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


 
                         CONGESTION MANAGEMENT
                        IN THE NEW YORK AIRSPACE

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

                               (110-141)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                                AVIATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 18, 2008

                               __________


                       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
Vice Chair                           DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
Columbia                             WAYNE T. GILCHREST, Maryland
JERROLD NADLER, New York             VERNON J. EHLERS, Michigan
CORRINE BROWN, Florida               STEVEN C. LaTOURETTE, Ohio
BOB FILNER, California               FRANK A. LoBIONDO, New Jersey
EDDIE BERNICE JOHNSON, Texas         JERRY MORAN, Kansas
GENE TAYLOR, Mississippi             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
TIMOTHY H. BISHOP, New York          JOHN BOOZMAN, Arkansas
MICHAEL H. MICHAUD, Maine            SHELLEY MOORE CAPITO, West 
BRIAN HIGGINS, New York              Virginia
RUSS CARNAHAN, Missouri              JIM GERLACH, Pennsylvania
JOHN T. SALAZAR, Colorado            MARIO DIAZ-BALART, Florida
GRACE F. NAPOLITANO, California      CHARLES W. DENT, Pennsylvania
DANIEL LIPINSKI, Illinois            TED POE, Texas
NICK LAMPSON, Texas                  DAVID G. REICHERT, Washington
ZACHARY T. SPACE, Ohio               CONNIE MACK, Florida
MAZIE K. HIRONO, Hawaii              JOHN R. `RANDY' KUHL, Jr., New 
BRUCE L. BRALEY, Iowa                York
JASON ALTMIRE, Pennsylvania          LYNN A WESTMORELAND, Georgia
TIMOTHY J. WALZ, Minnesota           CHARLES W. BOUSTANY, Jr., 
HEATH SHULER, North Carolina         Louisiana
MICHAEL A. ARCURI, New York          JEAN SCHMIDT, Ohio
HARRY E. MITCHELL, Arizona           CANDICE S. MILLER, Michigan
CHRISTOPHER P. CARNEY, Pennsylvania  THELMA D. DRAKE, Virginia
JOHN J. HALL, New York               MARY FALLIN, Oklahoma
STEVE KAGEN, Wisconsin               VERN BUCHANAN, Florida
STEVE COHEN, Tennessee               ROBERT E. LATTA, Ohio
JERRY McNERNEY, California
LAURA A. RICHARDSON, California
ALBIO SIRES, New Jersey
VACANCY

                                  (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, Vice Chair   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 
ELLEN O. TAUSCHER, California        York
TIM HOLDEN, Pennsylvania             LYNN A WESTMORELAND, Georgia
MICHAEL E. CAPUANO, Massachusetts    MARY FALLIN, Oklahoma
MAZIE K. HIRONO, Hawaii              VERN BUCHANAN, Florida
LAURA A. RICHARDSON, California      JOHN L. MICA, Florida
VACANCY                                (Ex Officio)
JAMES L. OBERSTAR, Minnesota
  (Ex Officio)

                                 (iii)

                                CONTENTS

                                                                   Page

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

                               TESTIMONY

DeCota, William, Director, Aviation Department, Port Authority of 
  New York and New Jersey........................................    11
Faberman, Edward P., Executive Director, Air Carrier Association 
  of America.....................................................    11
Gribbin, D.J., General Counsel, Office of the Secretary, U.S. 
  Department of Transportation...................................    11
Lavin, Douglas E., Regional Vice President for North America, 
  International Air Transport Association........................    11
May, James C., President and CEO, Air Transport Association......    11
Schumer, Hon. Chuck E., a United States Senator from the State of 
  New York.......................................................     3
Shays, Hon. Christopher, a Representative in Congress from the 
  State of Connecticut...........................................     7

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Carnahan, Hon. Russ, of Missouri.................................    39
Costello, Hon. Jerry F., of Illinois.............................    40
Engel, Hon. Eliot, of New York...................................    45
Mitchell, Hon. Harry E., of Arizona..............................    49
Oberstar, Hon. James L., of Minnesota............................    52
Shays, Hon. Christopher, of Connecticut..........................    56

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

DeCota, William R................................................    60
Faberman, Edward P...............................................    75
Gribbin, D.J.....................................................    91
Lavin, Douglas E.................................................   100
May, James C.....................................................   109
Schumer, Hon. Chuck E............................................   125

                       SUBMISSIONS FOR THE RECORD

DeCota, William, Director, Aviation Department, Port Authority of 
  New York and New Jersey, responses to questions from Rep. Petri    72
Faberman, Edward P., Executive Director, Air Carrier Association 
  of America, responses to questions from Rep. Petri.............    86
May, James C., President and CEO, Air Transport Association:

  Responses to questions from Rep. Petri.........................   121
  Responses to questions from Rep. Richardson....................   122

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       HEARING ON CONGESTION MANAGEMENT IN THE NEW YORK AIRSPACE

                              ----------                              


                        Wednesday, June 18, 2008

                  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 and staff, everyone in the room, to 
take their electronic devices and put them on vibrate.
    The Subcommittee is meeting today to hear testimony on 
Congestion Management in the New York Airspace. The Chair will 
make a brief opening statement and will recognize the Ranking 
Member for any statement or comments that he may, and then we 
will go to our first panel which is two Members, both Senator 
Schumer and our friend, Congressman Shays.
    I welcome everyone to the Subcommittee hearing today on 
Congestion Management in the New York Airspace.
    I am pleased to welcome our colleague, Senator Chuck 
Schumer, who served in the House a number of years before we 
went over to that other body, and Congressman Chris Shays who 
will be here momentarily to our hearing today. I am interested 
in hearing their perspective on this issue.
    Over the last year, we have seen record delays and 
congestion in the skies with nearly 27 percent of flights 
delayed. According to the Bureau of Transportation Statistics, 
the Department of Transportation Inspector General found that 
of those delayed: 88,234 flights were delayed for over an hour, 
7,659 had ground delays of between 2 and 3 hours and almost 
1,700 flights were delayed over 3 hours.
    The New York area airports have been hit particularly hard 
with delays according to the BTS. Less than 60 percent of the 
flights arrived on time at these airports in 2007.
    The New York airports do not have adequate capacity to meet 
demand, and the Department of Transportation has capped 
operations at JFK, LaGuardia and Newark. They have capped JFK 
at 83, LaGuardia at 75, and Newark at 83 slots.
    I believe that any type of administrative cap is a short-
term solution to a long-term problem. At O'Hare International 
Airport, for example, the short-term solution to congestion and 
delays at the airport was to cap O'Hare International Airport. 
The long-term solution is making additional capacity 
improvements like the O'Hare Modernization Program.
    On Monday, the FAA announced that the cap is being lifted 
as the new runway at O'Hare comes online in the fall of this 
year.
    DOT is not only proposing to cap the New York airports but 
also to auction a percentage of those slots at each airport. 
Many have questioned both the Department of Transportation's 
legal authority for such a proposal and the likelihood that 
slot auctions would decrease congestion and delays.
    Under one of the proposals, the auction revenue would 
revert back to the air carriers with no guarantee that the 
proceeds would be used to mitigate congestion and delays in the 
New York airspace.
    In my view, auctioning slots is a bad deal for consumers. 
During these tough financial times for our carriers, consumers 
are being asked to pay more for less. Any additional costs to 
assess these markets or access these markets more than likely 
will be passed on to the consumers, resulting in higher fares 
and absolutely no guarantee of congestion and delay reduction.
    Further, service to small communities has already been 
affected by carriers pulling down capacity because of increased 
fuel prices. Should auctioning be allowed, carriers could 
potentially limit service to small communities in favor of 
access in the more lucrative markets.
    I am interested in hearing from our witnesses on how they 
believe the DOT cap and slot auctioning proposal will affect 
service and pricing in the New York airspace and if there will 
be any significant reduction in congestion and delays as a 
result of these measures.
    With that, I again welcome our witnesses here today. I look 
forward to hearing their testimony.
    Before I recognize Mr. Petri for his opening statement or 
comments, I ask unanimous consent to allow two weeks for all 
Members to revise and extend their remarks and permit the 
submission of additional statements and materials by Members 
and witnesses. Without objection, so ordered.
    The Chair now recognizes the Ranking Member, Mr. Petri.
    Mr. Petri. Thank you very much, Mr. Chairman.
    I would like to join in welcoming our, in absentia at this 
point, our colleague from Connecticut, Chris Shays, and the 
Senior Senator from the State of New York and former colleague, 
Chuck Schumer.
    I would also like to thank you, Mr. Chairman, for calling 
this important hearing as we discuss long-term solutions to 
airspace congestion issues in the New York-New Jersey 
metropolitan region.
    Airline delays continue to be a problem at our most 
congested airports. According to the Department of 
Transportation Bureau of Transportation Statistics, Newark, JFK 
and LaGuardia Airports had the worst on-time performance 
statistics in our Country last year. Also, according to the 
Department, the New York area airports account for 75 percent 
of our chronically delayed flights. So the impact is felt 
across the airspace system.
    It is no surprise that delays are a major inconvenience to 
air travelers, but they also cost airlines, passengers, and of 
course, our economy. According to Travel Industry Association 
statistics, air travelers avoided 41 million trips this past 
year due in part to travel delays. According to the group, this 
costs the U.S. economy roughly $26.5 billion.
    Short-term caps at the three major New York region airports 
have been agreed to but given the demand for service in and out 
of the area, it is unlikely that without a long-term solution 
congestion problems will be abated just by that step.
    For the long-term solution, the Department has proposed a 
cap and auction system to control congestion while attempting 
to cultivate competition that is often stymied by artificial 
caps alone. I am interested in hearing from our qualified panel 
of witnesses about this and other possible mechanisms to 
address congestion and associated delays.
    The traveling public will not tolerate these kinds of 
delays. The Department has offered its solution. I look forward 
to discussing it in depth.
    Fifteen years ago, when the telecommunications industry was 
deciding how to best allocate limited spectrum resources, the 
FCC utilized the auction approach for allocating public 
spectrum capacity, very similar to what the Department has 
proposed. So auctions such as these are not unheard of or 
unprecedented. However, we must carefully consider all possible 
consequences of the Department's proposal and not rush into any 
one approach in particular.
    Again, I thank the witnesses for appearing today to discuss 
the Department's auction proposal, especially my colleagues and 
former colleague, Mr. Schumer.
    With that, I thank the Chairman and yield back my time.
    Mr. Costello. The Chair thanks the gentleman and now 
recognizes the Senior Senator from New York, the distinguished 
Senior Senator, Senator Chuck Schumer.

 TESTIMONY OF THE HONORABLE CHUCK E. SCHUMER, A UNITED STATES 
               SENATOR FROM THE STATE OF NEW YORK

    Senator Schumer. Well, thank you, Mr. Chairman.
    It is great to be here, to be here back in the House where 
I spent 18 very happy years.
    I notice all of the names here. Most of them came after I 
left in 1998, and the only two people, I was telling Chris, who 
would be senior to me had I stayed in the House would be 
Chairman Oberstar and Mr. Petri. I think, Jerry, you came a 
couple of years after I came in 1981.
    But anyway, thank you, and I want to thank both of you for 
the great job that you do as head of the Aviation Subcommittee, 
and I appreciate the opportunity to testify.
    We can put it simply, Mr. Chairman. The skies over New York 
are a huge mess, and the sad thing is this could have been 
avoided. The FAA's incompetence has created the problem, and 
the FAA can solve it, but they are just focused on untested 
schemes that don't work instead of doing what needs to be done, 
giving us an adequate number of controllers.
    Now anyone who has traveled in the last year has felt the 
pain and frustration that defines air travel in the U.S. Delays 
and cancellations have crippled the entire air traffic system, 
leaving passengers stranded across the Country, and it is 
nowhere worse than in the New York metropolitan area.
    Time and time again, we have seen the Department of 
Transportation attempt to address New York's congestion 
problems, using ideological market-based theory and other 
untested experiments. First, it was caps. Then, it was 
congestion pricing. Now, all we are hearing about are auctions.
    Instead of focusing on real, tested solutions to solve this 
problem like upgrading decades old technology and hiring an 
adequate number of controllers to staff New York's towers, the 
DOT continues to miss the point. To make matters worse, the 
FAA's treatment of controllers has led to an unprecedented rash 
of retirements, compounding the problem.
    The bottom line is that at the current pace and under the 
current plan, within the next five years, the New York City 
airspace will be in total gridlock. The wave of controller 
retirements and the FAA's inability and unwillingness to 
upgrade antiquated technology will simply cause a meltdown in 
the New York area and across the Country.
    Last summer's travel season was hampered by some of the 
worst delays ever recorded. Nearly 30 percent of all flights 
were delayed and cancelled. In a report issued last month by 
the Joint Economic Committee, which I Chair, we found that 
these flight delays cost passengers, airlines and the U.S. 
economy $40 billion a year and, sadly, it is just the 
beginning.
    To make matters worse, air traffic control towers across 
the Country are dangerously understaffed. When you look at the 
workforce nationally, most facilities in the Country have staff 
levels that are more than 35 percent trainees. In 2007, 
developmental trainees composed 25 percent of the controller 
workforce, up from 15 percent in 2004.
    Given that the trainees cannot staff a controller position 
without a fully certified controller supervising, these numbers 
are alarming.
    It is even worse in New York. In New York, when you fully 
count certified controllers, only excluding trainees, the JFK 
tower is only 60 percent staffed, having 22 full-time 
controllers when it should have 37. The LaGuardia tower is 66 
percent staffed, having 22 controllers when it should have 36. 
The Newark Tower is 67 percent staffed, having 27 controllers 
when it should have 40.
    The FAA tries to hide these numbers by including the 
trainees in the overall number, but we all know that they can't 
do a job on their own. They have to be with a supervisor.
    At the New York Center, which manages traffic entering into 
New York airspace, the average training time is more than four 
years, the second highest in the Country. However, most of the 
71 controllers in training haven't even started their official 
training. Since September, 2006, this facility in New York has 
lost 57 fully certified controllers and only hired 18 to 
replace them. That is shocking and the greatest level of 
incompetence that we have seen in the FAA.
    Similarly, in the New York TRACON, responsible for all 
arriving and departing traffic, we have lost 23 fully certified 
controllers and only gained 1, this month.
    Nationally, the culture of fear created by the FAA has led 
3,300 controllers to leave the workforce since 2005, and it is 
going to get worse. Fifteen thousand five hundred more are 
expected to leave between 2008 and 2017.
    In the six months from October of 2007 through March of 
2008, 1,000 controllers left the workforce, half of them to 
retire. Of the FAA's 1,800 new hires in fiscal year 2007, only 
150 have been certified.
    As the DOT IG report pointed out, the FAA may be hiring new 
trainees, but they aren't adequately training them to become 
fully certified professional controllers. The wave of 
retirements sets up a vicious cycle where there will be more 
overtime needed and then quicker and more retirements as 
workers get burnt out. In other words, the next wave of 
retirements will make this one look like nothing.
    If the DOT and the FAA don't take immediate steps to 
upgrade the technology and improve capacity with the number of 
controllers going up at New York airports, if they don't hire 
and train and retain more full-time controllers at New York 
airports, then we can all look forward to even more congestion 
and more problems.
    Instead of solving the problem as we have talked about--
more controllers, better technology--the DOT plans to auction 
takeoff and landing time slots and New York City's three 
airports. This will, in no way, reduce congestion in New York's 
airspace. Instead, this plan could limit consumer choices and 
have a dire impact on service to small communities as you have 
mentioned, Mr. Chairman.
    I will act quickly to prevent this plan from being 
implemented. As travelers, we feel the burden of the airline 
industry gasping to catch its breath. The worst possible thing 
the Administration could do to passengers and the industry is 
deliver one big punch in the gut by auctioning off slots at New 
York airports.
    This is an ideological, untested experiment coming from 
somebody in an ivory tower. There is no proof that the auction 
plan will do anything to reduce congestion, and yet DOT insists 
this market-based solution is the only effective proposal.
    The DOT's misguided plan to sell takeoff and landing slots 
to the highest bidder won't make your plane take off any 
faster. It will just cost you more to fly in and out of 
LaGuardia, JFK and Newark, and it will throw those airports 
into chaos. Auctions have no proven track record of working.
    They have never been tried in any U.S. airport nor have 
they been tried at any airport in the world. In fact, the 
entire plan is modeled after London's road congestion pricing.
    I don't know of one expert who believes this plan will work 
or believes it is beneficial to the consumer. In fact, the Air 
Transport Association which represents the airlines, the Port 
Authority of New York and New Jersey, the Airports Council 
International are all opposed to auctions.
    In fact, Mr. Chairman, I believe their plan is 
unconstitutional and will be challenged in court. I have 
introduced legislation. I will introduce an amendment to the 
upcoming FAA authorization to prohibit auctions, and I think it 
will get widespread support.
    In New York City, one of the world's busiest centers, New 
York should not be the guinea pig in DOT's harebrained 
congestion experiment.
    In conclusion, I spoke to Acting Administrator Sturgell, 
and I told him I would oppose any experiment in the New York 
area involving auctions because he couldn't give me a 
straightforward answer about the FAA's plans. So I have placed 
a hold on his nomination which still exists today.
    Auctions are detrimental to consumer choices. Small 
communities, low cost airlines will be forced out as the big 
boys shove them aside.
    The auction plan is further flawed by the assumption that 
all slots are interchangeable. We know that a flight from JFK 
to London is not interchangeable with a flight from JFK to 
Buffalo. Long distance and international flights need to take 
off and land at certain times of the day and need specifically 
designated large gates and terminals.
    So, as I said, I have introduced legislation, supported by 
both the airlines and the airports including the Port Authority 
of New York and New Jersey, which will protect travelers by 
prohibiting the DOT from implementing auctions in New York City 
or any commercial airport in the Country. Once again, the DOT 
is putting ideology before efficiency.
    My message to DOT and FAA: Put more controllers in the 
towers. Put forward the new technologies that all the rest of 
the countries in the world have and get off this goofy, 
harebrained scheme to auction off slots. It won't solve a 
thing.
    Mr. Chairman, I thank you. I know I went over the time a 
little bit, but I am passionate about this issue, and I thank 
the Committee's indulgence.
    Mr. Costello. Senator, thank you. We expected you to go 
over your time.
    [Laughter.]
    Mr. Costello. Let me comment before I recognize our 
colleague, Mr. Shays.
    Senator Schumer, in my view, you are exactly right, right 
on point. The idea of auctioning these slots is a bad idea. It 
is bad for consumers. There is no guarantee that it will 
relieve or provide any relief whatsoever for congestion and 
delays.
    I also agree, and I think that the FAA lacks the legal 
authority to proceed in the direction that they are heading in 
and that it is up to us to make certain that they do not go 
down that road.
    Lastly is we held a hearing last week in this very room, 
concerning the issue of controller staffing. Everyone gets it 
but the FAA. Everyone understands that there is a crisis 
developing in the lack of adequate staffing not only in terms 
of numbers but experienced controllers.
    As you rightly pointed out in your testimony, it is an 
alarming rate and it is something that should concern all of 
us.
    All of the stakeholders, the airlines, the pilots, the 
flight attendants, everyone involved in the system gets it 
except the FAA. I am hoping with our reauthorization bill that 
we can address that issue and reduce the number of experienced 
controllers from leaving the job.
    We know, we have heard from the Inspector General. We have 
heard from the GAO as to why they are leaving. Morale is at an 
all-time low. There are major, major problems, and the FAA 
needs to wake up before there are serious consequences.
    Again, Senator, we thank you for your thoughtful testimony. 
I think you have made your position very clear to this 
Subcommittee. We realize that you have a full schedule over on 
the other side of the Capitol, and if you would like to leave 
at this time we certainly would understand.
    Senator Schumer. Mr. Chairman, I just want to thank you and 
thank you for your leadership on this issue. I look forward to 
working with you because we see things the same way. The FAA is 
just appalling and has got to be changed.
    Mr. Costello. I thank the gentleman and would yield to my 
friend, Mr. Petri, for his comments.
    Mr. Petri. Thank you very much.
    I just would add that one additional facet which wasn't 
mentioned and that is something called NextGen which is 
basically digitalizing, moving air traffic control and the 
whole system to the new technology instead of radar-based 
satellite. That has the promise, if it can be made, of 
reorganizing the system and expanding the capacity, but there 
are a lot of steps between where we are and there.
    I urge you and your colleagues in another place to pay 
attention so we don't end up with a crisis and, frankly, clean 
up the mess afterward because this involved changing 
procedures, not just new equipment but whole new ways of 
analyzing and expanding, changing the parameters for operating 
the system.
    Senator Schumer. Ranking Member Petri, I agree. I mean I am 
frustrated because for years the FAA slow-walked NextGen in an 
effort just to hold back on costs. I mean the costs are so 
little compared to the loss of money by people waiting, flights 
being cancelled.
    London, Paris, they are way ahead of us on technology that 
was developed in America. The previous Administrator seemed to 
me to just give up her job and let OMB run the show. OMB said 
you have to cut costs, no NextGen, no controllers, no overtime, 
and that has helped lead to this problem.
    My regret is that the new Administrator doesn't seem to 
want to make a clean break from those policies, but I know this 
Committee has been out front on NextGen, and I agree with you 
completely.
    Mr. Costello. We thank you for your testimony, Senator 
Schumer, and look forward to working with you.
    The Chair now recognizes our colleague from the Fourth 
District of Connecticut, Congressman Chris Shays.

TESTIMONY OF THE HONORABLE CHRISTOPHER SHAYS, A REPRESENTATIVE 
           IN CONGRESS FROM THE STATE OF CONNECTICUT

    Mr. Shays. Chairman Costello and Ranking Member Petri and 
Mr. Hall and Mr. Boozman, thank you very much. Mr. Chairman, I 
am particularly grateful that you have given me this 
opportunity.
    My staff has written a 10-page statement that really is 
quite excellent. I will put most of it in the record and just 
make reference to a few parts of it.
    Under the integrated airspace alternative, the FAA's 
preferred airspace redesign plan, significant airplane traffic 
would be routed over parts of Fairfield County at the expense 
of the region's quality of life. The FAA has failed to provide 
any noise mitigation to our region despite the wide swath of 
land under the Fourth Congressional District that will be 
adversely affected by planes flying at altitudes as low as 
4,000 feet in the southern part of the district.
    The FAA is also continuing to implement its redesign 
despite DOT's auction proposal that could alleviate the need to 
redesign the airspace altogether.
    The FAA is not required to present noise mitigation 
strategies even though there is significant impact on the 
region. Because there is no mandate for the FAA to consider 
quality of life, redirecting air traffic over previously 
unaffected areas is given the same weight in the agency's 
decision-making process as keeping traffic over areas that 
already have air traffic.
    Even more concerning, no attempt has been made to utilize 
unpopulated or less populated tracts of land, industrial or 
commercial zones, major highway systems or large bodies of 
water for mitigating noise impact or to set minimum altitudes.
    If the FAA had to consider the quality of life impacts of 
the integrated airspace alternative, it would have never 
concluded that this airspace redesign was the appropriate first 
attempt at relieving air traffic congestion. It is unreasonable 
to design airspace without regard to impacts on the ground.
    For this reason, the FAA should adopt a no-action 
alternative at this time until other congestion mitigation 
strategies, such as the auction proposal of moving peak flights 
to off-peak hours have been thoroughly examined or 
disqualified.
    On September 20th, 2007, Congressmen Rodney Frelinghuysen, 
Scott Garrett, Eliot Engel and I offered an amendment to H.R. 
2881, the FAA Reauthorization Act, requiring the GAO to assess 
the strengths and weaknesses of the FAA's environmental impact, 
the costs and impacts of redesign and whether the FAA followed 
the due process in creating their proposal.
    It would be interesting to learn, for instance, if the GAO 
believes that what the FAA is proposing to do at LaGuardia and 
Newark would eliminate the need for redesign.
    I am hopeful this study, which is expected to be released 
in August of this year, will reveal options as effective a 
redesigning the airspace to mitigate congestion that will not 
result in any new residents being affected air noise. It seems 
to me there are other solutions that should be considered 
before implementing such a radical alternative that negatively 
impacts so many thousands of residents throughout the 
Northeast.
    The FAA has consistently stated the only way it can reduce 
congestion and travel delays is by redesigning the airspace. 
However, the case for the redesign is built on the flawed 
premise that delays are caused by the design of the airspace.
    This theory neglects to account for inadequate terminal, 
runway and gate capacity, insufficient air traffic controller 
staffing, weather and other scheduled flights. It also fails to 
account for the impact that market-based strategies could have 
on congestion.
    What is particularly frustrating about the FAA's action is 
the Department of Transportation's implementation of market-
based solutions for congestion relief while the FAA refuses to 
consider the impact of these proposals on airspace congestion. 
We believe moving flights out of peak travel times and 
implementing slots and quotas at congested airports would have 
the same effect as redesign and must be considered.
    So let me just conclude. I have asked the FAA and this 
Committee: Is the airspace redesign the best way we can do to 
mitigate airline congestion? In implementing the redesign, is 
it possible we are overlooking other market-based solutions to 
airline congestion?
    I believe the answers to those questions are no and yes, 
respectively.
    Let me just conclude by saying I have never dealt in my 
entire life in Congress with a more arrogant agency. We 
understand how it evolved. It is safety and efficiency, and you 
don't want politicians interfering with safety.
    But this isn't an issue of politicians wanting to interfere 
with safety. We want the FAA to come to our district to explain 
what they are doing, to have hearings and to respond.
    When I requested that they would come in, they wanted to 
schedule the hearing outside the affected area. When we got 
them to come into the town, they said they would take no 
questions and hear no comments from individuals in the 
district. They just were going to say what they wanted to say 
and that was it.
    I just would hope that, at the very least, we can have an 
agency that will be more responsive to people, listen to their 
concerns and take account of their concerns.
    Thank you, Mr. Chairman.
    Mr. Costello. Mr. Shays, we thank you for your testimony 
today, and let me share with you my frustration in dealing with 
this agency.
    They are not the most responsive agency, not only to 
Members of Congress but the public as well. I hope at some 
point in the future that we will see a change in that attitude 
and the way they conduct business.
    Mr. Shays. Mr. Chairman, I think you will because I know of 
what you and the Ranking Member and the Members would like to 
achieve, and so I really want to thank you for focusing your 
attention on this issue.
    Mr. Costello. We thank you for your testimony today. We 
understand that you, as well, have a busy schedule. If you 
would like to leave at this time, we certainly would 
understand.
    The Chair now would recognize the gentleman from New York, 
Mr. Hall, for his opening statement. After Mr. Hall's opening 
statement, we will move to the second panel. Actually, it will 
be panel one.
    If the next panel would quietly come up and take your seat 
as your nameplate is placed before you, so we can get prepared 
for your testimony when Mr. Hall concludes.
    At this time, the Chair recognizes the gentleman from New 
York, Mr. Hall.
    Mr. Hall. Thank you, Mr. Chairman and thank you, in 
absentia, to our Senior Senator from New York and to my 
colleague, Mr. Shays from Connecticut with whom I and a number 
of others wrote the FAA Acting Administrator on March 12th, 
urging the FAA to postpone the implementation of the airspace 
redesign.
    I would like to thank you for calling this important 
hearing today, Mr. Chairman.
    As a Representative from the New York City area, my 
constituents and I are uniquely affected by the policies that 
the DOT and FAA implement at New York's airports. However, I 
hope everyone realizes that New Yorkers are not the only people 
to whom this plan matters. When it comes to aviation, the 
entire Country is affected by what happens in New York.
    Currently, the airspace congestion over New York is 
unacceptable. Travelers in and out of the city's major airports 
have to expect multiple hour delays as standard practice, and 
circling flights waiting for clearance to land have caused 
unnecessary noise pollution across my district and neighboring 
districts.
    I don't envy the task that DOT and FAA have, to solve these 
congestion issues, and I have a great deal of sympathy to the 
difficult choices this decision has left. However, given the 
complexity of the situation at hand and the current troubles 
facing the airline industry, the decision you have reached 
seems well short of the ideal solution.
    The need for some limitation on the number of flights at 
both JFK and Newark has become unavoidable. The popularity of 
both airports far outweighs their physical capacity to accept 
their scheduled flights, much less additional ones. However, 
implementing an auction on previously used slots as part of 
that cap, especially without the strong support of both the 
Port Authority and the airlines involved, seems like an 
unnecessarily difficult and controversial addition.
    The FAA has already made the questionable decision to 
implement the New York-New Jersey area redesign which has led 
directly to an unacceptable increase in air noise for many of 
the residents of my district especially in and around the town 
of Pound Ridge and in parts of Rockland County. This decision 
has only enhanced my tendency to question the judgment of the 
FAA's priorities in the New York City area.
    I wonder, and I hope that this hearing will help to 
explain, why other congestion-reducing policies that their 
participants who need to be involved have already expressed 
their support for have not been adopted or even considered. For 
example, if the decision had been made to bring in a cap, why 
has the FAA opted not to use the worldwide scheduling 
guidelines?
    Why has the FAA failed to increase the number of 
chronically understaffed air traffic controllers which would 
clearly result in a reduction in congestion?
    Has the FAA fully considered the congestion-reducing 
benefits of adopting any additional policies that would create 
a more efficient and effective air traffic management system?
    It is my understanding that during the many meetings held 
last year, the Aviation Rulemaking Committee came up with 
dozens of recommendations to reduce congestion. Given that the 
plan currently being considered will lead to a prolonged and 
inevitable court battle, we would be better off doing 
everything noncontroversial and cooperative that we can to make 
sure that the summer travel season goes off with as little 
difficulty as possible.
    I look forward to the testimony we are about to hear. I 
state my admiration for Mr. DeCota of the Port Authority's 
Stewart Air PIN, and I look forward to hearing our concerns 
addressed.
    Mr. Chairman, I yield back the balance of my time.
    Mr. Costello. The Chair thanks the gentleman from New York, 
Mr. Hall, not only for his comments here today but for his deep 
interest in this issue. He is one of the reasons why we are 
holding this hearing today. It is at his request because of his 
interest in seeing that this issue is address. So the Chair 
thanks the gentleman from New York.
    At this time, let me introduce our first panel: Mr. D.J. 
Gribbin who is the General Counsel, Office of the Secretary for 
the U.S. Department of Transportation; Mr. William DeCota who 
is the Director of the Aviation Department, Port Authority of 
New York and New Jersey; Mr. James May who is the CEO of the 
Air Transport Association; Mr. Ed Faberman who is the Executive 
Director of the Air Carrier Association of America; and Mr. 
Douglas Lavin who is the Regional Vice President for North 
America, International Air Transport Association.
    Gentlemen, you all, I think, have testified here before. We 
will ask you to summarize your statement in five minutes to 
allow for questions, and your entire statement will appear in 
the record.
    With that, Mr. Gribbin, you are recognized for five 
minutes.

   TESTIMONY OF D.J. GRIBBIN, GENERAL COUNSEL, OFFICE OF THE 
 SECRETARY, U.S. DEPARTMENT OF TRANSPORTATION; WILLIAM DECOTA, 
 DIRECTOR, AVIATION DEPARTMENT, PORT AUTHORITY OF NEW YORK AND 
  NEW JERSEY; JAMES C. MAY, PRESIDENT AND CEO, AIR TRANSPORT 
   ASSOCIATION; EDWARD P. FABERMAN, EXECUTIVE DIRECTOR, AIR 
CARRIER ASSOCIATION OF AMERICA; AND DOUGLAS E. LAVIN, REGIONAL 
 VICE PRESIDENT FOR NORTH AMERICA, INTERNATIONAL AIR TRANSPORT 
                          ASSOCIATION

    Mr. Gribbin. Thank you, Mr. Chairman and thank you for 
having me back again before this Committee.
    Mr. Chairman and Members of the Subcommittee, thank you for 
the opportunity to testify on behalf of the Department of 
Transportation's continuing efforts to address aviation 
congestion. Before I go into detail about the DOT's efforts to 
address congestion, I want to take a moment to talk about the 
particularly challenging environment currently facing the 
airlines.
    As my fellow panelists well know, record oil prices, a 
slowing economy and increased competition are just a few 
factors that have created a number of significant challenges 
for airlines, challenges that certainly will change the face of 
the aviation industry in the years to come.
    To meet these challenges, many carriers are raising fares, 
streamlining operations and reducing service. It is possible 
that some of these measures will result in reduced congestion.
    However, so far, we have yet to see widespread evidence of 
carriers pulling out of the busiest and most congested 
airports. For example, the largest carrier at Newark, 
Continental Airlines, announced just last week that they are 
limiting service to 15 communities but do not plan--do not 
plan--on reducing the number of slots they use at Newark.
    Additionally, even if some of the busiest airports do see a 
reduction. As they see that reduction, history tells us that 
the aviation industry is very cyclical and that service will 
return to and exceed the record levels we saw last year. That 
is why we must do something now to fix the problems that caused 
last summer's horrible delays and not wait for another year of 
delays before we act.
    Some have incorrectly suggested that expanding capacity is 
the only appropriate response to congestion. The Department 
believes that expanded capacity is a critical component of the 
long-term solution to relieve congestion and looks to increase 
capacity both in the air and on the ground whenever possible. 
For example, DOT has worked to bring a new runway to O'Hare, 
implement airspace redesign in New York, implement NextGen, and 
free up military airspace for use during peak periods.
    Capacity increases must be part of the solution, 
particularly since we expect demand for air travel to resume 
its robust growth over the coming decade. However, capacity 
increases, both physical and operational, often take a long 
time to implement and may be limited in scope.
    Sometimes physical capacity cannot be expanded such as at 
New York City's airports. In addition, operational improvements 
can help address congestion, but sometimes they cannot provide 
enough capacity to meet the demand.
    When capacity increases cannot create enough supply to meet 
demand, caps may be necessary. This is what has occurred in the 
New York region.
    Congestion at these three New York airports is not a new 
phenomenon. Since 1969, JFK and LaGuardia have been capped, and 
recently Newark was capped after becoming one of the most 
delay-prone airports in the Country.
    Caps solve the problem of congestion because they simply 
freeze capacity and prohibit new flights from entering the 
system. Airlines are often enthusiastic in their support of 
caps at an airport that they already serve because caps limit 
competition and protect incumbent airlines from new entrants 
that might offer competing lower fares.
    Unfortunately, straight caps without some mechanism to 
ensure an efficient allocation of scarce slot resources is 
economically inefficient and stifles competition, leading to 
reduced service and higher fares to consumers. So, if caps 
alone are not the long-term answer, the question arises, what 
is the solution?
    It is clear that caps alone do not allocate airspace 
efficiently. However, solving that problem should not entail 
government picking the winners and losers and deciding who will 
be able to enter an airport.
    Market-based pricing and ample competition have been 
demonstrated time and time again as the most effective ways to 
allocate a scarce resource that is in high demand. Space in a 
movie theater, use of cell phones or flights during certain 
times of day or flights to certain locations are all examples 
that illustrate that pricing works.
    As you all know, last month, the FAA published a notice of 
proposed rulemaking to manage congestion at JFK and Newark 
Airports. Like the supplemental proposed rulemaking published 
for LaGuardia that I discussed the last time I was before this 
Committee, this proposal recognizes that a simple imposition of 
caps without some mechanism to ensure preservation of a 
competitive market is inadequate.
    Under this proposal recently introduced, all airlines 
operating at Newark and JFK would be given up to 20 slots a day 
for the 10-year life of the rule. Above that baseline, either 
10 percent or 20 percent of a carrier's slots would be 
withdrawn over the first 5 years of the rule and auctioned.
    As with the LaGuardia proposal, under this proposal, 
airlines operating at the two airports will receive a 10-year 
interest in the world's most valuable aviation assets free of 
charge, free of question, free of hassle.
    Additionally, this proposal, just like the LaGuardia 
proposal increases competition by creating a robust secondary 
market for trading slots and provides a way for new entrants to 
gain entry into a restricted airport.
    Mr. Chairman, I appreciate the opportunity to explain our 
proposals to you for the New York airports. We are firmly 
committed to the idea that any long-term solution to mitigate 
congestion at our Nation's airports must preserve competition.
    Really, for consumers, what we want to do is provide 
reliable and affordable air service. While caps do produce 
reliability, caps, if they are allowed to limit competition, 
will make travel unaffordable for many Americans, and we think 
that is unacceptable.
    Thank you again for giving this opportunity to testify.
    Mr. Costello. The Chair thanks you, Mr. Gribbin, and now 
recognizes Mr. DeCota.
    Mr. DeCota. Thank you very much, Mr. Chairman. I appreciate 
the opportunity to be here especially since this hearing is 
about New York airspace, as is this proposal, which we believe 
will provide anything but reliable and affordable air travel. I 
want to thank you.
    I certainly want to thank Senator Schumer. His remarks 
certainly are in parallel with ours and, Congressman Hall, you 
also. You have been a great leader in helping us in buying 
Stewart Airport, and I am wearing my Stewart tartan.
    So I think we have to think about capacity which is what 
this is about.
    The Port Authority is very committed to providing safe, 
efficient air travel for people in our region. Our three major 
airports handle 110 million passengers, 2.7 million tons of 
cargo and have huge economic activity.
    We have taken a number of steps to enhance capacity on the 
ground. We spent $15 billion in upgrades to our airport's new 
terminals, air train systems, runway improvements. We 
programmed another $6 billion over the next 10 years to do 
that.
    In November of 2007, we bought Stewart Airport, north of 
Newburgh, New York. We are putting $500 million into that.
    The Chairman of the Port Authority of New York and New 
Jersey convened a flight delay task force before the FAA even 
got involved in the matter, and we came up with 77 initiatives 
to improve capacity. I understand about 16 of those have been 
implemented by the FAA.
    While we acknowledge the FAA has made a number of 
investments in aeronautical systems, made operational and 
procedural changes, the fact is they are unable to accommodate 
today, with all that investment, the same number of 
aeronautical operations that they served a decade ago. We are 
absolutely confounded by this.
    The Port Authority has very much attempted to work with the 
DOT and FAA officials with the problem for the last decade. In 
2000, Congress set the goal of opening up access to this very 
important, popular, yet constrained airport system to stimulate 
competition and opportunity, and Congress allowed the FAA and 
DOT nearly 7 years to try to come up with an appropriate 
framework to deal with this.
    The FAA took the challenge. They hired professors at the 
National Center of Excellence for Aviation Research, NEXTOR, 
and no one can deny that the FAA didn't spend a lot of time. 
However, these became academic exercises we came to fear. The 
professors explained in theory the market-based solutions, but 
they were never able to demonstrate how it would work in 
practice.
    As the operator of New York's airports, with our 
proprietary rights and our responsibilities to allocate gates 
and groundside facilities, we attempted to engage the DOT and 
the FAA, the airlines and the key stakeholders. Unfortunately, 
after all of this time, there is no workable solution.
    The Administration, in turn, decided to an approach that 
we, the airport operator, think is not only illegal, but we 
also think it is disastrous. The vast majority of the carriers, 
the Air Travelers Association and consumer groups ultimately 
think this is going to harm them, not to help them.
    The LaGuardia order and the subsequent orders at JFK and 
Newark are attempting to impose slot auctions despite our 
collective concerns. We regret that we were only given 60 days 
to comment on it.
    It is incomplete. It does not give specifics on how an 
auction will work. It is deficient in supporting data and 
analysis, and it appears that the priority is to fast-track 
these unpopular proposals for implementation before the end of 
the year.
    We are concerned it is fundamentally flawed, it is 
unworkable, it is unresponsive, it is disruptive, and it is 
really going to be bad for the traveling public.
    So we don't think the FAA has the statutory authority. We 
don't believe Congress has ever given them the statutory 
authority. There is nowhere in the FAA Authorization Act that 
allows that.
    We think this is an attack on our proprietary rights, but 
we won't even get into that at any length.
    The notice of proposed rulemaking for LaGuardia fails in 
its primary objective in reducing congestion delays at 
LaGuardia. Despite increases in airport capacity I described, 
despite declining airport activity--which it is true in this 
industry environment, delays have increased by more than 50 
percent from 2004 to 2008--airspace capacity somehow has 
declined.
    The SNPRM really fails to acknowledge that decline, but it 
also fails to provide any evidence or analysis of what the 
capacity is. It fails to provide an indication of whether the 
FAA can restore airspace. It fails to establish a cap at a 
level that even seems to be reasonable.
    The DOT and this group of academics have obsessed with 
promoting these auction schemes. Auctions are not the 
solutions. The fact is when you go through the theory, the 
mechanics of how it works, where it stumbles in the same place 
is no recognition there is a real-world concern of how do 
airlines get gates, how do they get facilities, how do they get 
baggage belts.
    A member of my staff described this as the Fatima moment 
where supposedly everything just works out. There is some kind 
of a miracle that occurs.
    The proposal is fundamentally flawed, and professors around 
the world have not been able to do this. This is almost like if 
the Transcontinental Railroad was constructed in the 1860s in 
this manner, the East and West never would have met at 
Promontory Summit, Utah.
    The ground facilities don't match with the air facilities. 
Gates and terminal facilities are not interchangeable. Wide 
body gates are fungible with regional gates. New entrant 
carriers can't use multiple terminals. We have a variety of 
business arrangements that can't be overcome.
    The professors always assume in a way it is our 
responsibility, but they have never figured it out. It 
highlights a fundamental flaw that, despite this attempt, this 
obsession with market-based solutions is an ideological 
solution.
    The auction scheme strongly favors big carriers. It doesn't 
really help the small ones. We are concerned about 
destinations, the impact on small carriers.
    There are so many cities that are vulnerable. They are in 
our testimony. It is not just a New York phenomenon. It has 
been proven elsewhere.
    Let me just close by saying the bottom line is it is 
capacity. We need to focus on capacity. It is clear that if 
capacity is not added in the short term, there needs to be 
something like a cap.
    There needs to be something like IATA scheduling. There 
needs to be a robust buy-sell rule. But in the long term, it 
has to be capacity. That is what it is all about.
    We are advancing many initiatives to improve capacity in 
the New York region, building new facilities, really trying to 
guarantee passengers' accessibility and service, and we remain 
very committed to work with the FAA, with the DOT and the key 
stakeholders to come up with the right approach for New York.
    Thank you.
    Mr. Costello. The Chair thanks you, Mr. DeCota, and now 
recognizes Mr. May.
    Mr. May. Before I begin my remarks, Mr. Chairman, I would 
like to note as a proud member of Clan Donald, we have had a 
longstanding relationship with the Stewarts. So I am glad to 
associate with my friend, Mr. DeCota, here and also with 
Congressman Hall.
    Mr. Chairman, Members of the Committee, thanks for allowing 
me to appear here today. I would like to report good news about 
New York and the state of the Nation's industry. Unfortunately, 
I can do neither.
    Yesterday, we announced a revised 2008 forecast. Our 
airlines expect to lose in the range of $10 billion this year, 
a loss on par with the worst year on record.
    Soaring fuel prices are the sole reason for those losses. 
We face a $62 billion fuel bill this year. That number is 
greater than the combined fuel expenses for the first four 
years of this decade for the airlines. That grim news more 
clearly demonstrates why the airlines are so focused on 
improving efficiency in the New York airspace.
    Redesign of the badly outdated airspace structure combined 
with improved operational measures and technologies will 
significantly increase system agility. Smarter, more efficient 
aircraft departures, routings and landing sequences mean 
reduced fuel burn and cost savings. Thus, upgrading that 
outdated air traffic control management system is an absolute 
key priority right alongside safety for the airlines.
    As we start the busy summer travel period, meaningful 
relief in New York is going to unglue, if you will, the rest of 
the Country, even further reducing fuel burn and wasted time.
    Why? Because although New York has 12 percent of the 
operations system-wide, it creates 45 percent of the system 
delays. There is no question that the ripple effect from relief 
in New York will be significant throughout the Country.
    Candidly, New York passengers, especially those coming from 
small communities, will not escape current capacity cuts. 
Service may be pared back as fuel prices further erode the 
carriers' bottom line. That means access will be constrained, 
hitting the business and leisure traveler and the entire travel 
and tourism industry hard.
    Mr. Chairman, I know this Committee is deeply concerned 
about what is being done to reduce congestion and flight delays 
in New York, the financial and cultural center of this Country, 
a magnet for visitors from all over the world.
    Along with the grim news about the airline industry, I have 
to bring you some grim news about New York. Based on what we 
have seen since the first of the year, we are not encouraged.
    So you might ask yourself what the Department is doing 
about the ever-growing congestion in New York to make sure that 
passengers, shippers and airlines and others can get where they 
want to go on time, and the answer is not much. The lack of 
relief is despite the fact that airlines have accepted caps at 
all three airports, reduced flights at peak hours, readjusted 
schedules and selectively upgraded our aircraft.
    Throughout at the airports, the number of planes that move 
in and out each day, is down the lowest in a decade. Although 
we are meeting with a newly appointed New York czar later this 
week, by all accounts, only a very small percentage of the 77 
capacity enhancements identified by the New York ARC have been 
fully implemented.
    There is no real sense of urgency to get these things done 
today and not tomorrow. The three-year implementation time 
line, frankly, is unacceptable. New York and the rest of the 
Country need relief now.
    Instead of moving forward with the capacity enhancements 
and airspace design with every available resource, with all 
deliberate speed, DOT is pushing congestion pricing and slot 
auctions, completely unproven textbook experiments that every 
graduate student would love to pursue, but no one in the 
aviation world has ever used successfully.
    In the next few months, DOT seems intent on leaving a 
legacy of failed but extremely costly experiments that do 
nothing to reduce congestion, and flight delays in New York or, 
for that matter, anywhere else. In addition to limiting the 
public's access to New York, auctions and congestion pricing 
rob the airlines of years of investment and planning as we make 
clear in our written statements.
    Congestion pricing and slot auctions are unlawful, unfair, 
incredibly costly to passengers, airlines and the economy. 
These proposals have been tried and failed elsewhere, and they 
are not going to work here.
    Our prescription for New York is simple: Stop talking 
ideology and experiment and start leaving a legacy that will 
help, not hurt, the Country.
    Devote all the resources necessary right now to implement 
New York airspace redesign and related initiatives.
    Work with the Port Authority and air traffic controllers to 
implement the near-term capacity enhancements identified last 
year by the ARC.
    Work with the Department of Defense as well as Congress, if 
necessary, to open up new airways on a more permanent basis.
    Accelerate development and implementation of technologies 
that will bring us NextGen. We talked about it earlier.
    And, deploy the worldwide scheduling guidelines.
    Mr. Chairman, the ATA and its members are committed to 
getting the job done with the right solutions. We commend 
Senator Schumer, Congressman Meeks and others who have 
introduced legislation to prohibit the Department from engaging 
in this folly, and we commit to continue to work with you.
    Thank you.
    Mr. Costello. The Chair thanks you, Mr. May, and now 
recognizes Mr. Faberman.
    Mr. Faberman. Good morning, Chairman Costello, Ranking 
Member Petri and Members of the Committee. I am pleased to be 
here today to talk about issues that are critical to the 
Nation's air carriers, communities and to the traveling public.
    Our member airlines are dedicated to providing affordable 
airfare options to all American travelers who receive 
significant benefits when low fares are available.
    We thank this Committee for holding this hearing, for your 
dedication to enhancing the Nation's air traffic system and for 
supporting the growth of air commerce and airline competition.
    We are at a point in time that if steps are not taken to 
ensure the dream of deregulation will remain an essential part 
of U.S. airline service, we may see the disappearance of travel 
options for millions of travelers. Unfortunately, these are not 
issues.
    Let me read a statement: Throughout the year, there were 
strong indications that the airport and airways system was on a 
verge of saturation. The airports serving Chicago, New York and 
Washington and the airways system connecting them was simply 
congested during too many hours each day.
    That statement was made in 1968.
    We absolutely fully support expanding capacity, system 
changes and what is necessary to help the system run smoothly 
and to expand. However, other things must also be done to keep 
options available, particularly supporting deregulation and 
competition.
    We are at a defining point in history. We have seen several 
carriers, including low cost carriers, file for bankruptcy at 
the same time, as Jim May noted, costs are out of control and 
continue to rise.
    While we are supposed to have open markets and a 
deregulated system as a result of the significant increase in 
operations added at the New York airports, these airports are 
again closed to competition. The current slot system that has 
allowed the sale of slots has not promoted competition nor has 
it improved operations. Airports that are slot-controlled have 
less low fare service and competition than most other airports.
    When addressing closed airports, the Department has 
correctly stated that it is important to preserve competition. 
As part of a solution to address congestion, the Department has 
proposed a market approach that includes an auction.
    While there are legitimate questions about the authority to 
impose auction approaches, we applaud the Department for 
exploring the options to promote competition. It has been a 
long time since steps were taken to make sure that would 
happen.
    While an auction approach may not happen and may not be 
completely possible, steps must first be taken to make sure 
competitive options survive the current situation faced by the 
industry. As many carriers announce reductions in operations at 
major airports, the elimination of aircraft from their fleets 
and possible mergers, now is the time to start withdrawing some 
slots in facilities and make them available to carriers with 
small numbers of slots.
    As competition is addressed, we do not object to exploring 
market mechanisms and considering all options if specific steps 
are taken for new entrants and limited incumbents. Any 
mechanism must be a blind sale transfer allocation system as 
the Department of Justice has said. If not, then those that 
control will continue to control.
    And, we have to address the significant increase in 
operations of regional jets at major airports, although we 
fully agree with comments made here this morning that small 
community service must be preserved.
    This Committee has played an active role in improving the 
Nation's aviation system and in opening doors to competition.
    Some of the actions being taken to address delays and 
congestion could forever close the door on competition and 
prevent the growth of small carriers and maybe see more of them 
disappear.
    Our dream of deregulation is to create a high-tech, safe, 
delay-free and secure system that maximizes consumer choices 
and ensures that low fares are available to all consumers and 
all communities. Let's not make that dream just a memory. 
Instead, let's continue to work together to make sure that this 
becomes a reality.
    We look forward to continuing to work with you on this and 
all other matters.
    Thank you.
    Mr. Costello. The Chair thanks you, Mr. Faberman, and now 
recognizes Mr. Lavin.
    Mr. Lavin. Thank you, Mr. Chairman and distinguished 
Members of the Subcommittee for the opportunity to represent 
IATA's 230 member airlines at this important hearing today.
    Over the past nine months, I have spent much of my 
professional time representing IATA's members' interest before 
DOT on the issue of New York congestion. I'd like to share my 
thoughts on what has been an extremely frustrating and 
counterproductive DOT process.
    First, IATA believes that the one significant step DOT has 
taken over the past nine months to address congestion in New 
York was to designate JFK and Newark as level three congested 
airports under the principles of the Worldwide Scheduling 
Guidelines or WSG. In doing so, DOT employed an international 
standard utilized at 140 airports around the world to manage 
congestion.
    IATA supported these temporary caps under the WSG 
principles as long as they were accompanied by a renewed FAA 
commitment to increase capacity at the region's airport.
    The FAA deserves credit for taking up this challenge, and 
today we estimate that by the end of this year they will have 
completed 60 percent of the 77 technology and procedure 
improvements recommended by the Aviation Rulemaking Committee 
to increase capacity in the region. While more work needs to be 
done, we are pleased with the efforts to date and urge this 
Subcommittee to support the FAA in this important initiative.
    While the FAA has been addressing congestion, DOT has spent 
the last nine months pursuing a quixotic mission to use the New 
York challenge as an opportunity to impose their free market 
pricing views on the industry. After three months of ARC 
meetings, DOT was apparently surprised to find that it was not 
able to convince the airlines serving New York as well as the 
Port Authority that peak pricing and slot auctions were the 
best way to manage congestion at the airports.
    Knowing that Congress would not grant it the authority to 
impose congestion pricing directly, DOT instead moved to change 
their internal rules to authorize airports to implement their 
own peak pricing schemes in contradiction of ICAO policies and 
international law.
    Not resting there, DOT is now seeking to establish that 
airport slots are the property of the U.S. Government and that, 
supposedly, rich airlines should not receive them without 
compensation in return. DOT is now proposing to lease their so-
called property and, at the same time, confiscate significant 
numbers of slots from carriers that have invested millions in 
these airports to support their operations.
    To be clear, DOT's auction proposal has nothing to do with 
curbing congestion and is unnecessary to protect competition at 
these airports. If DOT wanted to protect competition, one would 
expect them to implement the WSG as similarly congested 
airports in London, Paris and Frankfurt and 137 other airports 
around the world have done before them.
    While some have challenged the WSG as anti-competitive, the 
facts indicate otherwise. London Heathrow has been operating 
under the WSG since 1993 and has seen 25 new entrants over the 
past 5 years including Continental, Northwest, U.S. Airways and 
Delta in the past 6 months.
    JFK, Newark and LaGuardia have either been capped or 
constrained for a long time following WSG principles, and yet 
they remain some of the competitive airports in the world.
    In its Newark-JFK NPRM, DOT acknowledges that WSG is well 
understood and an internationally-recognized system of slot 
allocation at congested airports and, indeed, adopts many of 
the key WSG principles. However, at the same time, DOT argues 
that a cap under the WSG without so-called market mechanisms 
will not allow for enough competition.
    One must question what competition danger DOT sees that the 
other 140 airports utilizing the WSG have missed.
    IATA is very concerned about the dangerous precedent DOT is 
setting internationally by pursuing these economics 
experiments. U.S. and international law, ICAO policies and 
several court cases have served to restrict governments' 
ability to pursue congestion pricing in the past. However, 
since DOT embarked on this mission, we have already seen an 
aggressive congestion pricing scheme being proposed by Brazil 
and understand that other countries are now considering the 
same.
    We are particularly concerned that foreign governments will 
see market mechanisms as an opportunity to raise new revenues 
from the airline industry to address general budget shortfalls.
    Mr. Chairman, I do not need to tell you that this industry 
is facing an economic crisis beyond that which we experienced 
post-9/11. At currently predicted fuel prices, IATA members 
could face an additional financial burden of $99 billion over 
the next 12 months compared to 2007. Twenty-four airlines have 
ceased operations or entered bankruptcy over the past five 
months.
    To put it bluntly, there could not be a worse time for DOT 
to pursue market experiments that would impose hundreds of 
millions of dollars of new costs on an industry in crisis, an 
industry that today supports 7 percent of global GDP and 32 
million jobs.
    Thank you for your consideration.
    Mr. Costello. The Chair thanks you, Mr. Lavin.
    Mr. Gribbin, let me begin with you. You have heard in my 
opening statement, I question the legal authority that the 
Department has to proceed down this path. You have heard 
witnesses here today. You sat and just listened to them.
    I think everyone questions your legal authority of the 
Department. So, for the record, why don't you detail for us why 
you believe, what statute exists that gives you the legal 
authority to move forward with this proposal?
    Mr. Gribbin. I would be glad to, Mr. Chairman.
    I think, as the Committee may be aware that in the notice 
of proposed rulemaking for LaGuardia that was supplemental by 
the recent supplemental notice of proposed rulemaking, the DOT 
noted that we did not have the legal authority to use market 
mechanisms to allocate slots. Regretfully, that was inartfully 
worded.
    What the real intent was saying is that what the DOT would 
prefer before doing this is clear statutory authority focused 
directly on the auction or congestion pricing of slots.
    Because you now have the reauthorization bill, we were sort 
of thrown into an environment where we needed to explore what 
legal authority already exists and whether that legal authority 
allowed any type of use of market mechanisms.
    What, in essence, our legal theory rests upon is the fact 
that slots are property. There is a long history of slots being 
treated as property. The Court of Appeals for the First 
District in a bankruptcy hearing case found that they were 
property.
    I think right now it is pretty clear that airlines have 
booked the value of slots on their books. They have traded 
them. They have leased them. The FAA has allowed that trading 
and leasing to occur, so that it is pretty clear that these 
slots are property and that the airlines, prior to the repeal 
of HDR on January 1st of last year, that the airlines held a 
property interest in these.
    HDR was repealed. That is now gone. The property interests 
have now been sort of wiped away, which means that now the FAA 
has a complete bundle of property interests in these slots.
    The FAA has broad, expansive statutory authority to lease 
both tangible and intangible property. So, if the FAA has 
property, it can lease that property to others for others to 
use it.
    Slots, as a form of intangible property, can be leased by 
the FAA. So, really, what we are talking about is just a lease 
of intangible property by the FAA.
    Where the auction kicks in is if the FAA wants to lease 
that property to the entity that is going to make the highest 
and best use of that property. That normally is the entity that 
will pay the most for the property.
    So the auction, in essence, is just the mechanism used to 
determine who values that leasehold the highest, and then FAA 
will transfer that leasehold, as we propose, for a term of 10 
years.
    I see the shaking of heads.
    So, in essence, it is FAA property. FAA has broad authority 
to lease property. They are going to lease property.
    They don't have to use an auction mechanism to lease 
property. They could lease property in any mechanism they 
wanted to. We thought the auction mechanism was the best one to 
identify who values that property the highest.
    Mr. Costello. I would ask the witnesses if they would like 
to comment on Mr. Gribbin's authority as he has explained it.
    Mr. DeCota.
    Mr. DeCota. Thank you, Mr. Chairman.
    In our written comments back to the DOT for the docket for 
LaGuardia, we document extensively some of our beliefs about 
their lack of legal authority.
    We argue that they cannot dispose of property they do not 
own. We also say that they can't rely upon that kind of 
authority to acquire property, to circumvent basically their 
total lack of authority to do with what they are doing. 
Congress has not given them the authority to raise this revenue 
or to lease these slots via auctions.
    I think the legal history is very clear. I think there is a 
lot of unanimity up here.
    There is an old Sesame Street song: One of these things is 
not like the other. Four of these things are kind of the same.
    I think you will find from four of us, you will get the 
same legal argument.
    Mr. Gribbin. It is not often I debate Sesame Street 
arguments. So I thank Mr. DeCota.
    [Laughter.]
    Mr. Costello. Mr. May.
    Mr. May. I would simply reiterate what my colleague, Mr. 
DeCota, said and not take any more of the Committee's time.
    Mr. Costello. Mr. Gribbin, you heard Mr. DeCota testify 
that over a period of time that the Port Authority made 77 
recommendations to the Department, and I think Mr. DeCota said 
he believes that only 16 of them have been implemented. Do you 
want to comment on why others have not been implemented or any 
comment at all?
    Mr. Gribbin. Sure. I would be glad to comment.
    I would also like to comment--Bill and I have talked about 
this in the past--that actually the idea of auction slots came 
from the Port Authority. It was proposed by the Port Authority 
in 2001. We had a conversation about this when I was visiting 
the Port Authority in New York.
    The Port Authority says additional experience led them to 
the belief that auctions were not a good mechanism. We believe 
they actually got it right in the first place.
    But, yes, on the point of--I lost the question. I am sorry, 
sir. A comment on the 77 operational improvements?
    Mr. Costello. Yes. Have the balance been reviewed and 
rejected or what is the status?
    Mr. Gribbin. In October of last year, as we kicked off the 
ARC, we had a long discussion over what is the best way to 
address congestion in New York, and both the Port Authority and 
the ATA at that point in time were not supportive of market 
pricing and were not supportive of caps.
    Their answer was we ought to do operational improvements, 
and so they came forward and announced at a press conference, 
17 operational improvements that the FAA should do instead of 
imposing caps, instead of using a pricing mechanism.
    Our concern was that while 17 operational improvements, 
while good, wouldn't provide the additional capacity we needed. 
That said, every one of those 17 operational improvements will 
be finished by the end of this summer. So we have moved forward 
on those operational improvements.
    Mr. May said that FAA had no urgency about expanding 
operational improvements. I would argue just the contrary. In 
fact, I am incredibly impressed that the FAA will be able to 
get every single one of those 17 done by the end of this 
summer.
    Now we didn't want to stop there. We were looking for any 
and all ideas that could possibly improve capacity in the New 
York airports, and so the list of 17 grew and grew and grew and 
grew and got to 77 operational improvements.
    Again, we are working through that list. I think we 
probably have about half of those underway right now. Some of 
them have yet to be fully defined as to exactly what that 
operational improvement will detail, but I think to argue that 
the DOT and the FAA have set aside an interest in expanding 
capacity in order to pursue an interest in pricing is just 
inaccurate.
    Mr. Costello. Mr. DeCota, do you want to comment?
    Mr. DeCota. Yes, I would like to respond to the comment 
that at one point we were supportive of auctions. The reality 
is at LaGuardia Airport, back in the year 2000 when we were 
facing rampant congestion, we looked at a variety of different 
solutions to try to address the capacity issues.
    Number one, at that time, we thought it was a LaGuardia-
specific situation. You have a 700 acre airport, two 7,000 foot 
intersecting runways, huge demand by business and high end 
domestic customers, more airlines wanting to offer service than 
there is ground capacity in terms of the number of gates.
    We, as airport operators, felt we had the proprietary 
responsibility and right to try to figure out a solution, and 
we came up with what we call a tool kit of options to explore: 
congestion pricing, auctions, administrative rules, fixing the 
old slot rule.
    As we looked at auctions and particularly now that we find 
out it is not LaGuardia problem, we have a New York problem, 
and the New York problem isn't just the acreage. We have nine 
runways. We have three major airports. Yet, somehow the 
airspace can't accommodate the number of planes, as I said in 
my testimony, that it did 10 years ago.
    You start looking at those solutions, and auctions quickly 
fell off the map. It fell off the map because of the added cost 
to the airline industry and the customer and possible 
elasticity of demand which fewer people would come into New 
York, the blow to tourism, the fact it doesn't really address 
congestion particularly in the way it is being described and 
the fact that it really masks the problem.
    It masks the problem that the Federal Government has 
absolutely failed in regard for airspace capacity. It creates 
enormous instability now and particularly when the airline 
industry is in such bad financial condition.
    It is an absolute experiment. The FAA and DOT have 
described it as trial. It is not a trial. It is an experiment, 
and it is a scary experiment, and it does nothing to alleviate 
congestion. So, at the end of the day, we dispelled that 
notion.
    And so, we moved for capacity. In fact, it was we, our 
Chairman, Mr. Tony Coscia, who put together a flight delay task 
force of interested parties in the area. We had CEOs of major 
corporations, heads of state transportation authorities, 
airline CEOs and everyone.
    The technical committee came together with a set of 77 
recommendations which then the ARC, the Aviation Rulemaking 
Committee, adopted. Our hope is that they all get implemented 
in one way or another.
    Now time and events can eclipse some of them, but it has to 
be a capacity solution. We have to find out, as I said in my 
testimony, why has New York airspace shrunk. The law of physics 
tells me airspace doesn't shrink, so why am I handling less 
after I have spent $15 billion on ground capacity and as I am 
spending $6 billion more?
    Mr. Costello. The Chair thanks you and now recognizes the 
Ranking Member, Mr. Petri.
    Mr. Petri. Let me just quickly follow up on that. Do you 
have any suspicion as to why it has shrunk? Is it, as Senator 
Schumer said, Federal mal-administration of the air traffic 
control situation or what?
    Mr. DeCota. Well, ultimately, it has to do with somehow how 
the entire traffic mix is being handled. We feel that the air 
traffic control system needs to get updated.
    You mentioned yourself, Mr. Petri, that there is a need to 
move forward on NextGen. I mean I think that is vitally 
important, that we get past these older, antiquated radio, 
radar-based, land-based radar beacons that navigate aircraft 
and move toward satellite-based technology.
    Right now, there is this constellation of satellites 
circumnavigating the earth that are quite available, and there 
are planes equipped with flight management systems and global 
positioning systems, and the FAA has pioneered and piloted a 
number of technologies that have great acronyms: ADS-B, ASDX, 
RNAV, RNP. All of those things together have a great deal of 
capability to handle traffic more efficiently.
    Why we are handling less traffic now with a higher level of 
delay is beyond me and is something really the FAA and the DOT, 
as a parent entity, would really have to be able to address. 
But it is confounding because we think with nine runways we 
should be able to do a lot more.
    Mr. Petri. This is for Mr. May or anyone who wants to 
answer it.
    You took EC 1, the way a lot of kids do in college. Why has 
the price of fuel has gone up for everyone? Is it not just one 
airline or another? So why is it that this translates into 
tremendous losses for the airlines rather than higher ticket 
prices for the traveling public?
    Mr. May. I think, Mr. Petri, it is a function of the 
fiercely competitive nature of the business. We have had, I 
think, somewhere in the range of 20 fuel increases or price 
increases so far this year.
    Be that as it may, ticket prices are still a bargain. 
Believe it or not. The average ticket one way right now, as of 
the first of June is about $191. The cost of fuel per passenger 
on that same flight is on an average of $138. Add another $20 
to $30 for taxes and fees, and that leaves the airlines 
something on the range of $27, $28 to manage all other 
expenses: wages, benefits, repairs, maintenance, you name it.
    So it is a fiercely, fiercely competitive business, and I 
don't think there is an airline out there that wouldn't like to 
find a way to raise prices to cover the cost as many other 
industries have. My dry cleaner at home has a fuel a surcharge, 
for crying out loud.
    All those are challenges in front of us.
    Mr. Petri. In history, I read they had this happen in the 
railroad industry when it expanded west. I think the Penn 
Central and New York, and they got below cost of moving 
freight. Vanderbilt broke his competitor by basically closing 
down his railroad and booking all his freight on the other 
line.
    Maybe some airlines ought to try that. If they are spending 
more to fly their planes and pay the taxes and everything else 
involved than they are getting in revenue, they might as well 
put the passengers on someone else's flight.
    Mr. May. Mr. Petri, I think what you are seeing is the 
capacity cuts that are taking place in the industry.
    I testified yesterday that we have about 100 communities 
that will almost certainly lose service by the end of this 
year. That number could grow to 200 because we are simply not 
going to fly routes that are wholly uneconomical, that are 
guaranteed money losers, and the public is going to be the 
worse for that.
    Now, off the subject a little bit of today's hearing, I 
think this Congress needs to understand that it is time for a 
bipartisan approach that is badly, badly needed to make some 
very short-term, near-term solutions available that address the 
high cost of fuel.
    It is fine to have long debates over nuclear and supply 
side solutions and making sure we can drill offshore and not 
drill offshore and ANWAR or not ANWAR, all of those issues. But 
the reality is those are long-term solutions.
    We happen to think, many other experts in the business 
happen to think there is a significant premium for speculation 
in the price of oil. Some have suggested it is as high as $40, 
$50 per barrel.
    I think this Congress, in a bipartisan way, ought to force 
the CFTC to begin to close some of the loopholes that exist in 
the law and begin to address that immediately. It doesn't fall 
within the jurisdiction of this Committee, but it is something 
that is critically necessary for the future of the economy of 
this Country and the airlines.
    Mr. Petri. Thank you.
    Mr. Chairman, I just have one more question. I apologize. I 
will yield the time back at another hearing.
    This was really on the auction question or leasing property 
or however you want to characterize it. Real estate developers 
or the GSA or other people spend a lot of time figuring out how 
they structure these things. I guess there is a rulemaking 
process going forward.
    This may not be the most ideal place to figure out how to 
structure because of all the size and scope of the congestion 
problem and everything else, and you may end up giving the 
whole thing a bad name.
    The Mayor of New York has been trying to do congestion 
pricing. We are trying to do it with highways.
    You can lease a whole building or you can do it room by 
room, periods of time. There are a 101 different variables in 
how you structure. You can do it as a percentage of the airline 
revenue, so that would help new entrants get in because it will 
just be like a passing through, or you can require capital up 
front and that favors the bigger guys.
    So it is not automatically more competitive depending on 
how you structure the market. Could you address that?
    Have you been considering this, what is really going on 
here?
    Mr. Gribbin. Yes, Congressman Petri.
    I think, first, it is important to understand, as I 
mentioned in my opening statement, we want to have service that 
is reliable and affordable. If we don't have operational 
improvements to meet demand, then we have to have some type of 
cap. If we have a cap on its own, it is anti-competitive.
    The Chairman mentioned we raised the cap in Chicago. We 
announced we are going to lift the cap in Chicago.
    Mayor Daly said, flight caps limit economic growth in the 
region and if left in place serve as a disincentive for future 
investment at the airport. Flight caps also negatively impact 
travelers by artificially constraining the market, forcing 
higher fares and fewer choices.
    That is Mayor Daly speaking.
    So I am not sure this is an ideological debate as much as 
it is one about what happens to a market when you artificially 
constrain the amount of competition that is allowed in that 
market.
    If we don't have enough capacity, which I think everyone 
agrees we are unlikely to develop in the near term enough 
capacity to meet demand, and then if we have to put in place 
some type of managed controls like caps. I think it is also 
imperative that we have as part of that, underneath the cap, an 
auction or some type of market mechanism.
    Everyone here has said that auctions don't alleviate 
congestion, and that is partially true. The congestion is 
managed with the cap, but the problem is the cure of a cap has 
a very nasty side effect, and that nasty side effect is limited 
competition which brings fewer choices and higher fares.
    So what the DOT is trying to do is fix the reliability 
problem with a cap and fix the affordability problem with some 
type of market mechanism, in this case, an auction.
    Now there are a wide variety of ways to structure auctions 
and how they work. We have proposed rulemakings and we are 
accepting comments on them because, as you noted and I think 
Mr. DeCota would agree and Senator Schumer mentioned, since 
this is in New York City airspace, is is really important.
    We want to get this right but also realize that we are 
proposing to auction a very small slice of existing capacity. 
We are not throwing up 100 percent of the slots for auction. 
What we are proposing auctioning works out to be about 7 to 8 
percent of the slots over the course of 5 years.
    So I think what we have done is we have tailored the 
solution to the affordability problem. We have a solution that 
is very small in scope, and we have a solution that we think is 
manageable in our ability to implement it.
    Mr. Costello. The Chair thanks you, Mr. Petri, and now 
recognizes the distinguished Chairman of the Full Committee, 
Chairman Oberstar.
    Mr. Oberstar. Thank you, Mr. Chairman and Mr. Petri for 
getting together to hold this hearing.
    I read your testimony last night and that of the other 
witnesses. Slots are public assets.
    Mr. Gribbin. That is correct.
    Mr. Oberstar. The airspace is the common heritage of all 
Americans. The notion that airlines can make slots their 
private property to accrue value, then to be able to sell or 
lease that asset and pocket the value is repugnant, the only 
way I can describe it, to me and to the notion of a value of an 
airspace held and used for the benefit of all Americans and for 
our national and regional economy.
    For the Department to take this step, to assume unto itself 
authority to hold an auction and have some value and let that 
value accrue to the airlines is an anathema to me.
    You can make all the judicial, legalistic pronouncements 
you want. Just policy-wise, it is wrong.
    What is the next step? Privatizing the DOT? Outsourcing it?
    What has been done? What has the Department done to extract 
more value out of Stewart Airport?
    Mr. Gribbin. What has the Department done to extract value?
    Mr. Oberstar. Yes, that is the question.
    Mr. Gribbin. We have said very positive things about the 
Port Authority.
    Mr. Oberstar. What have you done?
    Mr. Gribbin. I am not sure we had a role to do anything.
    Mr. Oberstar. Yes, you do. You are the Department of 
Transportation, the FAA. You have a huge capability. If you 
think you can arrogate unto yourself the power to auction 
slots, then you surely have a whole host of authorities you can 
deploy to support development of Stewart.
    What about Atlantic City?
    There was a grant made to Atlantic City for a taxiway 
development. They have a 10,000-foot runway. They need surface 
transportation, commuter rail or light rail to and from the 
airport. That could provide some relief. What have you done 
about that?
    What have you done intermodally to relieve the pressures?
    Mr. Gribbin. Mr. Chairman if I could, sir, I will circle 
back to your first statement about slots being an anathema.
    Mr. Oberstar. Sure.
    Mr. Gribbin. You should know, historically, slots have been 
held by the airlines and have been traded by the airlines and 
sold by the airlines.
    Mr. Oberstar. I know that, and I think that is wrong.
    Mr. Gribbin. So our proposal actually limits_
    Mr. Oberstar. Comes the time, we are going to make sure 
that never happens again.
    Mr. Gribbin. I think most of the folks sitting to my left 
would argue for Worldwide Scheduling Guidelines which, in 
essence, would pass an in-perpetuity right to the airlines, 
complete ownership, in effect, with some limitations on it to 
the airlines for those slots.
    What we propose instead, is a limited 10-year interest and, 
in addition to that, not just granting incumbents 100 percent 
ownership in what they are operating currently.
    Mr. Oberstar. Well, in that vein, what are you doing to 
carry out the rulemaking of 2000 that provided that carriers 
must certify there is new service, that they are stage three 
compliant, and that there will be additional capacity created?
    Mr. Gribbin. Well, we have worked on capacity. Let me start 
with the last one. On the capacity created, as I mentioned 
before, we pursued very aggressively the 17 operational 
improvements that were suggested by the Port Authority and the 
ATA to expand airspace.
    In addition, we are pursuing aggressively the NextGen 
program.
    Mr. Oberstar. How does the slot auction address those 
issues?
    Mr. Gribbin. The problem we are facing in aviation right 
now, as you are very aware, is that we don't have the ability 
in the course of the next three, four, five years to ramp up 
capacity to meet demand. We have demand exceeding capacity in a 
few spots around the Country: New York, San Francisco, Las 
Vegas, Houston. I won't list them all, but demand is 
outstripping supply.
    The first and I think preferred approach by everyone on 
this panel would be to increase supply so that those who want 
to fly in an airport can fly in an airport and they don't get 
caught in the kind of horrific congestion we saw last year.
    Mr. Oberstar. Okay. Look, you are wandering away from me. 
What is the arrival capacity of LaGuardia, of JFK, of Newark?
    Mr. Gribbin. The cap at LaGuardia is 75.
    Mr. Oberstar. Not the cap, what is the capacity?
    Mr. Gribbin. The cap is set at----
    Mr. Oberstar. I don't want to hear about the cap. What is 
the capacity of air traffic control to handle arrivals under 
ideal weather conditions at LaGuardia, at JFK, at Newark? Do 
you know that?
    Mr. Gribbin. Yes, sir. It is where the cap is set. That is 
why we use the cap.
    Mr. Oberstar. No. Give me the number. What is it?
    The cap is an artificial figure. The actual arrival 
capacity of those airports is different from the cap. You don't 
understand that, apparently.
    Mr. Gribbin. Actually, sir, I do understand that.
    Mr. Oberstar. Well, then tell me what the number is.
    Mr. Gribbin. The number is 75 at LaGuardia, 82, 83 at 
Newark and JFK.
    Mr. Oberstar. Okay. What have you done to enhance that 
arrival capacity?
    Mr. Gribbin. We have implemented New York airspace redesign 
or we are in the process of implementing New York airspace 
redesign. We pursued_
    Mr. Oberstar. Yes, but that, for various reasons not 
entirely within your control, hasn't been implemented.
    I still think you are talking or you are referring to the 
cap and not to the real capacity. I think we would get a better 
answer if I talked to air traffic controllers.
    Mr. Gribbin. I am sorry. I don't mean to disagree or argue 
with you.
    Mr. Oberstar. That is all right. You can argue with me.
    Mr. Gribbin. The cap is set. I mean the goal of placing the 
cap was----
    Mr. Oberstar. I know how the cap was set. The point is it 
is an artificial number.
    Mr. Gribbin. Well, it is equally artificial to say, what is 
the operation capacity of the airport? If you plot JFK out of 
New York and you put it in Iowa, you could probably get over 
100 operations an hour in that airport, but the problem is 
JFK's airspace conflicts with LaGuardia and Newark, and to a 
lesser extent----
    Mr. Oberstar. How many RJs operate out of LaGuardia? How 
many operations a day are there for RJs?
    Mr. Gribbin. For regional jets, Mr. DeCota would probably 
be in a better position to answer that.
    Mr. Oberstar. All right.
    Mr. DeCota. Yes, Mr. Chairman. There is still a large 
number of RJs. The fact is that the average seating capacity at 
those airports is still relatively low.
    If I come up with round numbers, there is about 70 people, 
on average, sitting on a plane at LaGuardia Airport. That 
indicates a lot of RJs. At Kennedy Airport, the number is about 
110. At Newark, it is probably about 100.
    But small planes do have a role. We have always said small 
planes to small places make enormous sense. Small planes to big 
places don't make any sense, and we still see a lot of RJs 
operating. Even into the Washington, D.C.-New York corridor 
where we have 150 plus flights a day, you still see RJs that 
are being deployed.
    Mr. Oberstar. The RJs have a slower takeoff rate than the 
larger capacity aircraft, right?
    Mr. DeCota. Yes.
    Mr. Oberstar. That has a consequential effect on your 
capacity, right?
    Mr. DeCota. Exactly. Separation standards between different 
sized planes, also the difference between propeller planes 
versus jets, they fly at different altitudes.
    Mr. Oberstar. So couldn't there be some accommodation, some 
shifting of certain types of service to Stewart, to Atlantic 
City at certain times of the day to create more capacity?
    Mr. DeCota. Our big goal in purchasing Stewart, more than 
size of aircraft, was to figure out a way.
    We have a regional airport system that is handling 110 
million passengers. We know that 10 million of those passengers 
would either prefer or be indifferent to using Stewart Airport 
if their airline, their destination and their time of day, 
their airfare were available. That is not going to happen 
anytime soon in a very limited air service airport.
    The goal is to figure out a way as to how to attract more 
of those people that now use Newark, Kennedy and LaGuardia to 
actually use Stewart Airport, and your question is right on the 
mark. What do we do to try to make that happen?
    The Port Authority's capital plan: We purchased the airport 
November 1st. The program, $500 million initially is just 
capital investment. A lot of that is infrastructure in a very 
deferred maintenance place but also some capacity improvements, 
and then we are going to do an air service development program 
and see how we might lure more air service. That, in turn, 
would get people who live near Stewart to use Stewart.
    Mr. Oberstar. Now you are moving in the direction of an 
answer that I want from the Department of Transportation and 
not getting it.
    They are a multimodal agency. They are not using all the 
assets at their disposal to enhance the opportunities to 
relieve the capacity constraints of the airports. So they are 
shifting to a so-called market-based proposition that does 
nothing to increase capacity.
    That is enough. It is an appalling lack of imagination, 
frankly, from this Department.
    Mr. Costello. Thank you, Mr. Chairman.
    Now the Chair recognizes the gentleman from Tennessee, Mr. 
Duncan.
    Mr. Duncan. Well, thank you, Mr. Chairman.
    Five or six weeks ago, we were told in a hearing in the 
Highway and Transit Subcommittee that 935 trucking companies 
had gone out of business in just the first quarter of this 
year, and that survey only counted trucking companies with 5 
trucks or more. Now we hear in Mr. May's testimony that eight 
airlines have ceased operations since 2007 and one more is in 
bankruptcy.
    I can tell you that it is not that most people think just 
about the gas because it is so obvious as to how it is going up 
every day, but because gas and diesel fuel and aviation fuel 
have gone up and are going up more, everything is going to go 
up. You mentioned the dry cleaners, Mr. May, but everything is 
delivered at some point by trucks or trains or airplanes.
    You are exactly right. You made a good suggestion there. We 
need both short-term and long-term solutions.
    When President Clinton vetoed drilling in ANWAR in 1995 and 
several times since then, we have always been told, well, it 
wouldn't be an immediate help or an immediate solution, and 
that is true. But we told people years ago it would help out 
five or six or eight or ten years from now.
    George Will pointed out in his column a few days ago that 
if we were drilling there, the most conservative estimates are 
that we would have a million barrels a day that would have been 
flowing down here, 27 million gallons of gas a day.
    You know we don't need to drill all of our oil, but we need 
to drill some more or these speculators and these foreign oil 
companies are going to be able to keep on raising their prices, 
and we can do this in an environmentally-safe way.
    I have noticed over the years that most of these 
environmental radicals come from very wealthy or very upper 
income families. They have wanted gas to go up for years, so 
people would drive less. But I can tell you they are hurting a 
lot of poor and lower income and working people in this 
Country, and this situation is very close to shutting us down 
economically.
    Mr. Gribbin, let me ask you this. Mr. DeCota says in his 
testimony, cities such as Huntsville, Lexington, Des Moines, 
Flint, Bangor, Madison, Ithaca, Roanoke and, most important of 
all, Knoxville are in danger of losing service under these 
proposals.
    Others such as Myrtle Beach, Columbus, Richmond, Savannah, 
Jacksonville and Buffalo could see reduced service and higher 
air fares.
    Have you taken that into consideration and what do you say 
about that? Do you think he is wrong in that statement?
    Mr. Gribbin. Congressman Duncan, I can assure you the 
Department has no interest in affecting service in Knoxville.
    It is a legitimate concern. I think you can look at, again, 
the relatively small slice.
    I think what Mr. DeCota is referring to is if you auction a 
slot and it is available, the carrier most likely to win that 
auction is a carrier serving potentially a larger market. 
Although I am not sure that is always the case, that would make 
intuitive sense.
    So the way that we structured it is in LaGuardia, the 
perimeter rule stays in place. So you are going to have limited 
ability for long distance carriers or for international 
carriers to supplant local service at LaGuardia.
    And, we are talking about just over a percentage point a 
year in the slots that we are auctioning. So there is not going 
to be any major churning. There is not going to be an 
abandonment of service to small communities.
    I would also touch on the fact that there has been concern 
about the impact of auctions, the price that it might cost 
carriers and that those costs may be passed through to 
consumers.
    We have proposed two different auction regimes: one in 
which money goes to the Federal Government; the other, the 
money goes to the carriers themselves.
    Under the second one, there would be no net increased cost 
to carriers. So there should be no net increased cost to 
passengers. In addition, the cost of the auction is maybe a 
dollar a person whereas the cost of not having a competition 
could be tens or hundreds of dollars per passenger.
    So I don't think you need to worry too much about the 
service to small communities because of the very limited nature 
of these auctions.
    Mr. Duncan. Mr. May, how many flights have your airlines 
eliminated over the last few months? I didn't catch that.
    Also, I am wondering how these voluntary caps that were 
imposed back in December, how have they been working?
    Mr. May. Congressman Duncan, our summer schedule is 
relatively intact because it had been pre-sold. I think most of 
the significant capacity reductions will begin to be evidenced 
beginning in September. Although a number of changes have been 
announced, they haven't necessarily been put into effect.
    Most of the folks who are astute observers of the process 
suggest that if oil stays anywhere near what it is today, it is 
going to require across the board about a 20 percent cut in 
capacity which is absolutely extraordinary.
    In terms of the voluntary adjustments that have been made 
at JFK, Newark, et cetera, in the New York market, those went 
into effect 18 days ago on the first of June. I think it is a 
little early to tell. I will suggest, as I did in my testimony, 
that throughput is way down.
    Mr. Duncan. We have a briefing paper that said December, 
but I guess maybe that was when the agreement was reached.
    Mr. Faberman, real quickly, how many slots do your carriers 
have now? What percentage of slots or how many slots do they 
have in New York now?
    Mr. Faberman. Well, small, low fare carriers have a very 
small percentage of slots at both LaGuardia and Newark, maybe 4 
or 5 percent.
    The problem with the caps, although we understand why they 
are put in place, is that it completely wipes out any ability 
to add anything. When you have fewer operations at an airport, 
your costs are higher than carriers that have larger operations 
because you are paying a lot for people, you are paying a lot 
for facilities, and you don't have as many flights to spread 
those costs over.
    That is going to be another problem, and that is carriers 
that have limited numbers of flights may have to start cutting 
back those flights, and we have already seen some of that 
happen.
    Mr. Duncan. All right. Thank you very much.
    Mr. Costello. The Chair thanks you and now recognizes the 
gentlelady from California, Ms. Richardson.
    Ms. Richardson. Thank you, Mr. Chairman.
    Gentlemen, this morning, I represent the South Los Angeles 
area, kind of Long Beach, Carson and Compton.
    Mr. Gribbin, I would suggest that in addition to the 
Worldwide Scheduling Guidelines that has been of discussion 
today in addition to this whole caps idea, you may want to look 
at what we did there in Long Beach.
    We have a noise ordinance of 41 flights. There was much 
discussion of which airlines get which flights and the whole 
thing. What we ended up doing was establishing each airline got 
a certain amount of flights, and then the open available 
flights, it was done on a rotating basis.
    So, for example, let's say there were 10 flights available 
and let's say JetBlue could get one. Then American could get 
another one. United could get another one, and it would just 
keep rotating.
    If a particular airline wanted the use of the flight, they 
could use it. If they didn't, it rolled to the next airline.
    And so, I was looking at how the WSG is implemented, and I 
think you may want to consider looking at this as an option, 
and I can provide you with some contacts if you don't have it.
    I would just like to say that I think one of your worst 
fears of this panel is having elected officials who fly on a 
weekly basis. I just flew here on Sunday afternoon. My flight 
was scheduled at 4:30. My flight didn't leave until about 5:30, 
5:45.
    It wasn't because the plane didn't have gas. It wasn't due 
to a lot of the things that you are talking about. The reason 
why my flight didn't leave is we didn't have attendants 
available to open up the door and to get the flight going.
    So my concern is when we look at why these caps were 
originally established which was to eliminate the delays and 
the problems that we were having in the New York area, I think 
still, though, we have to have an honest discussion.
    I can tell you as a Member, if you were to come to us and 
say, if you could do these things, we could address these 
problems, I think you would have quite a few Members who would 
be willing to be supportive. But the problem is even with these 
things, you still continue to have problems.
    We should not have a situation in my area, for example, 
where two attendants come running up. The flight was supposed 
to have left at 4:30. They come running up at 4:40. We should 
have been on the plane at that point and gone. Their excuse 
was, oh, we just heard about we needed to man this flight two 
minutes ago, and we just finished a flight from Hawaii.
    So my pushback is I don't agree that it is all of the 
things that are talked about in here. I think it also a part 
degree to the lack of adequate personnel.
    Then we sat on the plane because we didn't have enough 
galleys, whatever, the things that hold the sodas. Then we had 
to wait another 20 minutes. I mean clearly there are multiple 
problems.
    What I would like to hear from anyone who would like to 
respond is, in lieu of these caps, what are you suggesting that 
we do? Because we want to work with you to fix it, but you have 
to be forward about fixing it, and that is what my concern is.
    Mr. May. I suspect that I would probably be the appropriate 
person to address your concerns, Congresswoman.
    First of all, my apologies on behalf of the carrier that 
your flight was not smoother. We are well aware of service 
issues that occur on many of our flights.
    But I think the fundamental point that we have tried to 
make here is that to the extent we can deploy Next Generation 
technologies, New York airspace redesign, all of these 
improvements to the airspace, the entire Country's airspace 
will move more quickly and efficiently.
    We will have greater abilities to navigate around weather 
systems.
    We can increase the overall capacity of the system so as to 
permit more efficient operations. That, by the way, also makes 
us far more fuel efficient and environmentally sound than we 
would be otherwise.
    Rather than have artificial economics caps on overall 
capacity, we would like to grow the system, make it more 
efficient, make it more positive so that we hopefully can get 
back on a more sound economic footing. That would be the 
direction we think it is most appropriate to head.
    Ms. Richardson. So could you provide this Committee with 
that list and what is prohibiting, what are the barriers that 
are prohibiting you from achieving that?
    Mr. May. I would be happy to do that. I think that the 
Committee has significant input from us on that point. We will 
repeat it as often as we need to.
    Ms. Richardson. I am a new Member. I came to Congress in a 
special election.
    Mr. May. Good.
    Ms. Richardson. Thank you.
    Mr. May. Thank you.
    Ms. Richardson. Yes, sir. You wanted to say something?
    Mr. Faberman. I just wanted to add that I agree with 
everything Mr. May said, but with your example, that is another 
reason why maintaining competition and promoting options are so 
critical for all consumers and all communities.
    Long Beach is one of the lucky airports that has options. 
Not every airport does, and I think that is why we also have to 
focus on not only expanding the system, making it better, but 
on making sure competition stays in place.
    Ms. Richardson. Okay. Thank you, Mr. Chair.
    Mr. Costello. The Chair thanks the gentlelady and now 
recognizes the gentleman from North Carolina, Mr. Hayes.
    Mr. Hayes. Thank you, Mr. Chairman.
    Mr. May, project yourself into the simulator. We are five 
miles from the outer marker, and we are in bad weather. We have 
some problems, and we have to get this thing on the ground. I 
will be right back to you.
    Mr. DeCota, freeze that thing. Why do people go Teterboro 
and LaGuardia instead of JFK or Newark, in your opinion? 
Location, right? It is easy to get into the city, assuming you 
get on the ground, assuming you get a cab and all that sort of 
stuff.
    So what I was discussing with Mr. Oberstar is we keep 
talking about the five pound diaper syndrome. A five pound 
diaper will only hold five pounds, and that is where the system 
is today until we get a more creative, imaginative approach.
    I just noticed the other day--I took the train from New 
York to Washington--far less hassle in terms of what is going 
to happen, things that can go wrong.
    There is a great airport that goes right up the train track 
at Martin State. It rides out of Baltimore, under-used airport, 
big long runway. How many Martin States are there around where 
we could put together kind of a different approach that people 
could utilize the benefits of both, bigger airplanes into New 
York, longer flights?
    That is worth looking at. So, as a thought, I would like 
for you to think about that.
    But back to your comment, Mr. May, you discussed a number 
of issues that are critically important for the airline 
industry. This is an industry that is crucial for commerce, the 
economy, the future of the Country.
    I just had a meeting with one of the major airlines before 
coming here, and I had the list, and it is important.
    All right, here we are. We are on the localizer. We are on 
the glide slope. We got one engine out. We got electrical 
problems. We got smoke in the cockpit.
    Do we want a non-precision circling approach to the airport 
or do we want to get on the localizer and the glide slope, 
knowing that we will be within two feet either way if we keep 
the needle centered and on the ground, and then we can sort out 
the problem? What is our choice?
    Mr. May. I think the choice is obvious, Congressman Hayes.
    Mr. Hayes. We want the precise emergency and get on the 
ground and sort it out. We are facing a crisis with fuel 
prices, and the answer is doing the things that we have to do. 
You referenced the four issues that are out there.
    The airlines, their direct employees, their indirect 
employees should be lighting up the e-mails, the telephones, 
every connection to Congress, saying: Folks, we know there are 
bipartisan solutions to this. It begins with this. By the way, 
we want you to be environmentally sound with what you do but, 
for now, standing up together and saying we are going to 
address these issues headlong, along with the environmental 
concerns.
    A fellow who is in the business with the Southeastern 
Energy Alliance sat in my office and said, if you stood up. I 
even passed a bill. If you stood up and did that, oil will go 
down 30 bucks overnight. That is where we need to be.
    That is what I am asking you and the airlines and the other 
industries--because everybody is affected by this crisis which 
is the price of food, fuel and so on--to say, folks, and there 
are good people on both sides that want to do it. But when you 
feel your heat, you see the light. There needs to be more light 
up here, and it comes from heat, from folks at home.
    So what would you recommend, having listened to that, that 
the airlines and others similarly situated might do to help us 
see the light up here in Congress and stand up and say to the 
world: We have energy. We are going to use it responsibly, and 
we are going to become independent. We are going to fully 
develop wind, solar, hydrogen. We are going to do it cleanly 
and carefully.
    What do you think that message sends? What happens then?
    Mr. May. Congressman, if we are at fault for not speaking 
loudly enough in the past, I suspect that we are in the process 
of curing that fault right now.
    Mr. Hayes. Absolutely. I am not saying you are at fault, 
but I am saying there is source of energy, a source of 
illumination, a source of get the picture, and it is the folks 
who are in the government.
    It is not just us here. Help us understand and move 
responsibly to meet this crisis head on, because if you don't 
get out of the jam now, long-term doesn't matter. That is how 
you get to long-term. Will you do that?
    Mr. May. We will do that.
    We communicated with your office with a coalition of over, 
I think, 30 organizations that range from the Teamsters, to the 
truckers, to ourselves, to you name it in the business that are 
trying to impress upon Congress the importance of a bipartisan, 
underlined, approach. Anything you can do to help break that 
logjam would be deeply appreciated.
    Mr. Hayes. What we can do, again, is get the heat from our 
constituents, and I have the list. It is important, but it is 
getting that $30 knockdown immediately and working our way from 
there. So help us out.
    Thank you, Mr. Chairman.
    Mr. Costello. The Chair thanks the gentleman and now 
recognizes the gentleman from Michigan, Mr. Ehlers.
    Mr. Ehlers. Thank you, Mr. Chairman.
    I am in a markup just down the hall in the Education 
Committee, so I am sorry I missed much of the hearing, but 
after hearing this brief discussion, I can't help responding as 
a physicist and pointing out something that I think the general 
public doesn't recognize about the airline industry.
    The most crucial aspect of the energy crisis is what 
happens to the airlines because they basically have no choice 
but to use petroleum-based fuel.
    The reason is simple. If you are flying an airplane, you 
try to minimize the weight. That means you need a high-energy 
density fuel which is what the fossil fuels are, a lot of 
energy for the amount of weight of the fuel.
    Our automobiles don't have that requirement. Even our 
trucks don't have that. It helps, of course, but it is 
absolutely crucial for the airlines.
    So whenever we talk about alternatives to energy, let's 
recognize we are excluding the airlines or aviation in general 
because we have to continue unless we develop a higher-energy 
density fuel which is very, very unlikely.
    We can use alternatives for almost all the others. Hybrid 
automobiles, plug-in hybrids, even better, but you cannot plug 
in airplanes and you cannot run them on batteries.
    Some people have even talked about using hydrogen. I did a 
quick back of the envelope calculation once and decided the 
only way hydrogen would work, because it doesn't have very good 
energy density, if you put all the passengers on the wings and 
used the fuselage for a fuel tank, then hydrogen might work. 
But I don't think the people would be too happy to fly inside 
the wings.
    So I just wanted to say I recognize that very important 
aspect, and I have been trying to convince my colleagues of 
this too. Whatever alternatives we are talking about, the 
aviation industry doesn't have an energy alternative. It has to 
continue using Jet A or 100-LL or whatever type of airplane you 
have.
    So with that, Mr. Chairman, I yield back. Thank you.
    Mr. Costello. The Chair thanks the gentleman.
    We will give each of our witnesses the opportunity, if they 
want, to make a final point before we close the hearing, and I 
will begin in reverse order with Mr. Lavin.
    Mr. Lavin. Thank you, Mr. Chairman.
    I notice that D.J. Gribbin talked about Chicago O'Hare, the 
fact of the success that has happened in Chicago O'Hare in 
terms of raising the caps.
    I think it is important to recognize that Chicago was 
capped because it was congested. It was managed under the 
Worldwide Scheduling Guidelines. They focused on capacity, and 
now they have removed the caps.
    Mr. Gribbin also indicated that the WSG provides for a 
proprietary right for the airlines to the slots. At this point, 
there will be no slots at Chicago O'Hare Airport because they 
followed the procedures under the WSG and, as a result, there 
is no property to argue about.
    So we believe that the same holds true for New York. It 
could hold true for New York as well as the other airports 
around the world that are congested, and we look forward to 
continuing to work to try to convince DOT of that fact.
    Thank you.
    Mr. Costello. Thank you.
    Mr. Faberman.
    Mr. Faberman. Thank you, Mr. Chairman.
    I will be very brief. We certainly are willing to look at 
multiple options for managing capacity. As I said before, those 
options must allow for entry and some ability to compete.
    We have concerns about the WSG guidelines in that it does 
not allow significant entry into airports.
    We also say that although many of the airports we are 
talking about have some significant amounts of international 
service, they also have significant amounts of domestic service 
and domestic service at all those airports is much greater than 
the ``domestic'' service at Heathrow.
    I will also note that even though London Heathrow is now, I 
guess, open, one U.S. carrier was forced to pay $200 million to 
get into that airport. I don't think that is the approach we 
want to take in this Country, but I do think we need to move 
forward and we need to preserve options for your constituents.
    Thank you.
    Mr. Costello. Thank you, Mr. Faberman.
    Mr. May.
    Mr. May. Thank you, Mr. Chairman.
    We should focus on capacity improvements and efficiency 
enhancements, not on failed economic theory.
    Mr. Costello. Mr. DeCota.
    Mr. DeCota. Thank you, Mr. Chairman, and I do appreciate 
very much this hearing. You have highlighted so many of the 
issues.
    I will just be brief to say that this has enormous 
implications for trade, travel, tourism, the economy of New 
York, the world's largest origin destination market.
    The fact is this isn't going to reduce congestion, and this 
is going to create a great deal of disruption. It is illegal.
    We don't even know what the auction procedure was. We were 
only given it 60 days to comment. We were given incomplete 
information.
    It is ideology in front of efficiency, as someone said.
    It is the Administration being very deaf to the incredible 
challenges of this industry.
    Instead of modernizing, adding capacity, bringing forward 
the air traffic control system, instead of just trying to fix 
the problems which we as airport directors are trying to do, it 
is just a bad experience. Obviously, we are very strongly 
opposed and hope it doesn't happen.
    Mr. Costello. Thank you.
    Mr. Gribbin.
    Mr. Gribbin. Thank you, Mr. Chairman. I echo Mr. DeCota's 
comments. Thanks for having this hearing.
    To clarify, if I can just comment, and thank you for 
letting me go last too, in reverse order. It is quite helpful.
    On the Worldwide Scheduling Guidelines front, keep in mind 
that the Worldwide Scheduling Guidelines do two things. They 
help allocate space in a rational way that is recognized around 
the world, and I think, as several panelists have mentioned, 
the Department has used that and actually recommended using 
that in the NPRM for LaGuardia and Newark.
    However, the Worldwide Scheduling Guidelines also transfer 
historic rights to incumbents, meaning incumbent airlines. This 
is what Chairman Oberstar was chafing against. Incumbent 
airlines, in essence, walk away with a property right for that 
slot that they can then buy, sell and trade, and the American 
public doesn't get anything in return.
    So, on the large issue of congestion in New York, I agree 
with Mr. May. The first step ought to be expanding capacity. 
The Department and the FAA have both aggressively pursued that 
front. Because capacity is not going to be able to be expanded 
to meet demand in the near term, we are left with the option of 
having some type of demand management in the form of caps.
    I think as Mayor Daly, who no one would claim as an 
ideologue, has said, caps in place by themselves limit 
investment, limit economic growth and result in higher prices 
to consumers. So whether it is an auction or some other 
mechanism, I think it is extremely important that we keep the 
eye on the ball of congestion and on the ball of affordability.
    Mr. Costello. Thank you.
    The Chair would ask Mr. Petri if he has closing remarks.
    If not, let me thank all of you for being here today to 
testify before the Subcommittee.
    I have to tell you, Mr. Gribbin, that I think that probably 
Mr. DeCota summed it up pretty well, at least my sentiments, 
and that is I am very skeptical that this plan of caps and to 
auction off slots will work or will do anything to help relieve 
congestion in the New York airspace.
    I think that it would be worthwhile to take back to 
Secretary Peters, Chairman Oberstar's comments about the 
shocking lack of looking at all of the modes of transportation 
that are available through the Department of Transportation to 
help relieve congestion and address some of the problems in New 
York and the New York airspace as well.
    With that, again, I thank all of the witnesses for being 
here, and that concludes our hearing. The Subcommittee will 
stand adjourned.
    [Whereupon, 11:59 a.m., the Subcommittee was adjourned.]

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