanements and ranked in the top quarter of non-
primary and primary commercial service airports in terms of
enplanements.
The FAA terminal area forecast projects a 45 percent
increase in Santa Barbara enplanements by the year 2020. In
2002, Santa Barbara completed its master plan after many years
of environmental hurdles. The plan proposed some priority
projects for our airfield. Two of the projects addressed runway
incursions, and a project to extend the safety areas at each
end of our main runway to meet current FAA standards.
The plan proposed also a 67,000 square foot airline
terminal project to meet current and future demand. Our ACIP
for 2008 to 2012 totals $61 million. That is in contrast to the
$71 million in entitlement and discretionary money that the
airport received over the last 20 years.
The airfield safety projects totaled $35 million. They will
be completed this year, with our $15 million fiscal year 2007
AIP request. Funding for these projects included four years of
the airport's entitlement plus discretionary funding. PFCs
provided the local AIP match.
The terminal project will be funded with AIP grants and
debt financing, and I might add, our first debt in the
airport's history, and using PFCs to back debt service. Due to
increasing construction costs, our project square footage and
other features of the project have been cut and cut and cut. It
has been 30 years since the last expansion of the terminal, and
passenger use has grown over 100 percent.
AIP grants and PFCs are the financial resources that Santa
Barbara depends on for the critical capital development
projects. I urge you to increase the PFC cap from $4.50 to
$7.50. With PFC revenues at Santa Barbara growing at about 3
percent per year, but construction costs in Santa Barbara
growing at about 6 percent per year, you can see that our
purchasing power has eroded every single year that we go
forward.
At Santa Barbara, the additional PFC revenues above what we
need for debt service would be used to fund other eligible
features of our terminal project that have been cut, and also
fund the AIP match for airfield safety and infrastructure
projects.
I urge you to increase the AIP funding levels, even one
year with a 35 percent cut as currently proposed can impact a
small airport's ability to construct a project, and will impact
our terminal project. If levels are increased, Santa Barbara
could fund eligible portions of the terminal project for which
there are not sufficient AIP dollars under current levels, and
additional AIP funds would also be used to complete airfield
safety and infrastructure projects that we have had to plan for
at least five years away due to lack of available funding.
I urge you to maintain the 95 percent Federal AIP share for
smaller airports. For many small airports which have large
projects such as our airfield safety projects, coming up with a
5 percent match is difficult, let alone a 10 percent match. For
that project, we got a substantial amount of discretionary
funding, but it doesn't help if you can't come up with the
local share.
Santa Barbara's air passenger traffic has fully recovered
from September 11, yet the security impacts to our terminal
taking up more space has increased as our passenger demand has
also increased. AIR-21's enactment increased AIP funding
levels, increased PFC cap, and then the increase in the Federal
AIP share after 9/11, combined to make it possible for Santa
Barbara to construct over $35 million in airfield safety
projects over the course of four years.
Today, increasing the AIP funding levels, increasing the
PFC cap, and maintaining the Federal AIP match, combined will
make it possible now for Santa Barbara to construct its air
terminal project to meet passenger growth, and have funding for
future capital priorities.
Chairman Costello, Ranking Member Petri, and Members of the
Aviation Subcommittee, I want to thank you for inviting me to
appear before you today and to represent the small airports
perspective. I urge you to continue to assist airports of all
sizes to keep pace with the increasing passenger demand and
skyrocketing construction costs by raising the PFC cap and
increasing AIP funding.
These actions will have an impact on Santa Barbara Airport
by improving safety and increasing air terminal capacity to
meet growing passenger demand.
Thank you.
Mr. Costello. We thank you for your testimony.
Let me announce that we have four votes on the floor. We
have six minutes to get over to the Capitol to vote. We are
going to recess at this time. I would expect that we will come
back immediately after the last vote, which I would guess will
be somewhere in about 20 to 25 minutes. So we will recess until
then.
[Recess.]
Mr. Costello. The Subcommittee will come to order.
Mr. Kimmel?
Mr. Kimmel. Thank you, Mr. Chairman, Representative Petri
and Members of the Aviation Subcommittee, I am honored to be
here today to discuss the AIP program and its significance to
Williamson County Regional Airport, a non-hub primary
commercial service airport located in Southern Illinois.
Though the services and benefits our airport provides to
the surrounding region are significant, so too is the reality
of the financial challenges we face. In any given year, airport
revenue struggles to cover the cost of operating and
maintaining the facility. So as we have heard here earlier
today, capital improvement projects at smaller airports,
particularly such as ours, can only be accomplished with
funding through AIP.
In recent years, we have relied on AIP to extend our
primary runway, acquire land, remove obstructions, rehabilitate
and expand aircraft parking areas and taxiways, and acquire
aircraft rescue and firefighting equipment. Over the next five
years alone, we have identified project needs requiring over
$6.6 million in AIP funding.
Mr. Chairman, I ask that the Aviation Subcommittee account
for the capital development needs of our Nation's airports by
supporting AIP funding levels in the amount of $3.84 billion
and $4.2 billion for fiscal years 2008, 2009 and 2010
respectively, while setting forth a minimum level of 25 percent
as the general fund contribution throughout this period.
Also important for smaller airports, as has been discussed
this morning, will be retaining the Federal matching fund
amount of 95 percent. A $500,000 airport improvement project,
as an example, that has a local matching share that increases
from $25,000 to $50,000 is truly significant to smaller
organizations, and in many cases could prevent smaller airports
from moving forward in a timely manner with planned and
necessary improvements.
Regarding the small airport setaside fund, there certainly
has been discussion this morning indications that this will
result in reduced funding for smaller airports. So I would
certainly ask that we exercise caution with considering any
formula change that has that potential across the board. Though
we are not a general aviation airport, I would offer that any
future formula based upon a tiered level of funding for
airports, the only way that that could have any viability would
be if that lowest tier still is afforded entitlement funding
under AIP.
I would like to voice support of an increase in the PFC cap
up to $7.50. Though paling in comparison to the amount of money
that this generates at larger airports, this increased funding
capability is significant, too, for smaller airports that also
must be creative in financing airport improvements.
Now, alongside AIP, two other programs that are of
particular concern to smaller airports during this
reauthorization proposal and period are the Essential Air
Service Program and the Federal Contract Tower Program.
Connecting small communities to the national air transportation
system is both fundamental for local economic vitality and is
in the national interest. This was stated by the GAO in its
reference to the Essential Air Service Program. Unfortunately,
once again the current proposal would result in over 70
communities being dropped from the program, including
Williamson County Regional Airport. This discontinuation of air
service that would result for communities across the Country
would be an unprecedented tragedy in Federal aviation policy.
The Contract Tower Program is a vital safety and economic
asset to smaller airports as well. At our airport, the mix of
student pilot training from nearby Southern Illinois
University's program, and our own air carrier operations, makes
the ability to maintain these air traffic control services
essential to safe operations. In the short term, our airport
will likely depend upon the cost sharing provisions of this
program in order to maintain these services. So I would like to
make particular mention of the need to authorize $8.5 million
for the cost-sharing program in fiscal year 2008.
Finally, Mr. Chairman, I would like to voice my opposition
to the proposed increases in general aviation fuel taxes and
user fees. General aviation is a very broad term and it
consists of numerous small operators and private aircraft
owners far less capable of absorbing an increase in costs. If
such a proposal were to be implemented, then that effect would
be fewer operators providing fewer operations at smaller
airports across the Country, and fewer services to the public.
Thank you, Mr. Chairman.
Mr. Costello. We thank you, Mr. Kimmel.
The Chair recognizes Mr. LeTellier for five minutes.
Mr. LeTellier. Chairman Costello, Ranking Member Petri, and
Members of the Subcommittee, thank you again for my invitation
to be here today. I am testifying on behalf of the Coos County
Airport District, who is the owner and operator of the
Southwest Oregon Regional Airport, a non-hub commercial service
airport on the coast of Oregon.
As a small hub commercial service airport, our planning and
capital needs for development and renewal and replacement of
aging infrastructure are met almost exclusively from the AIP
and passenger facility charge programs. I would like to just
hit a couple of highlights of my written testimony to you now.
The first is the increase in AIP funding. The
Administration's request for $2.75 billion of AIP in the next
fiscal year is about $1 billion less than what the Congress has
authorized for this current year. The proposal would reduce the
total entitlements for non-hub airports from $307 million to
$269 million, a $38 million reduction year over year.
It also appears as if the Administration's proposal to
replace the small airport fund with a small airport
discretionary fund could also cost small airports.
We, like our colleagues, urge you to increase AIP funding
so the program can at least keep pace with increasing
construction costs, and ask you specifically that you protect
small communities like ours from penalties being imposed
through the formula changes for the distribution of the AIP
funding.
We also are concerned over the Administration's proposed
reduction of the Federal share for AIP projects. AIP funding
actually accounted for 94 percent of all capital expenditures
for non-hub airports in fiscal year 2003. This proposal would
decrease the eligible share for a qualified AIP project at
smaller non-hub airports to 90 percent. In our case, PFCs are
used for the actual match, and our ability to collect is very
small. So a 5 percent increase in matching fund requirements
for us would prevent us from moving forward with many of our
planned construction projects.
We would also like to see the PFC cap increased. You have
heard that at $3.00 PFC in 1990 is worth only $1.73 today; and
a $4.50 PFC is worth $2.86 over 2000. The American Association
of Airport Executives' analysis projects that a $4.50 PFC in
the year 2000, adjusted for inflation and increases for
construction costs, would need to be $7.20 this year. The
Administration's proposal to raise the cap on PFCs to $6.00 is
not enough to overcome the effects of inflation and increasing
construction costs. We therefore join our other colleagues in
asking you to raise the PFC to $7.50.
We believe that it is important to ensure that there is a
stable source of funding to pay for the airport improvement
program and we are concerned about the Administration's
proposal to increase general aviation fuel taxes.
Fourth, I wanted to talk just a moment about continuing the
Small Community Air Service Development Program. Small and
rural communities with non-hub airports like ours have
struggled since deregulation. There is a very deliberate trend
toward fewer flights by incumbent airlines to these
communities, even though overall passenger levels are
continuing to increase across the Country. Congress and the
Administration should work together to ensure that these small
and rural communities can continue to have access to our
national aviation system. It is disappointing that the
Administration's proposal does not include funding for this
vital program. We urge you to reauthorize this program up to
$50 million for the Small Community Air Service Development
Program.
Mr. Chairman, that concludes my remarks. I would just like
to say that you have heard remarkable unanimity here today from
the industry about the Administration's proposed legislation.
Thank you very much.
Mr. Costello. Thank you very much.
We thank each of our witnesses on this panel. A few brief
questions, if I can.
Mr. Bennett, I am pleased that you touched on the bonds, so
you have covered that question for me. But in your written
testimony you indicate that you would suggest that when the FAA
is denying a grant to the PFC authority to a project that you
would like them to give 30 days notice. Can you explain the
reason for that?
Mr. Bennett. Yes, sir, Mr. Chairman. Thank you for that
question. The effort there is to make sure that there is no
retroactive reversal under this scenario, a retroactive
reversal of a PFC that might otherwise have moved forward
without the opportunity to discuss that with the FAA. The
concept is not in the manner in which PFCs are currently
approved.
It would be in a more streamlined manner and it would be
very difficult for airports following that streamlined approach
to have the FAA have the ability to just at some point down
that process just cut them off. We would like some kid of 30
day notice period so that we could say, wait a minute, let's
talk about this; just don't completely cut this PFC off today.
Give us an opportunity to review and comment and try to change
your mind before you disapprove that.
Mr. Costello. Thank you.
Commissioner Fernandez, speaking of streamlining the PFC
process, you indicate in your testimony that the process is
overly bureaucratic and burdensome. I wonder if you might
explain some of the problems that you have personally
experienced with the bureaucratic process.
Ms. Fernandez. Thank you very much, Mr. Chairman, for that
very important question. As you know, we have been moving
forward with our air modernization program, and one of the
challenges we face is that a significant portion of that
capital program is reliant on PFCs. We have had the good
fortune to work very closely with the regional office of the
Federal Aviation Administration as it relates to ensuring that
the various elements contained within the application meet
their satisfaction.
But we are also on a time table where the cost of the
project is going to continue to increase if decisions are not
made in a timely fashion. So as we go back and forth with the
Federal Aviation Administration to resolve the issues contained
in the application, we would urge them to expedite that
application so that we can in the near future submit future
applications to be able to continue, keep our project within
the time line that have established, and avoid any increases in
construction costs and labor by deferring the construction bids
waiting for these funds to be available.
Mr. Costello. Mr. Clark, you indicated that the PFC funding
is too restrictive. I wonder, are there any projects in
Jacksonville at the Aviation Authority that have not been
completed because of the restrictions? In other words, if the
restrictions were removed, what projects would you endeavor to
undertake?
Mr. Clark. Thank you, Mr. Chairman. The recent example of
the restrictiveness of the PFC is, we needed to buy some
additional land for a proposed future runway. And although land
is eligible, the criteria is that you have to be at at least 65
percent of capacity of your existing runway.
The problem that we ran into is immediately adjacent to the
airport there is a development that is occurring that will
bring some 15,000 homes right on the fringe of the airport. Our
position was we needed to buy the land to protect that next
parallel runway system. Trying to work through the process with
the FAA, we were going to have to buy the land whether we got
PFC funding or not. We just needed to do that to protect the
future interest of the airport.
So in that manner, sometimes even though there is
flexibility with PFC, it can be very difficult to accomplish
what the airport needs in a more timely manner. It was looking
at the fact that this development was about to occur and is
occurring and we would not have had the ability to protect the
interests of the airport on a long-term basis.
Mr. Costello. Thank you.
Mr. Piccolo, you indicate that you believe, I think you say
a proper and equitable level of support should come from the
Federal Treasury, from the general fund.
Mr. Piccolo. Yes.
Mr. Costello. I wonder, what do you consider proper and
equitable, the percentage, for instance?
Mr. Piccolo. The historical average has been, in prior
years, the 25 percent range. So we think that somewhere in that
area is a good percentage. There is a great deal of benefit for
the entire Country, both from a defense standpoint and from an
economic standpoint. Having a quarter of those revenues coming
from the general fund seemed to be something that for a long
time the Congress traditionally did, as it was before.
Mr. Costello. Just as a side note, I am in total agreement
with you. For those who I think have a tendency, some of our
friends at the FAA, to shift costs and to reduce the
contribution from the general fund, I think we ought to be
trending in the opposite direction. Those who never use the
system benefit, the Country benefits as a whole. As a result,
there ought to be a robust contribution from the general fund.
Mr. Kimmel, you describe in your testimony $6.6 million in
AIP funding for your airport in anticipated needs over the next
five years. I wonder, what type of projects, quickly, are you
planning, and what would be the result if the AIP funds were
not available?
Mr. Kimmel. First and foremost, one is actually required by
FAA, due to our certification as a commercial service airport,
a runway safety area issue of having to relocate the end of our
north-south runway to accommodate the higher standards.
Obstruction and removal, more land acquisition, pavement
projects, runway overlay, ramp expansion.
And this doesn't even taken into account what I foresee us
coming up with in the next five years, particularly at our
airport, which is the need for a new airline terminal. You have
been to our airport on many occasions, and unfortunately we are
in a facility that we have talked about capacity constraints.
They are not always airside. And in our case, in particular,
even a smaller regional airport, we have a 1972 facility that
was designed with utter disregard for the functions of what we
need it to accommodate. We have grown out of that facility
right now and so, we are this year putting some AIP money into
a planning study for a new terminal, new terminal development,
looking at options on expanding on to the existing but most
likely replacing the existing.
So the $6.6 million figure that I used earlier doesn't even
take into account the probable need for a new airline terminal.
Mr. Costello. I thank you.
The Chair recognizes at this time the Ranking Member of the
Subcommittee, Mr. Petri.
Mr. Petri. I have a kind of general question for any or all
of the panel members to comment on, and that is, really your
attitude and the role of airports, your attitude toward and the
role, if any, of airports in the NextGen effort or the FAA's
effort and plan to roll out more modern and satellite and
transponder-based air traffic control as opposed to the old
radar-based system. Do you have any comments or concerns about
that as it affects airports?
Mr. Bennett. Just speaking from our perspective, our
concern is we need it soon. And we need to make sure that there
is a method to fund it and get it in place. Because every
estimation of our system suggests that demand is going to far
exceed the capacity of the existing system. We need NextGen and
we are very hopeful that it moves forward with dispatch.
Ms. Fernandez. I would echo that sentiment. One of the
concerns that I have as a large hub is the fact that the
forecast for the increase in operations is just eight years
away. If we are talking about 300 million more operations in
the air space and we are still using technology that dates back
20 years, that is a pretty frightening scenario. So clearly,
the sooner this new technology can be rolled out, the better.
As we are looking to more technology to supplement the manpower
that is overseeing that technology, I think it is necessary
that the Next Generation be implemented expeditiously.
Mr. Clark. I would echo my concerns and just say that when
you look at the fact that you can get in your car and go on GPS
and know exactly where you are and where you are moving to, it
would seem that it is something that we would also have with
aviation, which is much more technologically-involved.
Mr. Kimmel. I would offer that the technology is needed.
But the existing funding mechanisms, based upon the Aviation
Trust Fund, need to be utilized to fund it. The proposal with
user fees and increases in taxes would kill smaller airports. I
have 50 based aircraft that I can guarantee you would stop
flying if they had to pay any more than what they already do.
And we don't have a control tower, and we have less revenue and
have to come back and ask for me from the Federal Government.
Mr. Costello. I thank the gentleman.
The Chair recognizes at this time Mr. Moran.
Mr. Moran. Mr. Chairman, thank you very much. I am pleased
to join you here today and just generally like to get caught
up. I missed the testimony, although I have had the opportunity
to at least read the summaries of your testimony today. The AIP
program is a very important one across the Country but clearly
in States like Kansas, where we are so rural and the sources of
revenue so limited. I appreciate the comments earlier that I
heard about the importance of contract tower program, the
essential air service program. Those are ones that matter
significantly to communities I represent.
But I wanted to give you the opportunity, I am dismayed,
can't imagine that anyone could reach the conclusion that
Federal funding of AIP can be anything but increased. The
suggestion that it would be reduced just absolutely makes no
sense to me. And I wanted to give you the opportunity to put on
the record the kinds of consequences you would see if the idea
of AIP funding was reduced as proposed by the Administration,
and give you the chance to point out any of the increased
costs, the cost structure that you are facing in projects that
you are contemplating at your airports.
Ms. Roberts. I would be happy to start. We have three
airports, all of different sizes, a commercial passenger
airport, a cargo airport and a general aviation. All three
depend pretty heavily on AIP funding. We have a big project at
Port Columbus, our medium hub commercial airport for about a
$150 million replacement runway that we are in the middle of an
EIS and in conversations with the FAA. We are optimistic that
we would get about 50 percent of that from AIP and multi-year
letter of intent.
The Rickenbacker, our cargo airport, has been heavily
dependent on AIP and partially through the military assistance
program. We have large needs there, having inherited a facility
that was formerly exclusively military use, two long runways, a
lot of pavement. And we are using every dime we can get from
the AIP program as well as using local dollars.
So all three of our airports would be sorely hurt if we
were not able to get AIP. It covers about 10 percent of our
projected $1 billion capital program for our three airports in
Columbus.
Mr. Moran. Any comments about increasing costs? My
impression would be that you are facing a cost structure,
increasing construction costs.
Ms. Roberts. Absolutely. We have seen construction costs
rising in the project right now that we are jointly funding
with the State department of transportation. We have seen the
cost rise from a $40 million estimate to about $55 million.
Because of Federal highway limitations, our State DOT is
telling us we are going to have to fund the shortfall, which is
almost $15 million. Not that that is an AIP project, but those
are costs that then come out of other funding sources, or we
issue new debt which ends up raising the costs to the airlines
ultimately and makes it harder for medium and smaller airports
to attract good air service for their communities.
Mr. Moran. Thank you.
Mr. Piccolo. Congressman, also on the construction cost
index issue, not only has it gone up about 25 percent and
eroded the effectiveness of AIP, but also for some places in
Florida we have seen construction cost rises of about 50
percent. It really pushes a lot of projects right off the
table. So a cut in AIP on top of the inflationary pressures
that are in the construction cost index would have a very
significant impact I think on airports across the Country,
particularly in areas where that construction cost index is
growing even faster. We have seen that go up some due to the
hurricane issues that we have had the last couple of years in
the southeast. There is so much work to do that there is such a
demand for materials that it affects the public projects as
well as the private projects.
Ms. Fernandez. Just to quickly punctuate on the
significance of the AIP program, we at O'Hare, for instance, we
look at the AIP as one component of our funding sources. We put
together a five year capital improvement program, and that
include sa portion of AIP that we feel will be necessary. FPCS
have always been a supplement to the AIP. We can't have a
diminish in one and not an increase in the other. They really
need to go hand in hand. That is how we have built not only our
five year CIP, but we also, as part of our O'Hare modernization
program, which is a $2.8 billion program, 12 percent of that
program is intended to be financed through the AIP. So it is
very important to us not only that it remains robust, but that
it remains a dependable, sustainable funding source.
Mr. Bennett. I would echo those concerns from the large
airport. With large programs such as we have here in
Washington, approaching about $7 billion, you have to have all
sources of funding brought to bear in order to execute that
project, so that you can keep your facility in a competitive
manner with respect to the fees that you have to charge for the
use of your facilities. And AIP is important even at a large
airport in Washington. At Washington Dulles we are in the
process as we speak of constructing a fourth runway that is
being funded with, 56 percent of the resources for that project
are coming from the AIP program through a multi-year letter of
intent of about $200 million. So it is very important to those
kind of capacity projects.
Mr. Ramsdell. Congressman, at Santa Barbara Airport, a
small hub, any cut in AIP, combined with the increased
construction costs, will cause us to cut back or need to cut
back more on our terminal project, which is already pretty much
cut to the bone. More AIP would also help reduce the debt that
we will need to incur which in turn will help reduce costs to
the airlines it services.
Mr. Kimmel. Just briefly, Congressman, I had touched on the
importance of maintaining in AIP the 95 percent Federal share.
Though Vision 100 had put that in place on a temporary basis, I
would contend that that higher share should have been in place
long before. Smaller airports, whether it is as a result of
September 11th or other factors, have and continue to struggle
in recent years. Costs of construction, as you have been
hearing, and other significant factors.
In our portion of Illinois, our electric rates have gone up
40 percent in the last few months. I have a bill on my desk,
our airline terminal went from $1,500 to $3,800. Our matching
local fund, based upon our $1 million entitlement right now at
95 percent, of course, is $50,000. Going up to $100,000, we
would be looking for areas to cut in order to do, plan any
necessary AIP projects.
Mr. LeTellier. Congressman, I would just like to echo my
colleagues' comments. At the Southwest Oregon Regional Airport,
our only access to capital funds are AIP and PFCs. So our
revenue streams are not sufficient to access commercial debt
markets. So without a PFC and AIP program, our capital program
would come to as screeching halt. Needless to say, if you
decrease it from our current allocations, it certainly is not
going to help us any.
Mr. Costello. I thank the gentleman from Kansas, and I
thank all of our witnesses for being here today and we thank
you for your testimony. I am sure that we will be speaking with
and working with you as we go through the reauthorization
process. Thank you very much.
We would now invite the third and final panel to come
forward. I will do introductions as you are moving forward. Mr.
Travis Vallin has been introduced by our colleague form
Colorado, Mr. Salazar, but he is the Director of the Division
of Aeronautics for the Colorado Department of Transportation.
The Honorable James Healy, County Board Member from DuPage
County, Illinois; and Mr. Robert Bogan, who is the Deputy
Director of the Morristown Municipal Airport.
So we would ask the three of you to come forward, if you
would, and take your seat.
Mr. Petri. Mr. Chairman, I wonder if I could ask unanimous
consent to introduce a statement by our colleague, Rodney
Frelinghuysen, who is very interested in and wanted to express
his support for the Morristown Municipal Airport.
Mr. Costello. Without objection, it will be a part of the
record.
The Chair recognizes Mr. Vallin at this time.
Mr. Vallin. Good afternoon, Chairman Costello, Mr. Petri
and Members of the Subcommittee. On behalf of the National
Association of State Aviation Officials, NASAO, I thank you for
this opportunity to share with you our thoughts.
My name is Travis Vallin, and I am the Aeronautics Director
with the Colorado Department of Transportation. But today I
speak to you on behalf of the men and women in State aviation
agencies in all 50 States, Guam and Puerto Rico. We are a
little bit unique from the testimony that you have heard today
in that we represent aviation in all our collective States.
Airports, pilots, general aviation, commercial and airlines
all fall underneath the category of customers. As I have said
many times to Congressman Salazar, I am the State Aeronautics
Director, and we represent what is in the public's best
interest. I am proud to say that NASAO's testimony today is
based on that same simple principle: what is in the public's
best interest.
I will provide to you my testimony in three general
categories. First, what we like; second, what we have concerns
over; and third, things that we just can't support.
First of all, what we like. The States fully support and
encourage the modernization of the air traffic control system.
NASAO members have been part of this transformation for years,
whether it be the Wide Area Multilateration System funded by
the State of Colorado or all the Atlantic Coast States putting
in State-sponsored ADS-B ground stations. What we think is
right about this proposal is that FAA agrees with us and the
Administration is supporting ADS-B funding from the airport
improvement program.
We also like the idea of the proposed hard floor for the
$300 million for the State apportionment funding, as this is
one of the most valuable investment categories to State
aviation agencies in meeting the demands of the general
aviation airports. NASAO also believes that Congress is going
in the right direction with the PFC. Like our partners at ACI
and AAAE, we agree that PFCs must be raised to $7.50 to meet
the needs.
Next, some of the issues that we area little concerned
about. There has been a lot of testimony today about the non-
primary entitlement program. As you know, the proposed system
would put airports into four different categories, resulting in
net losses to many States. At this point, NASAO cannot support
the four-tiered proposed system, but the good news is, we are
actively working with the FAA headquarters airports office to
find a workable solution that is a win-win for all of us.
Now the issues that we just can't support and think are not
in the public's best interest. First of all, the proposed AIP
level of $2.75 billion. That level simply will not meet the
needs of the aviation community, both large and small, and it
will not allow us to continue to be successful. NASAO
recommends authorizing AIP at $3.8 billion in 2008.
The essential air service program, which as many of you
know is a lifeline to small and rural communities. The
Administration's proposal would eliminate more than 60
communities and slash the budget to $50 million. NASAO
recommends and supports that Congress continue the EAS program
and fund it at a minimum of $127 million. NASAO does not
believe that the current funding structure, which has created
the largest, safest and most efficient air transportation
system in the world, is broken. The change to a radically
different user fee system that would actually collect less user
fees than what we enjoy today is most certainly not in the
public's best interest. NASAO is adamantly opposed to any new
user fees for general aviation.
We also strongly believe that increasing fuel taxes on GA
by about 250 percent would not be in the public's best
interest.
NASAO respectfully suggests that you have an excellent
template at your disposal. That is Vision 100. And that the
general fund contribution be no less than 30 percent.
Lastly, NASAO is opposed to the Administration's attempt to
impose a new board of directors on the FAA. We feel they
already have one, and that is you, the U.S. Congress.
That concludes my statement, Mr. Chairman. Thank you again
for allowing NASAO to participate in this hearing and this
legislative process.
Mr. Costello. We thank you, and the Chair recognizes Mr.
Healy at this time.
Mr. Healy. Thank you, Mr. Chairman, Members of the
Subcommittee. My name is James Healy, I am a county board
member from DuPage County, Illinois.
Unlike all the other panel members today, I, like you, am
an elected official, elected by the voters of my district.
Today I speaking in behalf of the other county officials across
America and NACo, the National Association of Counties, which
represents the 3,100 urban, suburb and rural counties.
Counties own about one-third of the Nation's commercial and
general aviation airports. This includes some of the largest
airports in the United States, including the hubs in Miami, Las
Vegas, Cincinnati, Milwaukee, Fort Lauderdale and Orange
County, California. Counties also own or appoint the governing
boards of the airport authorities at small airports, such as
the Williamson County Regional Airport, the Outagamie Regional
County Airport in Wisconsin, and the facility owned by my
county, the DuPage County Airport, the third or fourth largest
airport in Illinois, and a reliever for O'Hare Field.
Earlier this month, NACo adopted its policy on the Aviation
Reauthorization bill. Much of our policy relates to the AIP
program. Over the next five years, the existing airport
infrastructure, both airside and landside, will be strained by
increased usage and counties across America are trying to meet
that need. Accordingly, NACo recommends the AIP program be
funded at an average level of no less than $4 billion annually
during the next reauthorization period. Further, NACo supports
guaranteed funding of the AIP program through the existing
point of order provisions or an even stronger guarantee.
One way to help ensure higher funding into the future is to
index the revenue sources of the Aviation Trust Fund, such as
the ticket tax and fuel taxes and adjust them annually. NACo
believes the current revenue structure in place since 1970 and
the revenue sources funding the AIP program have worked and
should be continued.
NACo fully supports allowing airports to increase the
passenger facility charge to no less than $6. NACo believes the
FAA-proposed funding of the trust fund is likely to lead to a
substantially smaller AIP program. The proposed 70 cents per
gallon tax on aviation fuel would be devastating to smaller
airports and ultimately lead to less revenue for needed
improvements. NACo proposes that the proposed user fees based
on air traffic control usage on general aviation. NACo believes
the proposal would be counter-productive, adversely affecting
safety and ultimately increasing gridlock on the Nation's hubs
and undermine the investment counties have made in airport
facilities.
Airports must have the flexibility to use the AIP and PFC
funds to invest in landside and off-airport capital projects
that are closely related to the operation and success of an
airport. That includes roads, interchanges and public transit
that are an integral component to the growth and sustainability
of these airports. The priorities set by the local government
bodies must be recognized.
While passengers need to be assured of the dependability of
their flights, they also need to feel they can get to the
airports easily and on time. This is especially true given the
extra time passengers need at airports for security measures.
It is important to begin moving away from the silo approach to
mobility and begin to think of a comprehensive system of moving
our citizens. Intermodalism is not just a buzz word we now use
in the lexicon of transportation. It is what county officials
are striving for.
Restrictions of what can be funded with AIP dollars is a
major concern to county officials. At DuPage County Airport,
our application was denied for funding of an emergency response
vehicle to meet the needs of the larger corporate aircraft,
which are equal to the size of commercial airliners. In another
example, Outagamie County, Wisconsin, has invested in and
operates a regional airport in Appleton, Wisconsin, serving a
region of 500,000 people. However, the county is unable to use
AIP funds for a new road into the airport and other related
expenses as part of a $7.2 million parking and access project
for that airport.
Allowing airports to use AIP funds for these types of
related purposes makes sense to NACo. Counties are asking you
to remove the shackles from how we use AIP and PFC funds. Our
constituents have entrusted us to use these tax dollars wisely.
We simply ask that you give us that same trust.
Based on feedback from some of our members regarding the
eight-State AIP block grant program, it is NACo's believe this
program imposes an unnecessary administrative layer between the
airports and the FAA. The program should be eliminated and
permit those airports to work directly with the FAA. The
smaller GA airports in these States can continue to get
technical assistance from their State agencies, the same as
they do the other 42 States, which are not part of this
program.
Thank you for this opportunity to address the Committee. I
would be happy to answer any questions.
Mr. Costello. Thank you, Mr. Healy.
The Chair now recognizes Mr. Bogan.
Mr. Bogan. Chairman Costello, Ranking Member Petri and
Members of the Subcommittee, thank you for giving me an
opportunity to testify at this hearing.
I am Robert Bogan, Deputy Director of Morristown Municipal
Airport in Morristown, New Jersey. I am here representing a
group called Sound Initiative, a coalition for quieter skies.
Sound Initiative was formed by airports and counts as its
members airports, local governments and homeowner and citizen
groups that are concerned about aircraft noise. Our goal is to
encourage you to complete the job this Committee started in
1990 by phasing out all noisy Stage 1 and Stage 2 aircraft.
As you know, the FAA divides aircraft into three categories
by the amount of noise they make. Stage 1 aircraft are the
loudest, Stage 2 are also noisy, and Stage 3 aircraft are the
quietest.
By 1985, most Stage 1 aircraft had been phased out as a
result of earlier regulatory action taken by the FAA. In 1990,
at the initiative of Mr. Oberstar and this Subcommittee,
legislation was enacted to begin the phase-out of most Stage 2
aircraft. That legislation was included in the 1990 FAA
reauthorization bill, known as the Airport Noise and Capacity
Act, or ANCA. The phase-out of Stage 2 aircraft called for in
ANCA was completed by the year 2000.
However, both the FAA regulatory action and the 1990
Congressional action applied only to aircraft weighing more
than 75,000 pounds. Noisy Stage 1 and 2 aircraft that weighed
less than that were not affected, and many continue to fly to
this day.
According to the FAA, as of last summer, there were about
1,330 Stage 1 and Stage 2 aircraft registered in the United
States. These Stage 1 and Stage 2 aircraft comprise about 13.5
percent of jet aircraft weighing less than 75,000 pounds.
Although these aircraft represent a relatively small percentage
of the total U.S. fleet, the FAA noted in a letter to the
former Chairman of this Committee that while not an issue when
measured at the system level, there are a few airports where,
especially when adjusted for their limited number of
operations, this segment of aircraft appears to contribute in a
significant fashion to noise exposure contours.
So today, although those aircraft are small in number
relative to all aircraft, many airports across the United
States report that they account for a majority of noise
complaints. In fact, at some airports, 50 to 80 percent of the
noise complaints received are related to Stage 1 or Stage 2
aircraft. Sound Initiative was formed to address this problem.
Sound Initiative was organized by a group of airport
operators who are on the front line of the aircraft noise
debate on a daily basis. Across the Country, airport managers
must respond to the concerns of neighbors, government
officials, the news media and others who want to know what they
are doing about aircraft noise. Some airports have installed
sophisticated monitoring systems that identify aircraft and the
noise they make when departing. Others have long relied on
programs that try to be responsive to neighbors' noise concerns
by mediating their complaints with operators based at their
facilities.
But real action can only come from trying to reduce noise
at its source. The power of local airports to do this is
severely limited. That is why we call on Congress to complete
the job it started in 1990 and phase out all noisy aircraft,
regardless of how much they weigh. What happens at an airport
like Morristown, when these Stage 1 and Stage 2 aircraft go
away, it means quieter skies for people living and working
nearby.
Morristown is among the busiest airports catering to
corporate and smaller business aircraft in the New York City
metropolitan area, logging an average of 210,000 departures and
arrivals each year. Operations include those of based corporate
tenants, transient business use, flight training and
recreational traffic. Although only one Stage 2 aircraft is
based at Morristown, more than half the noise complaints from
neighbors are the result of other Stage 2 aircraft landing and
taking off there.
In a recent study, we reviewed the sound contour and the
noise footprint of all airplanes and jets departing
Morristown's runway 23. The study also looked at what would
happen to those contours if only Stage 3 aircraft departed from
the runway. The results show a significant reduction in the
noise impact to our neighbors. As you can see in the chart, the
noise footprint is radically reduced, it takes that footprint
out of the town of Madison, which it pretty well encompassed,
and it relieves about 3,000 people from the daily noise impact.
On the other hand, we have the example of Naples Airport in
Florida. That airport tried to work through the FAA's existing
Part 161 process to phase out noisy aircraft. It spent hundreds
of thousands of dollars on consultant studies to tell it what
it already knew about the need to reduce aircraft noise. When
the airport instituted restrictions based on the Part 161
study, the airport lost funding from the Federal Airport
Improvement Grant Program.
In the end, Naples successfully defended the lawsuits
against it and did succeed in banning noisy aircraft at its
airport. But it cost more than $3 million, money that could
have been spent on safety or security projects.
I can assure you that other airports do not have the funds
to take on the system the way Naples did. Rather than attempt
to develop an airport-by-airport solution which has yet to be
achieved even once by the Part 161 process, we believe a
lasting, long-term nationwide solution to the aircraft noise
problem can only come from Congress.
Sound Initiative does have a proposal we would like this
Committee to consider to address this noise problem. Under our
proposal, a copy of which is attached to the end of the written
testimony, all Stage 1 and Stage 2 aircraft would have to cease
operations in the 48 contiguous States three years after
enactment. Almost all of these aircraft are close to 20 years
old, most are much older than that.
So three years seems like a reasonable balance between the
needs of aircraft owners to change over to quieter aircraft and
the needs of airport neighbors for noise relief. It comes more
than 17 years after Congress set precedent for this type of
action and 7 years after the last Stage 2 weighing more than
75,000 pounds operated or was modified to meet Stage 3
standards.
Our proposed legislation goes a step further, however, by
recognizing that some airports, due to their location or other
factors, may not have as much need for noise relief. In those
cases, we propose to let airports notify the FAA that they are
wiling to continue to allow Stage 1 and Stage 2 aircraft to
operate there.
Mr. Chairman, Congress provided noise relief to our
Nation's larger airports several years ago. It is now time to
provide added relief to those airports and to extend the same
relief to the people who live near smaller reliever and
satellite airports. On behalf of Sound Initiative, I urge you
to include our proposed legislative language or something
similar to it in the Subcommittee FAA reauthorization
legislation.
Thank you very much.
Mr. Costello. I thank you.
Let me follow up with a question. You mentioned the Naples
Airport under the Part 161 process. Why did they lose their
funding?
Mr. Bogan. At some point, there was clearly some confusion
about whether the actions that were taken by the airport were
legal. I believe that the FAA merely took the position that it
was not, that the Naples action was not consistent with FAA
policy, so they withheld grant funding.
Mr. Costello. Do you have any idea how long the process,
going through the court system, how long it took and the
approximate cost to litigate?
Mr. Bogan. We were up here last week and this week, and I
did run into a group from Boca Raton who was very familiar with
that. They said it was up around $5 million and it took quite a
while. I think multiple years were involved.
Mr. Costello. Thank you.
Mr. Healy, in your testimony you talk about how you
support, or NACo supports eliminating the eight-State AIP block
grant program. I wonder if you would tell us why you support
the elimination.
Mr. Healy. That came about at our last conference here in
Washington. As you know, we have county commissioners from
across the Nation come together. Several of them came in from
Michigan and from North Carolina, saying they were having a
problem with it. I phoned home to my State, talked to my
airport director, he said the same thing.
The reason is, we believe it is an unnecessary level of
extra government. There is definitely a need for State agencies
to assist smaller GA airports that don't have the resources or
expertise to apply and utilize State Federal grant funds.
However, for airports that do have these resources, dealing
with State agencies under a Federal block grant program is an
unnecessary and ineffective system. It is a bureaucracy that is
adding to the cost of us doing business in our airports. It
does not even eliminate the need for us to go to the FAA in the
process of getting approvals for projects. It just adds to
another layer of government, and we believe that it should be
eliminated so that we can deal directly with the FAA. As the
other 42 States do with their airports, the smaller airports
that need this type of assistance would continue to go to the
State agency.
Mr. Costello. Very good, thank you.
The Chair now recognizes the Ranking Member of the
Subcommittee, Mr. Petri.
Mr. Petri. Thank you for your testimony.
Just one or two fairly quick things. It is my impression,
Mr. Bogan, living part of the time within the flight path going
to an airport, that there has actually been considerable
improvement in the last few years as silenter planes have been
phased in. Is that your experience, too?
Mr. Bogan. Absolutely. I believe corporate America has
stepped up, recognizing that they want to be good neighbors,
too. My tenants have all upgraded their aircraft over the last
10 years, and they are all flying Stage 3 aircraft, save for
one who is nostalgic for the old days, I guess. But yes, there
has been quite an improvement, and that is part of the problem.
The community has now been educated to expect quieter aircraft.
When one of these Stage 2s show up, they can tell the
difference.
Mr. Petri. I guess that is right.
Mr. Healy, why is it easier for the, we usually hear the
opposite, why is it easier for local airport authorities to
deal with the FAA, the Federal Government, than with these
State aviation agencies?
Mr. Healy. We already have to deal with the FAA. So to us,
it is just another process we have to go through. We first go
to the State agency, then we are at the same time either
simultaneously or afterward dealing with the FAA on the same
type of projects.
Mr. Petri. So it is not necessarily easier, it is just
duplicative?
Mr. Healy. It is duplicative, and actually, it sometimes is
a hindrance. Because if you are turned down at the first stage,
you don't know if you can go to the second stage dealing with
the FAA.
Again, we realize that some of the smaller counties and
some of those smaller airports may need that type of assistance
from their State agencies. We are not saying not to. We are
saying that the other 42 States in the Nation are able to
handle that by working with their local agencies and local
airports. But for the eight States that have it, we believe
that it is cumbersome.
Mr. Petri. Thank you.
Mr. Vallin, your testimony was somewhat critical, I should
say, but strongly critical in some aspects of the
Administration's proposal but supportive in others. I wondered
if you could talk a little bit about the new four-tiered non-
primary entitlement program, which is a significant proposal
people are looking at very carefully. Are there any changes or
what changes would you make in that proposed program?
Mr. Vallin. Right now, we do have open communications with
the FAA on that. We are running a lot of different scenarios.
The problem that we face is when you take that tiered
system today and you implement what the dollars will look like,
I will give you an example, the State of Montana will lose
about $700,000 from what they realized under a straight
$150,000 entitlement. The State of Colorado goes up $1.2
million.
So because it creates such an inequity when it comes to
winners and losers, it is very difficult for NASAO to take a
positive position on putting fewer dollars in some of our
smallest airports. A couple of scenarios that we are looking at
is maybe adjusting the funding levels a little bit. But we
understand it is a very complex issue. It is kind of like a
Rubik's cube, we make an adjustment, we run the analysis and
then we see where the winners and losers are. So we are
actively involved in that process and hopeful we can find a
win-win in that negotiation.
Mr. Petri. Thank you. Thank you all very much.
Mr. Costello. The Chair thanks the gentleman.
Let me thank our witnesses on this panel for being here
today. We appreciate your time. You just happened to end up on
the third panel, so you had to sit here quite a while. We
appreciate your patience, your testimony and look forward to
working with you and to considering your suggestions and your
testimony as we go through the reauthorization process.
We thank you, and this concludes this hearing. Until our
next hearing tomorrow morning, the Subcommittee is adjourned.
[Whereupon, at 2:30 p.m., the Subcommittee was adjourned.]
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