[Senate Hearing 110-1109]
[From the U.S. Government Publishing Office]





                                                       S. Hrg. 110-1109

                ADMINISTRATION'S PROPOSAL TO REAUTHORIZE
                  THE FEDERAL AVIATION ADMINISTRATION
                               (PART I)

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

                                HEARING

                               before the

       SUBCOMMITTEE ON AVIATION OPERATIONS, SAFETY, AND SECURITY

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 15, 2007

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation







                                _____

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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                   DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska, Vice Chairman
    Virginia                         JOHN McCAIN, Arizona
JOHN F. KERRY, Massachusetts         TRENT LOTT, Mississippi
BYRON L. DORGAN, North Dakota        KAY BAILEY HUTCHISON, Texas
BARBARA BOXER, California            OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida                 GORDON H. SMITH, Oregon
MARIA CANTWELL, Washington           JOHN ENSIGN, Nevada
FRANK R. LAUTENBERG, New Jersey      JOHN E. SUNUNU, New Hampshire
MARK PRYOR, Arkansas                 JIM DeMINT, South Carolina
THOMAS R. CARPER, Delaware           DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri           JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Lila Harper Helms, Democratic Deputy Staff Director and Policy Director
              Margaret Spring, Democratic General Counsel
             Lisa J. Sutherland, Republican Staff Director
          Christine D. Kurth, Republican Deputy Staff Director
             Kenneth R. Nahigian, Republican Chief Counsel
                                 ------                                

       SUBCOMMITTEE ON AVIATION OPERATIONS, SAFETY, AND SECURITY

JOHN D. ROCKEFELLER IV, West         TRENT LOTT, Mississippi, Ranking
    Virginia, Chairman               JOHN McCAIN, Arizona
JOHN F. KERRY, Massachusetts         KAY BAILEY HUTCHISON, Texas
BYRON L. DORGAN, North Dakota        OLYMPIA J. SNOWE, Maine
BARBARA BOXER, California            GORDON H. SMITH, Oregon
BILL NELSON, Florida                 JOHN ENSIGN, Nevada
MARIA CANTWELL, Washington           JOHN E. SUNUNU, New Hampshire
FRANK R. LAUTENBERG, New Jersey      JIM DeMINT, South Carolina
MARK PRYOR, Arkansas                 DAVID VITTER, Louisiana
THOMAS R. CARPER, Delaware           JOHN THUNE, South Dakota
CLAIRE McCASKILL, Missouri
AMY KLOBUCHAR, Minnesota















                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on February 15, 2007................................     1
Statement of Senator Klobuchar...................................     2
Statement of Senator Lautenberg..................................     1
Statement of Senator Lott........................................    12
Statement of Senator McCaskill...................................    20
Statement of Senator Rockefeller.................................    17
Statement of Senator Thune.......................................    25

                               Witnesses

Blakey, Hon. Marion C., Administrator, Federal Aviation 
  Administration.................................................     3
    Prepared statement...........................................     5

                                Appendix

Inouye, Hon. Daniel K., U.S. Senator from Hawaii, prepared 
  statement......................................................    29
Response to written questions submitted to Hon. Marion C. Blakey 
  by:
    Hon. Thomas R. Carper........................................    44
    Hon. Byron L. Dorgan.........................................    36
    Hon. Daniel K. Inouye........................................    29
    Hon. Frank R. Lautenberg.....................................    38
    Hon. Mark Pryor..............................................    41

 
                      ADMINISTRATION'S PROPOSAL TO
                    REAUTHORIZE THE FEDERAL AVIATION
                        ADMINISTRATION (PART I)

                              ----------                              


                      THURSDAY, FEBRUARY 15, 2007

                               U.S. Senate,
  Subcommittee on Aviation Operations, Safety, and 
                                          Security,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:37 a.m. in room 
SR-253, Russell Senate Office Building, Hon. John D. 
Rockefeller IV, Chairman of the Subcommittee, presiding.

        OPENING STATEMENT OF HON. FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. Senator Rockefeller has been delayed. 
And so, he suggests that we get started, and I agree with that. 
Taking the prerogative of the chair, I'm in charge, and I may 
change budgets. Well, no, we'll just get ourselves going, I 
would, first of all, welcome Ms. Blakey. We have met in these 
conditions many times, and it's good to see you again.
    I will make a very short statement, as the Acting Chairman 
here, and, as we begin the process of reauthorizing the FAA, 
I'd like to specifically focus on safety and our ability to 
manage future increases in air traffic.
    Seven hundred and sixty million people will fly this year, 
and it's expected that by 2015 the number will hit 1 billion. 
Additional, 5,000 very light jets will be carrying passengers 
over the next 10 years. That's going to add challenges to an 
already strained system.
    Last year was the worst year for flight delays since the 
year 2000. One in four airplane flights were late. Newark 
Liberty International, unfortunately, had the worst delays in 
America. For travelers who fly between Washington and New York/
New Jersey area, a 36-minute flight often comes to 2 hours 
because of delays. We will look to the FAA for leadership in 
managing these demands. At the front line of both safety and 
increases in traffic are our air traffic controllers. Our air 
traffic controllers are retiring in large numbers, and the FAA 
is not replacing them quickly enough. There are a thousand 
fewer controllers now than we had a few years ago, and it takes 
several years to train new controllers. We are seven 
controllers short at Newark Airport.
    The FAA and our Nation's airports are also moving too 
slowly to upgrade runway safety areas to prevent overruns. And 
runway incursions are listed by the National Transportation 
Safety Board as a major safety concern. So, in response, I will 
help craft comprehensive runway safety legislation this year to 
address these and other problems.
    And finally, I would note that the Administration wants to 
widen the approach paths for Newark Liberty and other airports 
in the New Jersey, New York, Philadelphia region. Air noise is 
already a problem in New Jersey, and this change would only 
make it a larger one by spreading out planes over a wider area 
of the skies above New Jersey.
    So, I hope that the FAA is going to reexamine this 
proposal, make sure that it is necessary to do that, and to 
evaluate its impact on the people of my state. We're going to 
be watching the process very carefully, because aircraft noise 
is already a major problem in the New York/New Jersey area.
    And, with that, I will follow the procedures that Senator 
Rockefeller is using, if the staff can correct me, and that is 
5-minute statements around the table.
    Senator Klobuchar? Thank you. Five minutes.

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. Thank you, Senator.
    And thank you, Ms. Blakey, for coming today, and for 
beginning this conversation on the FAA reauthorization.
    I'm from Minnesota. As you know, we have a major airport 
there, and so, we're very interested in these issues.
    I think we'd all agree on one goal, that we need to build a 
cutting-edge, next generation air traffic control system that 
uses the latest advancement in satellite-based technologies. 
This system should allow us to increase capacity, improve 
safety and efficiency, reduce noise near airports, and reduce 
delays.
    Controlling costs is a huge part of this. I've read the 
proposal that you have for switching from a financing system 
based largely on ticket taxes to one based more on user fees. 
I'm not quite convinced yet that this is the way to go, but we 
do look forward to hearing more about it.
    And, in my view, as we look at a financing approach, we 
have to look at four criteria. First of all, it must be in the 
best interest of the traveling public. Second, it must produce 
sufficient revenue to cover our aviation needs, our safety 
needs, our technological needs, our commercial needs, our air 
traffic control needs, with, of course, help from the General 
Fund. And it also must avoid unnecessary complexity and be 
relatively easy to administer. And, finally, it must distribute 
the cost of the system among the users of the system in a way 
that is sensible and fair.
    It remains to be seen whether these criteria are best met 
by our current system, with some modifications, or by a 
substantially different approach. This is what these hearings 
are about.
    There are other issues that are important to me, as well, 
as we move forward with this reauthorization. Some of these 
include ensuring that our small airports continue to receive 
the support that they need to maintain the vitality of rural 
America, ensuring that our airports and airplanes are 
maintained with safety as the first and paramount priority, 
ensuring that we have enough qualified air traffic controllers 
to fill our needs nationwide, and then, finally, ensuring that 
Congress exercises proper oversight over FAA's budget.
    Today marks the beginning of an important dialogue on a 
vital part of American commerce and American life. I'm excited 
to be part of this.
    And, I thank you very much.
    Senator Lautenberg. Thank you very much.
    And now, we're pleased to hear from the FAA Administrator, 
Ms. Blakey, please.

  STATEMENT OF HON. MARION C. BLAKEY, ADMINISTRATOR, FEDERAL 
                    AVIATION ADMINISTRATION

    Ms. Blakey. I'm delighted to be here, Senator Lautenberg, 
and very pleased, also, to be working with you, Senator 
Klobuchar, because this--I do know that you have a very vital 
aviation link right there in Minneapolis-St. Paul, and one of 
our major airlines there. So, I welcome our discussions in the 
future.
    What brings me before you this morning, of course, is a 
matter of national significance; indeed, it is a scenario that 
affects every man, woman, and child in this great Nation, that 
affects every business, from blue chips to the corner store. 
The common thread among each of these is aviation. The United 
States of America has long depended on aviation, not just as a 
means of point-to-point travel, but as the hinge on which the 
door to commerce literally stays open. Aviation keeps America 
open for business.
    As you're well aware, the National Airspace System is 
rapidly approaching critical mass. Senator Lautenberg, you're 
hitting the nail on the head when you're talking about the kind 
of delays we are seeing on the East Coast; and Newark is a 
prime example. For years, the word ``gridlock'' has been 
bandied about. For years, experts have pointed to a system that 
is stretched too thin, a system that simply will not be able to 
accommodate all those looking to use it. The day is now here, 
and we have it upon us.
    As passengers, I think we all know, not just from 
headlines, that the year 2006 was the worst in history for 
delays across the board. Conversely, that highpoint for delays 
occurred simultaneously with what can only be described as the 
``Golden Age of Safety.'' Our pilots are first-rate. Our 
controllers are the envy of the world. The people who service 
our equipment are acknowledged experts, capable of handling 
anything, from the devastation of a hurricane--and we've had 
plenty of those--to sophisticated software upgrades, where we 
continue to try to patch the system. Our safety inspectors are 
so good that they've helped whittle away the list of accident 
causes, to the point that they almost never happen.
    And yet, amazingly, the system is in trouble. It's grossly 
inefficient. And everyone who flies it, knows it. The system's 
in trouble, because we have squeezed every ounce of capacity 
that's out there. In some cases, we've imposed artificial 
constraints--for example, in places like Chicago and New York, 
trying to stem the stream of passenger jets that always seem to 
want to take off at 7 a.m. and come home at 5 p.m. in the 
evening, usually on the same day. Schedules, packed to the 
gills with delays, missed connections, and canceled flights, 
are all-too-common these days across the country.
    So, what's in front of us? The undeniable fact is that we 
face a billion passengers by 2015. We face an ever increasing 
number of very light business jets, with new models that we 
welcome, like the Eclipse and the Diamond D. Traffic levels, as 
we know them, will double, perhaps even triple, in the not-too-
far-distant future.
    The logical question that follows goes like this: If we 
have the best people and the safest planes, why don't we have 
the best system? The question from the passenger who flies in 
the middle seat is a bit more pointed: Why is commercial travel 
becoming such a nightmare?
    I'm here today to tell Members of the Committee that the 
Band-Aid solutions of the past will not be enough to deal with 
this change with the challenges in front of us. We can't keep 
trying to scale up an air traffic control system that's based 
largely on technologies from the 1950s and 1960s. We need to 
take bold action. And, with taxes and user fees expiring in 
September, we have a once-in-a-decade opportunity to do so. The 
next 6 months are the pivot point. If other countries around 
the world are moving toward the system of the future, why can't 
we? Aviation is just too critical for Americans to be satisfied 
with taking a backseat to the rest of the world.
    Fortunately, there's good news on the horizon. We know the 
answer to the challenge that brings us here today. America 
needs the Next-Generation Air Transportation System. Without 
it, we will cease to set the pace for global aviation. We will 
be the country others will be talking about as a lessons-
learned exercise, the country that could identify its problems, 
but couldn't fix them.
    In layman's terms, the NextGen is an integrated plan 
utilizing modern technology, updated procedures, and new 
equipment to get us beyond the current system of ground-based 
radar technology and into the second century of aviation, with 
satellite-based operations. Let's face it, satellite technology 
has revolutionized the trucking industry. Trains use it. 
Fishermen use it. Hikers in our national parks use satellites. 
Isn't it about time we put this technology into the hands of 
our pilots and our controllers?
    Make no mistake, this isn't pie-in-the-sky. We have a clear 
vision for NextGen, and a plan to execute it. Both were 
developed in partnership with our stakeholders and from across 
the spectrum of aviation, from pilots and airlines, to 
mechanics, to Wall Street, and beyond. They agree. We agree. 
NextGen will get us where aviation needs to go. But we need to 
act quickly if we hope to avoid that doomsday scenario.
    ``Why is this so important?'' you might ask. Countries like 
China, India, Australia are aggressively adopting satellite 
technologies. Europe is moving ahead with SESAR. That's the 
rival version of NextGen, and it's based on satellites.
    Fact is, the rest of the world is not waiting for the 
United States. And, while the rest of the world has their 
action plan in high gear, we risk getting bogged down in a 
debate over who's going to pick up the tab.
    Truth be told, right now the passenger in the middle seat 
is footing the lion's share of the bill for the operation of 
the system. The commercial traveler is paying 95 percent of the 
costs, but is imposing only 73 percent of the requirements. 
Imagine being at a restaurant where you're required to pick up 
the tab for the people sitting at the next table. It's not as 
farfetched as it sounds. It happens in our skies every day. A 
seat on a commercial jetliner is the most heavily taxed spot in 
aviation.
    This year is a once-in-a-lifetime opportunity, presenting a 
rare chance to leave an extraordinary legacy for our children. 
But to successfully develop the NextGen system, we need a 
revenue stream that's tied to the actual costs of our 
operations. We need a revenue stream that's equitable. In other 
words, all users pay their fair share.
    I can't say it more clearly. The hybrid financing system 
that we put on the table yesterday is balanced, is fair, and it 
delivers on all these counts. A cost-based system is much more 
transparent and accountable for the FAA, for passengers, and 
for users. And, frankly, it gives Congress much more insight 
into the costs of our operations for oversight purposes.
    Despite all the hype that you've undoubtedly been hearing, 
moving to a user-based system is hardly unprecedented. In fact, 
I mentioned several countries before, but here's another list 
to think about: Barbados, Brunei, Guinea-Bissau, Kiribati, 
Kuwait, Namibia, Sao Tome and Principe, Swaziland, Togo, and 
Tuvalu. That list represents the only countries that do not 
charge for the actual cost of air traffic services. Do we 
really want the most powerful nation in the world to be on that 
list?
    Speaking on behalf of everyone who flies, the first and 
foremost benefits of our proposal are to the passenger. The 
bill that's moving forward reduces congestion. It alleviates 
delays. It provides tax relief. It's green. And, make no 
mistake, it delivers the technology to make all of this happen. 
This is the only way to go. America has the opportunity. We 
have the solution; and we need to put it in motion.
    In closing, let me say that we have been presented with a 
historic opportunity to alter the future of aviation by 
creating a next-generation system that truly delivers. We owe 
it to the traveling public. We owe it to America. Our economy 
hinges on aviation, and we can ill afford to blow this chance 
to give our citizens a system that can handle what the future 
may bring and avoid all the gridlock.
    The Members of this Subcommittee will be very key players 
in this endeavor, and I look forward to working with you to 
make it happen.
    Thank you very much.
    [The prepared statement of Ms. Blakey follows:]

      Prepared Statement of Hon. Marion C. Blakey, Administrator, 
                    Federal Aviation Administration
    Chairman Rockefeller, Senator Lott, Members of the Subcommittee, I 
am happy to appear before you today to discuss the Administration's 
proposal to reauthorize the programs of the Federal Aviation 
Administration (FAA). I have mentioned in my previous appearances 
before you that we have been working very hard on this proposal for 
quite some time. With both our programs and our funding set to expire 
at the end of the fiscal year, we are presented with an important 
opportunity to make needed changes.
    The essential question is: why should we change the current 
financing mechanisms? The answer, simply put, is that the current 
mechanisms are not well suited to support the transformation to the 
Next Generation Air Transportation System (NextGen). This 
transformation is essential. As we look out into the future, we see a 
system that will need to grow to accommodate the demands of our 
stakeholders and the flying public. The current financing mechanisms--
both in terms of taxes and spending--are not tied to FAA's cost to 
deliver services, and therefore are not scalable to meet these growing 
demands. To deliver the benefits of NextGen, it is essential that a 
reliable funding stream that better ties our income and our outgo are 
better tied to the services we provide. NextGen is a reachable goal 
only if its development and integration is not left to the 
characteristics of a funding system that does not cover the costs of 
the system and the services provided. A reliable funding foundation is 
essential and failure to provide one may well result in tangible 
programmatic problems in the near term.
    Ten years ago, the last funding debate resulted in a lapse of the 
taxes. At that time, the uncommitted balance of the Aviation Trust Fund 
was sufficient to sustain continued funding of the aviation accounts 
without disruption to the system. Today, the Trust Fund balance cannot 
support such a lapse, and thus such a lapse would have potentially 
significant consequences. We must approach our work this year as being 
crucial to the future of aviation. I am sure the debate will be robust 
and I am anxious to take part in it. We all understand the importance 
of this industry, just as we are all committed to its success. It is 
because of our shared values and goals for aviation that I am confident 
that hard work and dedication will result in a new and better system 
for funding the FAA.
    The Administration's proposal creates a financing system where what 
users pay into the system--whether user fees or taxes--and the benefits 
they get out of the system will be more stable and transparent. The 
proposal adopts a cost-based financing system for the FAA through new 
user fees and fuel taxes. Most commercial aviation operators would pay 
for the costs of air traffic control services through user fees and 
general aviation would pay for these services through a cost-based fuel 
tax. The new user fees will allow aviation users to pay directly for 
the services that FAA provides in managing the use of the national 
airspace. This linkage between what users pay and what FAA invests in 
will be critical to facilitate our transition to the NextGen 
modernization of the air traffic control system.
    The new system will facilitate more reliable, more predictable, and 
less congested air travel for the traveling public. A newly created 
Board will give our stakeholders a significant role in key agency 
financial decisions and will provide strong incentives for the FAA to 
control costs and meet the demand for services efficiently. The 
financing proposal is the product of both significant consultation with 
the public, including our aviation stakeholders, as well as a detailed 
analysis of the current financing system and various alternatives. We 
have attempted to balance the diverse views that our stakeholders have 
expressed with the need for a stable, equitable, and cost-based funding 
structure. Our recommended solution builds on the work of numerous 
bipartisan commissions from the past two decades, including the 
National Civil Aviation Review Commission that Congress created and 
that former Secretary Mineta chaired approximately 10 years ago.
    Today's funding system is largely based on taxes that are, for the 
most part unrelated to the costs of the services provided by the FAA. 
While this system has worked well in the past, changes in the industry 
require that we replace it with something that better reflects the cost 
of providing service. The success of low cost carriers has been a 
tremendous benefit to the flying public, but in many instances it 
results in two identical operations, imposing identical costs to the 
FAA, paying very differently into the system because so much of the 
current revenue stream is based on the cost of the ticket. Similarly, 
as airlines work to control costs per enplanement, they are using 
increasing numbers of small aircraft. This trend adds to the workload 
of our air traffic system without increasing tax revenue 
commensurately. If an airline carries the same number of passengers (at 
the same fares) on two smaller jets instead of one larger jet, the tax 
revenues do not change, but the controller workload doubles. Our latest 
forecasts indicate that the trend to use smaller aircraft by airlines 
will continue, especially as the current system provides no incentives 
to the airlines to respond to the costs that a switch from large jets 
to regional jets imposes on the air transportation system.
    The results of these trends are best captured in the two charts 
that I have included with this statement. The first depicts the 
uncommitted balance in the Trust Fund in FY 2006. This information 
clearly supports the need for immediate action to prevent any lapse in 
funding. The second chart compares the Trust Fund revenue to the 
activity levels in the system. There is clearly no connection between 
the two. The recent industry changes I discussed have resulted in this 
disconnect being even more apparent. It is extremely important that a 
connection be established to ensure an uninterrupted, stable, reliable 
funding stream to transition us to NextGen.
    Under the current tax structure, it is clear that taxes paid by 
different user categories do not generally reflect the costs those 
users impose on the system. Commercial airlines and their passengers 
currently pay over 95 percent of the Trust Fund taxes, but our cost 
allocation shows that they account for approximately 73 percent of air 
traffic costs. In many cases, ``high end'' turbine (jet and turboprop) 
general aviation (GA) flights are consuming similar FAA and airspace 
resources as the commercial operators, but paying only a fraction of 
what commercial operators pay.
    Because of the fundamental disconnect between the existing tax 
structure and the FAA's workload, we strongly believe that the FAA 
needs to move to a different, more rational funding mechanism. I want 
to be clear that this proposal is not about collecting more money for 
the FAA, it is about creating a more rational, equitable, and stable 
system that provides appropriate incentives to airspace users to 
efficiently use increasingly congested airspace, to the FAA to control 
costs. Moreover, by adopting new discretionary user fees, the 
Administration's proposal gives FAA the flexibility to meet the 
financing challenges of NextGen and facilitates modernization of the 
aviation system on an assured and predictable basis.
    Let me describe in greater detail how our proposal would fund the 
different parts of the FAA.
Proposed Funding for the Air Traffic Organization (ATO)
    The cost of ATO's services will primarily be funded by those 
operating in the system. The manner of contribution will vary depending 
on the type of operation. Turbine commercial flights would primarily 
pay user fees; general aviation and all piston-powered flights would 
primarily pay fuel taxes; and the General Fund would finance the costs 
of services provided to public users and other programs that we believe 
are in the general public interest.
    User fees would apply to turbine commercial flights, including 
those by U.S. and foreign airlines, passenger and freight carriers, 
domestic and international flights, charter operators, and regional 
airlines. They would cover all flights by jet aircraft that are 
considered commercial under current tax code, including air taxis and 
flights operated under fractional ownership. Collecting user fees for 
air traffic services is an internationally accepted practice in 
widespread use around the world, and would be consistent with the 
recommendations of at least seven bipartisan commissions that have 
studied this issue over the last two decades. These fees would be based 
on data derived from the agency's cost accounting and cost allocation 
systems--including the operations, maintenance, and overhead expenses 
for the services provided, the facilities and equipment used in such 
services, and the projected costs for the period during which the 
services are provided. Existing U.S. overflight fees would be 
integrated into these new user fees. While the proposal gives the FAA 
and its users latitude in how the fees would be structured, these fees 
would clearly tie FAA revenues much more closely to the actual cost of 
the services provided. We anticipate that approximately three-fourths 
of the Air Traffic Organization's budget would come from these user 
fees. The fees would be dedicated to air traffic control and related 
services and would be treated as discretionary offsetting collections 
for budget purposes. The proposal also authorizes a reserve, funded by 
user fees, which FAA would use to minimize the need for increases in 
fee rates that might otherwise be required to avoid funding shortfalls 
attributable to unanticipated reductions in aviation activity, or to 
emergency requirements.
    The general aviation (GA) community and piston commercial 
operations would contribute their allocated share of air traffic 
control costs primarily via a fuel tax. DOT has considered stakeholder 
feedback from this community and accepts the argument that the 
efficiency and simplicity of the fuel tax mechanism merit its continued 
use as the primary mechanism for GA's contribution to FAA funding. Our 
goal is to identify the costs associated with these users and then to 
set the fuel tax rates to recover those costs. We anticipate that just 
over 10 percent of the ATO's budget would come from these taxes, which 
would continue to be deposited in the Airport and Airway Trust Fund and 
be subject to appropriation. The bill proposes periodically 
recalibrating the portion of the GA fuel tax dedicated to funding ATO 
based on updates to FAA's cost allocation study.
    In addition to the fuel tax, GA and piston commercial flights may 
be subject to a terminal user fee when they arrive or depart at one of 
a limited number of large hub airports. In general, these airports are 
the most congested terminal facilities in the aviation system, and all 
users at congested facilities contribute to congestion for other users. 
Given that large hub airports are in metropolitan areas that have 
alternative airports, which would not be subject to this fee, we 
believe it is appropriate to apply fees to all users of the most 
congested airports.
    The costs associated with air traffic control service for military 
and other public users, as well as other functions and services deemed 
to be in the general public interest would be funded from the General 
Fund appropriation, as discussed below.
Proposed Funding for Aviation Safety
    The funding proposal includes modest user fees to pay for the costs 
of 25 activities in the areas of certification and registration. These 
include issuance of certain certificates, appointment and training of 
designees, registration of aircraft and airmen, airmen medical 
certificates, and training provided to other aviation authorities. All 
of these activities are specific services that FAA provides for 
individual businesses; other Federal, state and local government 
agencies charge for similar services, as do many international aviation 
authorities. In fact, FAA currently charges fees for many of these 
services; however, the current fees are set significantly below the 
cost of providing the service. The legislation specifies the amount to 
be charged for 12 specific services. Thirteen other activities are 
identified for which fees will be collected, but do not have the unit 
charge specified as FAA's cost accounting system is still being 
implemented with respect to regulation and certification activities. As 
with the ATO fees, the charges for these activities will be determined 
based on the available data derived from the agency's cost accounting 
and cost allocation systems and revenue from the fees would be treated 
as offsetting collections. Based on the historical cost of these 
activities, DOT anticipates that approximately 10 percent of FAA's 
Aviation Safety budget will come from user fees.
    Regardless of the type of product or amount of fee determined for 
that product, FAA will always make fee decisions considering safety 
first. We are also mindful of the significant international leadership 
role of both the FAA and the U.S. industry, and the fact that benefits 
from many aviation safety functions (such as ongoing surveillance) are 
widely dispersed to the traveling and non-traveling public. No fee 
structure will compromise the FAA's statutory safety responsibilities 
or the U.S. aviation community's ability to remain the world's 
principal system innovator. As a result, we are proposing that the vast 
majority of FAA's aviation safety responsibilities remain funded from 
the General Fund.
General Fund Proposal
    The Administration derived its General Fund proposal by evaluating 
specific activities to determine whether they are in the general public 
interest and have a compelling case for a General Fund appropriation. 
The dollar figures in the reauthorization proposal are based on the 
following activities and services:

   Air traffic costs allocated to public users (military, other 
        government aircraft, and air ambulances), because DOT views 
        providing air traffic control services to these flights as 
        serving the public good;

   Flight service stations, because charging user fees for 
        these services would encourage general aviation pilots to fly 
        ``outside the system,'' which would have a negative safety 
        impact;

   Low activity towers, because they help provide safe access 
        to the aviation system to numerous small communities and are a 
        critical part of the national aviation infrastructure; the 
        primary users of these terminals (piston aircraft) likely 
        cannot bear the cost of funding them, even though many of these 
        towers are contract towers, which are the FAA's most cost-
        efficient facilities;

   Safety regulation and oversight that are not recovered by 
        user fees, because these regulatory functions benefit the 
        general public by contributing to a safe and reliable air 
        transportation system;

   Commercial Space Transportation, because, given the early 
        and volatile state of the industry, it would be virtually 
        impossible to develop a schedule of fees that would generate 
        significant revenue without unduly burdening the industry and 
        placing U.S. companies at a competitive disadvantage compared 
        to heavily subsidized firms from other countries; and

   The safety portion of Research, Engineering and Development 
        (RE&D) related to aging aircraft and aircraft catastrophic 
        failure prevention (approximately $17 million of the RE&D 
        budget),\1\ because this research supports FAA's ``public 
        good'' regulatory functions.
---------------------------------------------------------------------------
    \1\ The remainder of RE&D would be funded from the Airport and 
Airway Trust Fund, and is included in the universal fuel tax rate 
discussed below under ``Proposed Funding for AIP, RE&D and EAS.''
---------------------------------------------------------------------------
Transition and Elimination of Other Aviation Excise Taxes
    The Administration proposes that the changes to the aviation 
financing system take effect at the start of Fiscal Year 2009, in order 
to provide the FAA with sufficient time to establish user fees and 
implement a billing and collection system. Our proposal therefore 
extends the current excise taxes for 1 year to ensure that the FAA has 
sufficient funding in FY 2008.
    As of FY 2009, the existing domestic ticket tax (including the tax 
on mileage awards), domestic segment tax, cargo waybill tax, and 
Alaska/Hawaii departure tax would expire under our proposal. The 
proposed user fees, adjusted fuel taxes, and the adjusted international 
arrival and departure tax would replace these taxes. This represents a 
significant simplification of the aviation excise tax system.
FAA Governance
    A review of air traffic service providers around the world shows 
that one of the common changes accompanying the introduction of user 
fees is adoption of a ``user pays, user says'' policy--according users 
a significant role in decisions relating to the setting of fees and the 
use of moneys collected.
    Therefore, a new Governance Board (the ``Air Transportation System 
Advisory Board'') comprised of user representatives and public interest 
members appointed by the Secretary would have a significant role in the 
decisions of the agency. Although the FAA Administrator and the 
Secretary retain ultimate responsibility for the safety and operation 
of the National Airspace System and thus have the final decision 
authority, the Board would provide advice and recommendations on the 
creation and adoption of user fees, and would propose modifications to 
them on a periodic basis. Under our proposal, if the Board does not 
approve the establishment or modification of a fee, the Administrator 
can only implement it after publishing a written determination in the 
Federal Register. This Board would also review and make recommendations 
with respect to major capital infrastructure decisions and 
modernization projects, the agency's strategic plan, and the 
development and adoption of ATO's operational performance metrics. 
Finally, the Board would review and provide advice on FAA's safety 
programs, budget, and cost accounting system. However, the FAA 
Administrator would retain the safety and policy responsibilities and 
decisionmaking authority of the FAA with user input for these areas in 
a solely advisory capacity. Of course, as the FAA is a government 
agency, Congress will always have the ultimate oversight authority.
    The FAA Administrator and a representative from the Department of 
Defense would be Board members, along with members representing 
airports, air carriers, general aviation, business aviation, aviation 
manufacturing, and the public interest. The Management Advisory Council 
and Air Traffic Services Committee would be discontinued with the 
creation of this new Board.
Proposed Funding and Programmatic Reforms for AIP, RE&D and EAS
    The FAA is committed to a healthy national air transportation 
system. Airports are a key part of the system, and that includes small 
primary and general aviation airports that rely on AIP funding to help 
meet their capital needs. We have proposed changes to Federal funding 
programs that will stabilize and enhance these funding sources for 
airports.
    This proposal ensures that smaller airports that cannot generate 
sufficient funding on their own can rely on their entitlement funds to 
complete strategic projects. These airports play an important role in 
the national aviation system. Therefore, we propose financing the 
program through taxes.
    I am certain our proposed changes to these important programs will 
be the subject of future hearings before this Subcommittee and look 
forward to sharing the details of that proposal with you. However, 
today I will focus my comments on how our new structure will fund AIP 
and our other important programs.
    The proposed taxes are administratively simple and build on 
existing collection mechanisms. Specifically, DOT proposes funding the 
AIP program via a set of simplified excise taxes, consisting of a flat, 
universal fuel tax for domestic commercial and all GA flights and an 
international passenger head tax for international commercial passenger 
flights. This universal fuel tax would be in addition to the proposed 
GA ATO fuel taxes for GA users. Like the ATO taxes, these taxes would 
be deposited into the Airport and Airway Trust Fund and be subject to 
Congressional appropriation. The proposed taxes are expected to 
generate receipts sufficient to cover the proposed authorization levels 
for AIP, the Essential Air Service (EAS) program, and the Trust Fund's 
portion of RE&D. The bill also proposes indexing both the AIP portion 
of the fuel tax and the international passenger tax to inflation to 
keep pace with inflation.
    The universal fuel tax and international passenger tax would also 
be the funding sources for all of EAS and most of RE&D. As in the case 
of AIP, it is appropriate for users to fund most of the research and 
development because it ultimately benefits them, but it is challenging 
to allocate research costs to specific users. Similarly, EAS has a long 
history of being funded by users through overflight fees; however, it 
is not part of air traffic control costs, and similar to AIP, is 
largely a grant program to assist small communities that cannot support 
service on their own. Therefore, the Administration has included EAS 
and RE&D funding requirements in the proposed universal fuel tax and 
international passenger tax rates. However, AIP is the primary driver 
of the tax rates.
NextGen--Funding of Major Capital Projects
    As I stated at the outset, one of the drivers of our proposed 
changes to how the FAA is funded is to the challenge of funding 
NextGen. Implementing NextGen will be a unique transition from the 
technology of 50 years ago to the technologies of tomorrow and it will 
require a substantial investment of capital. Financing this investment 
is something I have very strong views about. Business as usual is not 
an option. The new discretionary user fees will enable us to fund 
several important NextGen investments. However, to avoid spikes in the 
user fee levels the Administration's proposal also would authorize us 
to borrow through the Secretary of the Treasury beginning in FY 2013 
with debt service recovered from users of the system by FY 2017. This 
authority would contribute to a more business like funding structure, 
leverage limited resources, and further accelerate the transition to 
NextGen by better aligning payment for a project with the benefits that 
project generates and providing greater flexibility to take advantage 
of capital investment opportunities as technology changes. Examples of 
FAA projects that may be appropriate for debt financing include safety-
critical and mission-essential software and systems that controllers 
and traffic flow managers will use to support trajectory-based 
operations in the NextGen system, enhancements to the global 
positioning system (GPS) technology related to civil aviation, 
surveillance technology for homeland security and defense, and 
potential facility consolidation. This authority would be targeted, as 
noted, for a limited time period (FY 2013 to FY 2017) and would be 
capped at $5 billion. We think this innovative authority will give us 
what we need when we need it.
    I want to end by saying that I know we all share the same basic 
goals for an industry that we all care about deeply. We want a safe 
system that can meet future demand--one that is cost effective and 
efficient and that meets the needs of the flying public. We all 
appreciate the importance of this industry, not only to those of us 
lucky enough to be a part of it, but to every American. While I 
anticipate and look forward to a frank and wide-ranging discussion of 
this proposal and others that I'm sure will be put on the table, I 
cannot overstate my personal commitment to the need for a funding 
system that better ties FAA's costs to its revenues and its revenues to 
its spending. It is the fundamental component that supports all of our 
important initiatives. So, let the debate begin.
    This concludes my prepared statement. I will be happy to answer 
your questions at this time.




    Senator Rockefeller [presiding]. Thank you very much, 
Administrator Blakey.
    And we will start the questioning with the very 
distinguished Senator from Mississippi.

                 STATEMENT OF HON. TRENT LOTT, 
                 U.S. SENATOR FROM MISSISSIPPI

    Senator Lott. Well, thank you very much, Mr. Chairman. And 
thank you for having this hearing.
    This morning, we have gotten some FAA proposals that were 
outlined in the budget, and now we're getting some more of the 
details from the FAA Administrator. This is a very important 
area for the Congress to work in this year, and I'm looking 
forward to working with you, and as the Chairman of this 
Subcommittee. We've worked together in the past. In fact, we 
worked together on the last FAA reauthorization, which some 
people thought would be very difficult, but actually moved 
along pretty well and in a relatively reasonable time period.
    It's going to be more of a challenge this time, because 
we're going to be talking about more money, and who pays it. 
And I'm glad that we're having this hearing. I hope we will 
move out aggressively on the legislative calendar, because we 
need to get it done before the current law expires--I believe, 
at the end of September. And in order to achieve that, we need 
to get it out of the Subcommittee and Committee in the next 
couple of months, at the very max, and then on to the floor of 
the Senate, and see if we can't find a window of opportunity to 
move it through the Senate and get ready for a conference.
    I think one of the areas where this Congress can make some 
real progress this year, in a bipartisan way, is in the 
transportation and infrastructure area. It's critical for the 
future of our economic growth. We have tremendous demand for 
more capacity in aviation, not only in passenger, but cargo, 
the freight rail cargo capacity, on our highways and bridges, 
and with our Amtrak passenger rail system. This is a place 
where we can really achieve some good things this year, and 
this is, I guess, step one in that effort. And there will be 
legislation introduced in the Finance Committee, or going to 
the Finance Committee soon, that will provide incentives for 
additional rail expansion. Senator Lautenberg and I are working 
on Amtrak.
    Now, what we need is the FAA, and the Administration, 
generally, particularly the Transportation Department, to get 
in the game, provide leadership, and push the ball with us. 
Let's make this a joint aggressive effort.
    So, I say to the Administrator of the FAA, I enjoyed 
working with you over the last few years. You've got a lot of 
experience under your belt now. You've taken a few barbs along 
the way, so you've toughened up, where I believe you're ready 
for the task. And we really do want to work with you to achieve 
some significant things in aviation. I think this Next 
Generation Air Transportation Financing Reform Act is good, 
because you've, you know, put something on the line. I saw, 
yesterday, where the House had a lot of unflattering things to 
say about it, perhaps. Of course, my answer to them is usually 
an answer that causes deafening silence in Washington, ``OK, 
what's your proposal?'' And the answer is usually not--they 
don't have anything to say.
    This is when we've got to step up. We have dilly-dallied 
around for 20 years. We're getting in a real box here. And if 
we don't address the needs of our--the importance of our 
modernization of our air traffic control system, we're going to 
have continuing growing problems and, I guess, gridlock by 
2015. This is when we've got to do it.
    Now, again, a lot of the problem is, how do you pay for it? 
I think you've made an effort here to make a reasonable 
proposal and try to come up with a proposal everybody is kind 
of semi-happy with. Usually when you do that, nobody's happy. 
So, what I propose is that we do more to everybody and make 
everybody unhappy, and then I think we'll have something we can 
go with.
    [Laughter.]
    Senator Lott. So, I'm not interested, in this case, in 
trying to adjust the--you know, the great dreams of the 
carriers, of the airports, of general aviation. Everybody is 
going to have to get in the game here, and nobody wants--
everybody wants it to be--not me, not you; the guy behind the 
tree. And that ain't gonna work here. So, I do think, you know, 
we've got to think about it.
    There's no question that our current system has some 
problems with it. It's not fair, in many respects. As I've been 
through your proposal, obviously there are some details that 
we're not going to be able to do, but I believe that--you know, 
Senator Rockefeller and I are going to--with the--you know, the 
leadership of Senators Inouye and Stevens--we're going to move 
out aggressively. We'd like to have your input. My attitude has 
always been, you know, work with the Administration, or without 
them, but get it done. But this time, I think that your 
experience and what you're suggesting, we can look at and 
really, you know, learn from that, and continue to work to get 
it right.
    Now, let's see here. Let me just ask you a couple of 
questions.
    Your proposal does increase the fuel tax for general 
aviation, like, you know, a little crop duster down in 
Mississippi, to 70 cents per gallon. Now, that's more than 
tripling the tax. You know--why is that the right thing to do? 
They don't put a lot of burden on the system. In fact, usually 
they're flying under the wires, and, you know, they're just 
cowboys, basically. And we used to have some weather--I guess--
what did we call them--weather flight center stations, which--
you closed those, the one in Greenwood, Mississippi. So, I want 
everybody to pay their fair share, but I don't want anybody to 
pay more than they should. What's your reaction on that?
    Ms. Blakey. Well, I will say this. We looked at the 
position of the general aviation community very carefully in 
constructing this bill. First and foremost, they said that they 
wanted to pay through a fuel tax, not through a user fee, which 
is what most of the rest of the world employs and certainly 
which is the most transparent and cost-based. They said this 
was a great administrative burden, and they wanted to keep the 
fuel tax--and we listened to them. We said, ``OK, I think 
that's fair. We'll have a hybrid system.'' Fuel tax, pay at the 
pump, it's the simplest way to do it. That's what we're 
proposing.
    Second, we went through a cost allocation system, and we 
broke it down into 600 different components. We looked at the 
question of their argument that, ``We're marginal users,'' 
especially the small-piston crowd, you know, the ones who are 
flying smaller planes, and probably not using as much of the 
air traffic system at all. And we--every time when we came to 
one of the costs that were involved, we were pretty careful to 
not allocate that to the smaller user unless it was very clear 
that it was fair, and that it fell in their camp.
    The final point I would make is that we have the General 
Fund picking up several very key services for, again, the small 
general aviation operator, including the cost of the flight 
service stations, because they're still out there. We have 
consolidated them, but I would tell you candidly, Senator Lott, 
that, because we have now been able to have much better 
technology in those centers, the pilots love the new flight 
service stations. There are not as many as there were, but 
there's much better technology for quick-call response and all 
those kinds of things. So, that service, they've got out of the 
General Fund, and the cost of the low-activity towers comes 
from the General Fund, not allocating it to them.
    You have to remember that right now in the system, general 
aviation has--is paying about 3 percent of the cost of the 
system. They're using about 16 percent. Now, we can look at 
ways to try to make it less--least burdensome as possible. But 
when you think about that gas tax that you just referenced, 
it's still less than 5 percent of the cost of operating a 
plane. It's not a major burden on pilots and their aircraft. 
It's certainly much less than the fuel tax that is being paid 
by the commercial operators. It's not too far off from what we 
pay in Federal gas taxes for automobiles.
    So, all of those things are part of what I would just 
suggest we are trying to look at, in terms of equity here, to 
be fair to everybody involved.
    Senator Lott. Well, general aviation, of course, has a lot 
of people under its umbrella, and they want to stick together. 
But I don't agree with that. I mean, I do think these small-
propeller general aviation aircraft are different from 
corporate jets, if you will. And I do think there has got to be 
some way to break down the difference between the propeller 
general-aviation planes and business jets, for instance. But 
that's a long discussion, and we'll work through all of that.
    One area in your proposal that does bother me is it looks 
like there is a pretty significant increase in the PFCs. And, 
you know, I'm concerned about that. I want to have decent 
modern airports, but I think maybe there's a limit to how far 
we should have an increase in that area. They do have AIP 
funds. They do have airport bonding capability. And I really 
think that local communities should put up more of their own 
money. So, I'm concerned about the increased PFC, and I'm also 
concerned about--you don't appear to have any regulation over 
that. That's going to go to these different airports for them 
to do as they see fit. Am I misinterpreting that?
    Ms. Blakey. We definitely have requirements that we place 
on PFCs, so there is regulation still involved. What we have 
found, though, over the years of administering the program, is 
that it does work very well. As you know, it's project-based. 
It's for specific improvements on the airport. And when they 
are finished, it goes away. So, it has that strength. It is 
locally administered. It does not have to come through the 
Federal bureaucracy. And, to be honest, I think it's also the 
best way to free up more AIP money to go to the smaller 
airports. PFCs work very well for medium and large airports. 
Going to $6 a segment, I think, will give them more latitude. 
But you'll also notice in our proposal that we're moving the 
large airports away from AIP entitlement funds, and that frees 
up more grant funds for the smaller airports that really do 
rely on AIP. You know, the big airports can, between their own 
ability to raise money through bonds, local revenue, and the 
ability to use PFCs, they have very strong revenue sources, but 
the small airports, I think, do rely on AIP. We need to 
recognize that, and therefore, strengthen that. And that is 
very much part of our proposal. You will see a number of ways 
in which that----
    Senator Lott. It looks to me like the--that will mean that 
if you're flying from Jackson, Mississippi, through Atlanta 
or--or wherever--to, you know, New York, you're going to almost 
double that PFC charge by the way this is set up. Is that 
correct?
    Ms. Blakey. Well, it goes from $4.50 a segment to $6. So 
it's not--it's an add-on. It's about a third. But it's not, you 
know----
    Senator Lott. Per segment, though.
    Ms. Blakey.--per segment.
    Senator Lott. See, that's--so, that's----
    Ms. Blakey. Well, now----
    Senator Lott.--that's a lot more than it sounded like what 
you just said. You hit--if you make three stops headed 
somewhere out West, you just got hammered.
    Ms. Blakey. There's a two-segment limit.
    Senator Lott. Two-segment limit?
    Ms. Blakey. Per one-way. So, if you're flying roundtrip, 
there's a four-segment limit. But that assumes, of course, that 
Jackson thinks it should, and can, charge a $6 PFC. They may 
say, ``Look, to be competitive, we're not going to do that.'' 
So, it's a local decision. And, as I said before, you know, it 
goes and comes, depending upon the project itself.
    Senator Lott. Well----
    Ms. Blakey. It's been a very important tool for airports. I 
would certainly urge that there be more discussion with the 
airport community about this. We felt this was a good 
compromise, because, again, it also helps us help small 
airports.
    Senator Lott. Well, I'm going to yield because I'm way over 
my time. I thank the Chairman for giving me this extra time. 
There has been a surge in expansions, improvements, and 
rearrangements at our airport terminals all over America, 
driven, a lot of it, by homeland security. Now, most airports 
have worked through that, and they have more screeners, and, 
you know, the airports are actually, I think, generally 
speaking, a lot more accessible and significantly improved. So, 
my question--my doubt, in my mind, is, do we need to continue 
to feed that in this process? I'd rather have them take that 
money and put it in modernization now, rather than terminal 
expansion.
    But, at any rate, thank you, Mr. Chairman, for your 
allowing me to go over time.
    Senator Lautenberg, thank you very much for your leadership 
in this transportation area.
    And I look forward to working with you, Madam 
Administrator, as we go forward.
    Senator Rockefeller. Thank you, Senator Lott.
    And I'll turn now to Senator Lautenberg.
    Senator Lautenberg. Thanks, Mr. Chairman.
    It was interesting for me to join with Senator Lott in the 
thought process about how we solve some of these problems. And 
obviously, high-speed rail service comes to mind. It is, I 
assume, Ms. Blakey, you recognize that the airspace is finite, 
and we just can't keep putting more there. At some point, is it 
possible that we might say, ``OK''--well, we're effectively 
doing it by using the delay tactic, right? I mean, we're 
saying, ``OK, sit there for a half hour while the space clears 
up between here and New Jersey/New York.'' So, that keeps the 
number of flights in the air at a given time at a particular 
level. But with the introduction of the very light jets and 
with the record-breaking travel position that we've got 
ourselves in now, record number of people flying, what happens 
if we continue to operate with too few controllers, and the 
load simply increases?
    Now, for instance, last year, Ms. Blakey, you told me that 
Newark Airport needed 35 controllers to conduct safe operations 
there. But there are only 28 active controllers there now. And 
I don't know how much of the delays that we run into at Newark, 
because of the unenviable record that we've compiled--and that 
is, the worst delays in the country--how much is due to the 
fact that there might be a shortage of controllers? And what's 
happening with overtime requirements and what will we do to 
fully staff Newark, and, maybe, help bring down some of those 
delays, as a result?
    Ms. Blakey. I wish, frankly, it was a simple as a staffing 
issue. It isn't. The delays are not a result of a shortage of 
controllers.
    Let me give you some up-to-date figures, too, on Newark, 
because it might be helpful just to level us up on this.
    Currently at Newark, we have 31 total controllers. There 
are 27 fully certified controllers, CPCs. And we also have 
three additional controllers who are working CPC I-T, as we 
refer to it, and one developmental, which is one who's in 
training, but is able to work on certain sectors. We are 
looking, at this point, at bringing in six additional hires 
this year. So, as you see, we'll be up to about 37, at that 
point. So, the controller issue is really not it.
    When you look at the overtime there--I mean, we have the 
money for overtime--overtime at Newark is only running .8 
percent of the payroll. That's low.
    Senator Lautenberg. Well, then why would we be looking to 
bring the level up to 36 controllers? There's something that's 
just not working out here. We were promised 35 last year. Now 
we're promised 36 this year. And will we be looking at this 
next year and saying that we're going to go up to 37? As long 
as we don't have them, we may as well keep on adding numbers.
    Ms. Blakey. The real dynamic here that we're all trying to 
calibrate and get right--because, as you know, you can't 
precisely know when people are going to retire; that's a 
function of family circumstance and a lot of things--but, as 
you know, we do have a retirement bubble throughout the system. 
So, what we're trying to do, particularly at our very critical 
facilities, like Newark, is get a bit ahead of the game, 
because if we have additional retirements, you want to have--
you want to ensure that you've got enough people in the 
facility. And so, that is one of the things.
    We're bringing out a controller staffing plan at the 
beginning of March, so I think that will be very helpful to you 
all. It's the third we have done. It's an update. It will give 
you all the figures that we currently project, by facility, 
We'll have a range there. And we are going, also, to detail, 
again, the advances we're making in training and what we're 
doing to ensure that we are going to be ahead of the 
retirements as they come.
    Senator Lautenberg. Ms. Blakey, I know that you work hard. 
You've got a lot of experience. We've had a shortage of 
controllers for some time now. And the safety record of our 
aviation system is fantastic. It really is. I mean, the number 
of movements, the weather problems that have begun to occur on 
a more frequent basis, it places a strain on things generally. 
I'll have some questions for you that I'll submit in writing.
    One of the questions that I have, and I've talked to my 
colleagues--and that is, we know we need more money to pay for 
the operations of FAA and the aviation system, as we know it. 
And the prospects of the very light jets, while it is a--it 
must be a wonderful one for those who are--got one of these 
ordered, but it's going to bring havoc, I think, in terms of 
the controller responsibilities. One question that I have--and 
I pass this on to Senator Lott and Senator Rockefeller, as 
well--and that is, at what point will we say to the average 
passenger that, ``Your ticket price has gone up so much that 
you'll not be able to take to the air, as you do now''? Because 
one of the things that's helped so much to bring these numbers 
up to record levels is that fact that we have these low-cost 
airlines. They're carrying a lot of people, carrying them very 
well, if you look at their balance sheets and operating 
statements. But what happens as we get into a new system? We're 
going to have to think very carefully about how we do the 
financing here. Because whatever we do is ultimately passed on 
to the passenger. And is flying going to be a luxury for those 
who can afford it, and leave modest-income earners unable to 
buy a seat in an airplane?
    Thank you.
    Senator Rockefeller. That's it?
    Senator Lautenberg. That's it--I don't want to strain the 
atmosphere here into becoming a arithmetic exercise, but--this 
is going to require some significant thinking----
    Senator Rockefeller. No--thank you, Senator Lautenberg.

           STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Rockefeller. I apologize for being a few minutes 
late, and I'm happy to see you, Ms. Blakey.
    And I also want to say that my goals for reauthorization 
are very simple. First, we have to establish a roadmap for 
implementation of the next generation air traffic control 
system. That's taking it from the ground up into the air. It's 
expensive. It's difficult. It has to happen. Second, we must 
adequately and fairly fund this system. The word is ``fairly,'' 
as well as ``adequately.'' Third, we must adequately invest in 
our Nation's airport infrastructure. I always think of O'Hare 
Airport when I think about that, and the effect that a 
reconfigured air runway system at O'Hare--what that would mean 
for the rest of the Nation. It would be gargantuan. As public 
citizens, we can't really understand that, but if you're 
interested in aviation, you know exactly what that'll mean. And 
fourth, as Senator Lott and I would always talk about, and that 
would be the continuation to improve small communities' access 
to the Nation's aviation system. And that's not because we come 
from little states, although that helps. It also is because 
it's got to work. The whole system's got to work. This is a 
system for everybody. You don't vaccinate people from 
Pennsylvania and forget people from West Virginia. I mean, it's 
a national thing.
    Now, let me also say that I have been increasingly 
attracted to the idea that we have to face up to the great 
discouragement, and perhaps upset, of a number of parts of this 
industry, you pay what you get for, and if you don't 
participate, you don't get it. And that it's going to be some 
20 to 30 years before the Federal Government, in my judgment, 
is going to be able to participate the way we once thought we 
could, because of a whole combination of things, which I won't 
get into here. And therefore, we have to have airspace 
moderation, we have to have, you can call it whatever you want, 
but there's nothing in the word ``user fee'' that offends me. 
There really isn't. It offends a number of sections of the 
airline industry. But I can't help that. If our job, and your 
job, is to leave a system that works, or begin to put into 
place a system that works, then we have to take these issues on 
forthright, regardless of what some of the criticisms may be.
    You are, I think, probably, unfortunately, leaving at the 
end of this summer. That's not very much time, and that's a 
great sadness to me, personally, because I think you've been 
great.
    Senator Lott. Well, Mr. Chairman, if you'll yield. We 
haven't----
    Senator Rockefeller. Yes.
    Senator Lott.--agreed to that, have we?
    [Laughter.]
    Senator Rockefeller. No, we haven't.
    Senator Lott. So, this is not clear.
    [Laughter.]
    Senator Rockefeller. Yes, the Senator from Mississippi 
straightened me out, and I accept that completely, quickly.
    [Laughter.]
    Senator Rockefeller. In any event, we've all got to be fair 
about this. And America likes to be fair, except when it 
involves them.
    And, this is a terrible thing to say, but JetBlue had a 
terrible series of experiences the other day, with waiting. 
And, you know, so have other airlines. And that happens; and 
passengers get furious. I've been in that situation, from 
Denver to Jackson, Wyoming. I get furious. So what? I get 
there, eventually. Maybe I sleep on the floor in the airport. 
But it doesn't make any difference. I get there. It's easier 
than bicycling.
    [Laughter.]
    Senator Rockefeller. And so, I mean, all of these, sort of, 
perspectives of, ``You pay for what you're going to get'' if 
you're looking at very light jets, and up to 5,000 of them in 
the next 15 years, you have to have an air traffic control 
system that is able to measure both laterally and 
altitudinally, just exactly where they are, and how far apart 
they are from each other, as well as how far they land from 
each other. And that is science. That is science. And so, I'm 
generally of that mind. OK? I think I've said that to you 
before, but I'm not sure. But I'm saying it to you now.
    So, knowing that the different parts of the community are 
going to be very unhappy with all of this, isn't the best way 
for--and you're stuck--I'm sorry--you are further burdened, 
with the Office of Management and Budget. And so, isn't the 
best way, for you and us to get together and sit down and 
figure out and hand the Administration, if that's what we must 
do, a solution to this problem, and do it fairly quickly? 
Because the iron is very hot right now, because we have a huge 
budget deficit, we have enormous numbers of really important 
things being cut way back in this country that we can't do 
without, but there are only a few of them which--like homeland 
security and other things--which affect everybody, at one time 
or another. Aviation is one of those. So, in the depths of our 
difficulties may be the best time to face up to these problems, 
because we are all joined in suffering from them.
    So, it occurs to me, it isn't even close to a statement. 
But if you wanted to say that you agreed with me, I wouldn't 
object.
    [Laughter.]
    Ms. Blakey. Well, I think I agreed with almost everything 
you said there. I'd have to go back through all of those items. 
But most of it certainly hit home in a very real way, because 
you're absolutely right about the need to move to the next-
generation system. It's imperative.
    I do believe that user fees make a great deal of sense, 
because they are very much tying our costs and our revenue 
together. They have these advantages, which we've worked very 
candidly and closely with OMB on. But, I won't pretend our 
proposal is perfect. I am certain that this Committee will have 
good amendments to it, and may have a better ideas.
    But I will say this, a user-fee system allows for 
offsetting collections, so you are not competing against the 
rest of the discretionary budget. That is very important.
    We also have borrowing authority. Now, that is a first for 
the FAA. The importance of being able to put that forward is 
that it smooths out these big capital investments. We know 
they're coming with the NextGen. If we can accelerate them and 
put the system in place earlier for all those who fly, it 
maximizes the benefits. But we all know, none of us pay for 
major capital investments on a cash-and-carry basis, which is 
what we've been attempting to do. The potential that we can, if 
needed, use that kind of authority, again, goes back to a fee-
based system. That's what enables that.
    So, I would recommend looking at some of the mechanics that 
we have there, as well as the fact we believe it makes sense to 
have a hybrid system. For the general aviation users, they have 
a simplified fuel tax, which is the way they prefer to pay, and 
that supports AIP and supports some of the grant programs----
    Senator Rockefeller. Right.
    Ms. Blakey.--that are important, like Essential Air 
Service. That's also built into that.
    Senator Rockefeller. Right.
    Ms. Blakey. So, I don't know that, as I say, we've gotten 
it all right, but I think that we certainly have offered a 
starting point.
    Senator Rockefeller. This is the first in a series of 
hearings. We're going to work this out very carefully. We're 
going to spend a lot of time together. And you have the 
Chairman and Vice Chairman of the Aviation Committee agreeing 
on a general approach that may or may not coincide with what 
the Chairman of the full Committee and the Vice Chairman of the 
full Committee think. But, frankly, I'm interested in our 
thoughts, because what we work on together usually comes to be 
the fact.
    I thank you, and I call on Senator McCaskill.

              STATEMENT OF HON. CLAIRE McCASKILL, 
                   U.S. SENATOR FROM MISSOURI

    Senator McCaskill. Thank you, Mr. Chairman.
    I would make one comment before my questions. And that is, 
in the short time I've been here--there are two kinds of 
revenue enhancements. And I've discovered that if you're for 
them, it's a user fee, if you're against them, it's a tax.
    [Laughter.]
    Senator McCaskill. I mean, that's kind of the way I see 
this developing around here.
    First of all, let me say, I have reviewed some of the 
financial documents--not all, though, I would like to--as it 
relates to the performance of your agency. I have looked at the 
most recent financial audit, and I've noticed that there was a 
qualified opinion. And obviously, that is a huge flashing red 
light to me. To get a qualified opinion on a financial audit is 
a big deal. And it was in the area of lack of support for the 
accuracy of $4.7 billion worth of equipment. I would certainly 
hope that the FAA would address this as quickly as possible. 
And any information that you would have on that qualified 
opinion, and any information that you would like to submit that 
would clarify the situation as to making sure that we have the 
right processes in place to not get qualified financial audits 
when we're talking about purchasing things with taxpayer money, 
I would appreciate it.
    In subsequent hearings, hopefully I will have an 
opportunity to go over some of the GAO work that's been done, 
and some of the IG work that's been done on your agency. Today, 
I would like to talk about the outsourcing of maintenance, and 
that issue as it relates to three things: reliability, cost, 
and security.
    It is clear that outsourcing of maintenance has become a 
common practice within the commercial airline industry. It is 
clear that there is not the same kind of oversight on these 
facilities as we have on the maintenance facilities that are 
located here in the United States. I would appreciate it if you 
would spend some time explaining, what kind of on-the-ground 
inspections do we currently have within the FAA--I'm not 
talking about computer models, I'm talking about kicking-the-
tires inspections--what kind of FAA inspections do we have in 
the facilities that are located in other countries?
    Ms. Blakey. All right, I'd be happy to talk about that.
    Let me simply point out that the FAA only certifies--
because I assume you're talking about foreign repair stations 
here; that is the concern. Is that----
    Senator McCaskill. Correct.
    Ms. Blakey. FAA only certifies repair station in countries 
that have extremely robust oversight capabilities, as we do. In 
a global industry, obviously it is imperative that you have 
facilities that can handle repairs around the world. But it is 
only in countries that do have comparable ability to exercise 
oversight.
    We have a very robust system of working with those 
countries, of going over for audits, of going over for careful 
review of the specific inspections that they do, and the 
specific documentation they provide. And it is something that 
is a very key ongoing aspect of our surveillance and oversight.
    We also, as I'm sure you're aware, provide those kinds of 
services in this country to foreign carriers. Again, in an open 
global system we actually probably undertake more in this 
country for foreign carriers than our carriers have done 
abroad. But it has to be the case that that's provided.
    And, obviously, in a competitive system, such as the 
airline system, it is up to the carriers to make business 
decisions as to whether they want certain kinds of maintenance 
performed. We have no reason to think, whatsoever, that the 
current system of foreign repair stations is not delivering all 
of the oversight and the safety required. As I mentioned 
earlier, we are in the safest period in aviation history, and 
there have not been indications that we are falling down in 
that area in any way. I know it has been an issue for some of 
the carrier labor unions that have been involved. But, in terms 
of the kind of actual data on this, what we see is a very, 
very, safe system. We maintain that kind of oversight.
    Let me add one other thing, because I share your concern 
about a qualified opinion on our audit. It was certainly 
something that we were most concerned about, after having had 
four clean audits in a row. What it goes to, though, really, is 
not at issue in the system that we are advancing for your 
consideration, of financing, because it is about the 
construction and progress account, and it is about providing 
those assets with adequate documentation for capitalization 
purposes. It's an accounting issue, and it's a--one that we 
very much are going to address.
    But a lot of this is very old, and goes back to 1998. While 
some of it's from 2004. It's something we simply have to clean 
up. I think, to be honest, the FAA put a lot more emphasis on 
safely putting these assets into commission, and all of our 
operational aspects, than on doing the paperwork of providing 
them for the capital asset account. We will clear it up. We 
have a major endeavor this year to get this taken care of.
    Senator McCaskill. That's great. I appreciate that, and 
I'll look forward to getting information about that.
    Going back to--so, I assume that your answer is, we don't 
have any FAA inspectors that travel to foreign countries to 
look at maintenance facilities in other countries.
    Ms. Blakey. No, I'm sorry, I must not have spoken clearly. 
We absolutely do. And not only do we have them travel there, we 
have them based there as well.
    Senator McCaskill. And----
    Ms. Blakey. I can give you a lot more information about our 
inspector workforce abroad, if that would be helpful.
    Senator McCaskill. That would be great. And I'd like the 
cost of that.
    [The information referred to follows:]

Information on FAA Oversight of Repair Stations
    Currently, the FAA has certificated a total of 4,923 repair 
stations, of which 693 are located outside the U.S. and are commonly 
referred to as foreign repair stations. Foreign repair stations must 
meet the same performance standards as those for repair stations 
located within the U.S. As a prerequisite for FAA certification, they 
must show that the foreign repair station certificate is necessary for 
maintaining or altering U.S. registered aircraft and articles for use 
on these aircraft.
    In support of the 693 foreign repair station certificates, the FAA 
provides oversight of these repair stations with approximately 67 
aviation safety inspectors (ASI) located in 6 offices (known as 
International Field Offices) that are located both in the United States 
and abroad. In the United States these offices are located in Miami, 
Dallas and San Francisco and, overseas, they are located in Frankfurt, 
London and Singapore.
    FAA currently has a total of 33 aviation safety inspectors located 
overseas--7 inspectors in Singapore and 26 in Europe, including the 
London and Frankfort offices. The cost of having these inspectors 
located abroad is $9.5 million including payroll, oversees allowance 
and fees associated with the International Cooperative Administrative 
Support Services (ICASS), which is the means by which the U.S. 
Government provides and shares the cost of common administrative 
support at its overseas diplomatic and consular posts. Additionally, 
the cost budgeted for travel to work locations by these inspectors is 
$1.5 million. Therefore, the FAA's total cost related to our overseas 
staff and their work is $11 million.
    What is also noteworthy is our work, on a bilateral basis, with 
countries to improve and harmonize oversight of repair stations through 
the use of a ``country-to-country agreement'', known as a ``Bilateral 
Aviation Safety Agreement with Maintenance Implementation Procedures'' 
(BASA/MIP). Currently, the United States has individual BASA/MIP 
agreements with France, Germany, and Ireland. These agreements remove 
duplicative efforts of the FAA and the national aviation authority 
(NAA) and provide for each authority to perform certification and 
surveillance activities on the behalf of the other.
    For those foreign repair stations that are not located in a country 
in which we have entered into a BASA/MIP agreement, certification and 
surveillance activities are performed solely by the FAA safety 
inspectors and in the same manner as performed for repair stations 
located in the U.S. We should note that repair station certificates for 
these repair stations located outside the U.S. are required to be 
renewed after the first year of operation and every 2 years thereafter; 
such renewal requirements do not apply to repairs stations in the U.S.

    Senator McCaskill. And I'm assuming the cost of basing 
inspectors and doing inspections outside of the country is 
greater than of the cost inspecting maintenance facilities here 
in the United States.
    Ms. Blakey. It is greater to have inspectors abroad, 
there's no doubt about it. But, again, I refer to the fact that 
this is a global network of facilities that our carriers and 
foreign carriers have to rely on in other countries. There's 
really no other choice than doing it this way.
    Senator McCaskill. But if an airline is choosing to 
outsource its maintenance to another country because they can 
do it more cheaply there, shouldn't they be bearing the direct 
costs of the additional expenses of government in inspecting 
those facilities?
    Ms. Blakey. I don't look at it that way, because, up until 
this point, we have been providing safety and surveillance 
oversight as a public good. And that is the way we've 
approached safety all along. We don't tend to charge for those 
kinds of services. And I would suggest that the Congress has 
been very supportive of that approach. You will see that, in 
the current proposal we're making to you, about relating our 
costs to the taxes and fees, we are not proposing to shift the 
cost of the bulk of our safety oversight into a user pays 
system.
    Senator McCaskill. But that's exactly the point. So much of 
what you're asking for is a user-based system, ``pay for what 
you're using,'' but yet--we are allowing commercial airlines to 
outsource their maintenance at a much lower cost to another 
country, but they're not having to absorb any of the additional 
costs of inspection, any of the additional costs that our 
government is having to embrace to make sure that those 
aircraft remain safe. That, to me, doesn't seem to be fair. And 
it certainly doesn't seem to make sense, in light of what 
you're proposing, and that is that we go to a more user-based 
system for fees.
    Ms. Blakey. Well, I would suggest this. We could talk about 
this at much greater length, but what I would maintain is that 
it is imperative that we have an inspector workforce that can 
provide the support for foreign repair stations, because, 
again, our carriers are serving those countries, and they need 
those services. I can't imagine a system in which we would not 
do so. So, the cost issue, and how that is borne, we can 
discuss at greater length. I'm happy to do that.
    Senator McCaskill. I would like to do that.
    Mr. Chairman, I would like to make a request, on the 
record, that we look at, in a hearing, the whole issue of 
outsourced maintenance. And there's a recent publication, just 
out, that goes through a lot of these issues in detail as it 
relates to these inspections and the outsourcing of this, 
especially as we're considering more user-based structure. I 
think this is a situation where maybe a user-based structure 
might also be important.
    Thank you, Mr. Chairman.
    Senator Lott. Mr. Chairman, if I could ask just a couple 
more questions? We do have a series, I believe, of three 
stacked votes now, so I won't take up too much time, so other 
questions can be asked.
    Let me just ask this, how much is this next-generation 
system going to cost, as best you can predict it at this point? 
I know you surely have taken a look at that. Or, at least in 
2008, what is the estimated cost that you anticipate?
    Ms. Blakey. Well, remember that, of course, a system like 
this, you ramp up from an R&D level, then through the 
demonstration projects, and then really into implementation, 
which is where the big bucks come in.
    Senator Lott. Right.
    Ms. Blakey. In 2008, we are proposing, in the President's 
budget, what I think is a very strong support for the NextGen 
R&D and some demonstration projects, of $173 million. This is, 
of course, an add-on to the additional capital investments we 
are making in the current system. And some of that current 
system, of course, is baseline support, is foundational support 
for the NextGen technologies, like ADS-B, Automatic Dependent 
Surveillance-Broadcast. In the 5-years of the figures we have 
in the President's budget, you will see that we are at $4.6 
billion.
    Senator Lott. So, it ramps up pretty----
    Ms. Blakey. Oh, it ramps up.
    Senator Lott.--fast. Yes.
    Ms. Blakey. What you will also see is that, as we discuss 
with you all the details on NextGen--and we will be providing 
you more of this in a report--we anticipate that the costs of 
the infrastructure for the NextGen system will be in a range. 
Because there's no corporation in America that can tell you, 20 
years out, exactly how much those capital investments are going 
to be, and exactly how much the technology's going to cost. But 
we do believe it is going to cost a range of between $15 and 
$22 billion for the infrastructure. We also believe that 
there's a corresponding cost to those who are going to have to 
equip the avionics to be able to use this, and we see that as 
being around $14 to $20 billion. So, it's a range, right now, 
but that gives you some idea.
    I think we're getting it pretty close to right, because 
I'll tell you a couple of other ways of looking at this. We had 
a advisory group that comes in from all of the stakeholder 
commercial community, and asked them to do a great deal of 
analysis on this. They came up with an estimate that is about a 
billion dollars a year. When you look at what I just suggested, 
that's about what it's costing, over the next 5 years.
    Senator Lott. Madam Administrator, one thing I do hope you 
will do, you need to make sure that you put in place, for your 
successors in the future, very careful, very close scrutiny--
potential successors, whenever that may come; we may just keep 
you here in perpetuity----
    [Laughter.]
    Senator Lott.--that there is a process to monitor and watch 
very closely, because with this amount of money, the corporate 
world has a tendency to gold-plate it, perhaps, if not, you 
know, if you don't work with them very closely. So, I hope 
you'll put some protections in place to watch and monitor how 
this goes forward.
    And one last question, CBO forecasts that if we adjust the 
current FAA funding levels for inflation, and keep the current 
General Fund contribution at 18 percent, then the uncommitted 
balance of the Trust Fund would grow to $24 billion in 2017. 
That's a pretty significant amount of money, just by adjusting 
for inflation. And that $24 billion would go a long way to help 
us with what we need. What's the problem with that?
    Ms. Blakey. Well, I think that the problem, as I see it, on 
this--and I'd like to look at that more closely--but the--
simply adjusting for inflation does not, in any way, take into 
account the kind of investments that we've got to make; and 
they are, as I've just indicated, very significant.
    The fact of the matter, too, is that we know that we are in 
a situation, with the current system, where we are going to be 
up against the other requirements that you all have to 
consider, whether it is, you know, the entitlement programs, 
like Social Security, or whether it's the cost of homeland 
security. But in the discretionary budget, there are huge 
pressures, and that means that there is a tendency to not fund 
these kinds of capital investments, because they are fighting 
against everything else, on an annual basis.
    Senator Lott. But this is a Trust Fund for a specific 
purpose. Why shouldn't we use it for the purpose that it's 
intended--would be my argument. I've had that argument over 
highway trust funds and aviation trust funds in the past. It's 
just a point I think we should look into.
    Ms. Blakey. I will--I'd be happy to talk with you all at 
great length about that.
    Senator Lott. Thank you.
    Ms. Blakey. And I will look at that study, too.
    Senator Rockefeller. I have to say something that he will 
also raise, and that is, on the user fee matter, let it be 
stipulated that users from small rural states and airports pay 
far more than do users from big cities.
    Senator Thune?

                 STATEMENT OF HON. JOHN THUNE, 
                 U.S. SENATOR FROM SOUTH DAKOTA

    Senator Thune. Thank you for making that point, Mr. 
Chairman.
    I also think that Essential Air Service, which, as you 
would expect, I would be interested in, Madam Administrator, 
it's essential to have a direct flight from Sioux Falls to 
Washington, D.C., but that's probably not going to be part of 
the proposal.
    [Laughter.]
    Senator Thune. I would like to ask a couple of questions, 
and one having to do with Essential Air Service. But, before I 
get to that, I know that the NextGen system is probably the 
answer to the questions I'm going to ask. But, since that's a 
few years out there, what can be done, in the interim, to deal 
with some of these hiccups that happen? And they're more than 
that if you're sitting on the ground. Yesterday's story, of 
course, was the JetBlue flight that spent 8 hours on the 
ground, and they couldn't get to their destination, but they 
couldn't get back to the gate. That's happened, it seems like, 
more routinely, of late. And also, the delays in flights are 
now at record levels, at least going back to the year 2000. And 
I know there's a lot of congestion in the airspace, and it's a 
challenge, and that's why we need the new system. But that's a 
few years out there, as I understand it.
    So, what steps can be taken? I mean, you're getting an air 
traveler who is becoming increasingly frustrated with the 
system as it works today, and particularly given the types of 
incidents like what occurred yesterday, where you've got people 
who, for 8 hours, are sitting on an airplane. Maybe you've 
already covered that ground, but, if you haven't, I'd like to 
have you respond to that.
    Ms. Blakey. No, and I have a couple of thoughts on this--
one very immediate and practical, and the other one does 
involve more use of technology. But I will say this, that the 
FAA is trying very hard to use the system we have to allow the 
flow of traffic, even despite major weather problems, which was 
at the heart of that. The NextGen system goes to much better 
weather forecasting and a better ability to deal with the 
weather. But right now, with what we have, what we are looking 
at is trying to not affect any airport that does not have to be 
held from a ground-delay standpoint. And a lot of it is simply 
just affecting flights. It used to be we would put ground stops 
in, full stop for the whole airport, and, no matter what, 
everyone sat there. We are now managing the flow of traffic in 
a way that is much more precise and specific to given flights, 
and, otherwise, trying to give other people options, in terms 
of going around storm fronts or being able to use a traffic 
pattern that will get them where they want to go.
    The very practical thing I would say, though, is that we 
also have, at our Command Center, a new service that we put in 
place, about 6 months ago, where flights that are having 
massive delays can call in, can explain the circumstance. And 
sometime it's not a question of a weather delay, sometime it's 
an emergency that forced them down to divert--forced them into 
an unusual situation, and they're out of the traffic pattern, 
and sometime they're way back at the end of the queue. We can 
help those flights, on an individual basis, by giving them 
priority if we know that they are occurring. And we are 
encouraging the airlines to call in and to say, ``We've got a 
particular circumstance that's a real problem for us. Can we 
get to the front of the line? Because these passengers have 
been terribly disadvantaged for reasons that may be very 
legitimate, but, nonetheless, they've been waiting too long.'' 
So, we're trying to also deal with specific problems like that, 
and we will do everything we can to give priority to them.
    Senator Thune. Is the technology available to do that 
today? Is this just a function of consciously making a decision 
that this is what we need to do? And I know you can't control 
the weather, and you don't want to do anything to compromise 
the safety--but I also think there are times when pilots would 
like to be able to have more flexibility to deal with some of 
these contingencies that come up, and it just seems like the 
system isn't built to accommodate the type of inconvenience 
that was created yesterday, with this JetBlue flight. And I say 
that only because it's the most recent incident. But there are 
others that have occurred in the recent past, as well, that 
there's got to be steps that can be taken by the FAA that would 
address some of these things. Some of the suggestions that 
you've described ought to be implemented.
    Ms. Blakey. Well, we're working----
    Senator Rockefeller. Senator Thune, you and I----
    Ms. Blakey.--they are available now.
    Senator Rockefeller.--are going to be lucky to get to the 
end of the line for this first vote.
    Senator Thune. What's that?
    Senator Rockefeller. We're going to be lucky if we get to 
the end of the line for this----
    Senator Thune. All right. We'd better get rolling.
    Mr. Chairman, I've got one last question that I would like 
to submit for the record. It has to do with Essential Air 
Service and how this new NextGen system would affect--right now 
it's funded by overflight fees, and I'm interested in knowing 
how the new funding structure would impact the future viability 
of the Essential Air Service program.
    So if you could submit that for the record, that would be 
great.
    Ms. Blakey. Be happy to.
    [The information referred to follows:]

Information on the EAS Program
    The EAS program has remained fundamentally unchanged since its 
inception with the Airline Deregulation Act of 1978 while the aviation 
landscape has changed dramatically with the spread of the hub-and-spoke 
system, regional jets, and low-fare carriers. Without fundamental 
change, subsidy costs will continue to rise.
    Under the proposed reauthorization legislation, the Essential Air 
Service (EAS) program would be funded by a mandatory appropriation of 
$50 million per year from the Aviation Trust Fund. The funding 
reauthorization proposal contains a small aviation fuel tax that would 
be used to generate approximately $50 million each year for the 
component of the Trust Fund for this purpose. As $50 million would not 
be sufficient to support all currently subsidized services, communities 
would be ranked on the basis of isolation (i.e., driving distance to a 
medium- or large-hub airport) and the most isolated would receive 
subsidized air service to the extent allowed by the funds.

    Senator Thune. Thank you, Mr. Chairman.
    Senator Rockefeller. Absolutely.
    Senator Thune. Thank you, Madam Administrator.
    Ms. Blakey. Thank you.
    Senator Rockefeller. Thank you very much.
    Ms. Blakey. You're welcome.
    Senator Rockefeller. Hearing adjourned.
    [Whereupon, at 10:45 a.m., the hearing was adjourned.]
                            A P P E N D I X

 Prepared Statement of Hon. Daniel K. Inouye, U.S. Senator from Hawaii
    The Senate Commerce Committee faces a rare opportunity this 
Congress to significantly shape the future of the national air 
transportation system as we address the expiration of the current FAA 
authorization and expiration of the taxes that have supported the 
Airport and Airways Trust Fund for the past decade. The beginning of 
the 21st century has marked an era where aviation is increasingly 
important to the globalization of the economy, and all indications 
point to continued and substantial growth in the aviation industry. The 
United States has been the world's leader in aviation and we cannot 
afford to lose that position. The policy decisions we make this year, 
both in the area of modernization and in funding that modernization, 
will impact not only all aspects of the national air transportation 
system, nationally and globally, for decades to come but also our 
standing as a leader at the forefront of the aviation industry.
    While the FAA unveiled its reauthorization proposal yesterday, the 
agency had indicated over the past 2 years its intent to completely 
alter the system by which we finance aviation programs in the United 
States. The plan is ambitious; unfortunately, the time provided to 
review it is short. Consequently, the FAA has to make a strong case for 
changing the financing structure. Specifically, the Committee needs to 
know how this plan affects consumers, our local communities and various 
aviation stakeholder groups. We must determine that the plan we have 
received is equitable to all parties involved.
    The entire country, rural and urban, will feel the impact of the 
FAA reauthorization that we enact. The Vice Chairman and I represent 
regions that exemplify the unique circumstances that must be addressed 
as we move forward with a reauthorization. In Hawaii, we depend on 
aviation to connect us as a state, as well as to the rest of the 
country and the world. Any aviation proposal that moves through 
Congress must deliver the promise of improving access and providing 
affordable, secure and quality air service to all Americans, regardless 
of geographic location.
    The actions we take this year will affect the public for decades to 
come. We must ensure that the national air transportation system 
continues to serve the public well, and at the same time, we must move 
forward with modernization at a faster pace so as to not inhibit the 
social and economic growth that is taking place. The number of airline 
passengers is expected to increase 50 percent in the next decade. The 
additional passengers, airplanes in flight and needed security could 
cripple a system that is already near full capacity. Without 
considerable progress on this endeavor, our system will grind to a halt 
over the next decade. Modernization is critical to the future of our 
national air transportation system, and it must be given the highest 
priority by the FAA to ensure that deadlines are met and the process is 
begun on time and in earnest.
    The Senate Commerce Committee will hold a number of hearings on the 
reauthorization of the FAA over the next few months. Today is the first 
step in that effort. We must proceed in a dedicated, cooperative manner 
that ensures we enact the best legislation for the system and our 
Nation.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                         Hon. Marion C. Blakey
    Question 1. What is the status of the enterprise architecture, or 
the blueprint for FAA modernization?
    Answer. The ATO has made great strides in the development and 
institutionalization of the National Airspace System (NAS) Enterprise 
Architecture (EA). This year the ATO approved a new architectural 
framework based on the well-accepted Department of Defense Architecture 
Framework. Further, the FAA has amended its acquisition management 
system to be consistent with GAO and OMB guidelines which call for 
investment decisions to be based on the agency's enterprise 
architecture. Finally, it is expected that the first version of the NAS 
EA that complies with the new framework will be approved in June and 
will form the basis for the FY 2009 budget formulation activities.

    Question 2. Capacity/Congestion Issues: What is the capacity of the 
current system? What is the projected capacity of the current system? 
What are the projected delays under the current system? To what extent 
would the NextGen system address this potential delay? What are the 
costs associated with delay?
    Answer. It is difficult to describe the capacity of the entire 
National Airspace System (NAS) with a single number. While some 
components of the NAS may have an identifiable capacity, such as a 
specific runway in certain weather conditions, other components have 
capacities only in relation to delay or safety measures.
    For example, one can usually add more flights into a congested part 
of the NAS. However, the cost of doing so would be an increase in delay 
in order to handle those flights safely. Therefore, ``capacity'' is 
typically measured as the maximum number of flights that can be handled 
without exceeding a certain level of delay.
    In 2006, there were about 18 million Instrument Flight Rules (IFR) 
flights in the NAS, with average delay slightly below 18 minutes per 
flight. This is approximately the same level of flights and delays as 
existed in the year 2000.
    Therefore, if we are prepared to accept 18 minutes of delay per 
flight but no more, the capacity of the NAS is about 18 million IFR 
flights per year. More flights can be flown, but without increases in 
capacity, delay will increase.
    NextGen is being designed to be scalable to three times the number 
of IFR flights as were flown in 2005. The estimated future capacity 
will be stated as the number of flights which can be handled by the 
NextGen system without exceeding current levels of delay.
    The ATO projects that if future demand were not constrained by 
capacity limits in 2025, average delays for the entire year would 
approach 30 minutes per flight. Average delays would exceed 60 minutes 
on more than a dozen days. These are average delays; delays for some 
flights would be many times longer. (These estimates are based on the 
assumption that the weather in 2025 is the same as 2004, and no further 
improvements are made to the system.)
    However, delays of this magnitude would prove so disruptive to 
passengers and airline schedules that it is likely many of these new 
flights would never be scheduled. Available seats on flights would 
become a scarce resource, and ticket prices would increase, preventing 
many passengers from flying and imposing additional costs on those that 
do.
    The goal of NextGen is to accommodate future demand. NextGen will 
prevent the excessive future delays and disruptions that would occur 
without transformation, allowing many more passengers to fly 
conveniently and affordably.
    One way of stating the cost of delay is to express the lost value 
to consumers of those flights which may not fly because of capacity 
constraints--that is, flights which would exceed the capacity of the 
system by causing intolerable levels of delay. Initial JPDO estimates 
indicate that without NextGen, the costs of delay between now and 2025 
will exceed $100 billion dollars.

    Question 3. Are there environmental benefits to modernization? What 
is the ``continuous descent'' or ``green'' approach? What are the 
benefits? Tradeoffs?
    Answer. There are environmental benefits to modernization. About 90 
percent of aviation environmental reductions have come from new 
technologies. The environmental provisions in our bill focus on new 
technologies and operational innovations enabled by new technologies to 
make NextGen quieter, cleaner, and more energy efficient.
    Key environmental provisions include:

   A research consortium for the development, maturing, and 
        certification of lower energy, emissions, and noise engine and 
        airframe technology.

   An Airport Cooperative Research Program that includes 
        specific funding for research and development for the airport 
        environment.

   An environmental mitigation demonstration pilot program to 
        demonstrate the noise, air quality, or water quality benefits 
        of promising research concepts at airports.

   AIP support to bring noise abatement flight procedures 
        online faster for airport noise compatibility programs.

    Continuous descent approach (CDA) allows an airplane to fly a 
continuous descent path to land at an airport, rather than the 
traditional ``step downs'' or intermediate level flight operations. The 
airplane initiates descent from a high altitude in a near ``idle'' 
engine (low power) condition until reaching a stabilization point prior 
to touch down on the runway.
    CDA has been called a ``green'' approach. Its environmental and 
performance (economic) benefits include:

   Noise reduction
   Fuel Burn
   Aircraft emissions reduction
   Flight time (from cruise) reduction

    CDA demonstrations to date have not completely identified trade-off 
concerns. Further research is being pursued.

    Question 4. What is the status of the Airport and Airway Trust 
Fund?
    Answer. The Airport and Airway Trust Fund's uncommitted balance at 
the end of Fiscal Year 2006 was $1.8 billion--the lowest since 1997 
(after excise taxes expired). This is equal to less than 2 months of 
the FAA's budget--less of a safety net than any year since 1975.
    The President's Budget estimates that the uncommitted balance will 
be $2.0 billion at the end of FY 2007 and $3.1 billion at the end of FY 
2008.
    The Trust Fund is vulnerable because our revenue stream is 
irrational--it depends on factors that are unrelated to our costs. We 
have seen significant volatility in tax revenue from year-to-year over 
the last 15 years, which makes meaningful long-term planning 
impossible.

    Question 5. Do you consider the projections of the Congressional 
Budget Office (CBO) in your long term forecasts?
    Answer. Yes. Although our long-term forecasts are based on the OMB 
economic assumptions, we also consider the economic forecasts of CBO 
and commercial forecasting services.

    Question 6. If the concern is that the system will not raise enough 
money to cover FAA's budget, and particularly modernization costs, why 
not adjust the tax rates to ensure sufficient revenues are collected?
    Answer. Simply adjusting the tax rates would not ensure that we 
have access to the funding we need when we need it. Currently, all FAA 
spending has to compete with all other discretionary budget priorities. 
The proposal provides greater certainty that the FAA will be able to 
spend the revenue it receives because offsetting collections remove 
user fee funding from competition with the rest of the discretionary 
budget. Simply raising the tax rates on the existing taxes also would 
not address the significant fairness issues that exist in today's 
system.

    Question 7. Has the reduction in the Trust Fund over the past 5 
years been cyclical, or is it a structural problem?
    Answer. The aviation industry has recovered from the downturn that 
began in 2001, and as a result, Trust Fund revenue has begun to 
increase from the lows of 2003. However, on an inflation-adjusted 
basis, revenue in 2006 was still about 10 percent below what the Trust 
Fund received in 2000. It also appears that the revenue forecast has 
permanently ``shifted to the right.'' In other words, revenue is 
continuing to run about 25-30 percent below what we (and others in the 
industry) had projected prior to the downturn and significant industry 
changes that have happened over the last 5 years.

    Question 8. Approximately what percentage of FAA's budget would be 
funded by the General Fund under your proposal?
    Answer. 18.6 percent, which is based on the cost of specific public 
good functions.

    Question 9. What have the trends in safety been over the past 10 
years?
    Answer. In the past 10 years (1997-2006), accident and fatal 
accident rates have improved in all four major segments of the civil 
aviation system, particularly over the past 5 years.
    Part 121 airline operations: In the past 10 years, the fatal 
accident rates have decreased by more than 70 percent, while fatality 
rates have decreased by more than 80 percent.
    A decade ago there was a sudden spike in major accidents (13 
accidents in just 30 months from July 1994 through January 1997). 
However, in the past 5 years, with more than 40 million aircraft 
departures and a passenger demand that has exceeded its 9/11 base by 17 
percent, there has only been one fatal accident involving passenger jet 
operations (the Lexington, Kentucky accident in August 2006 that 
resulted in the tragic outcome of 49 fatalities).
    Part 135 commuters: There have been 2 fatal accidents in the past 5 
years, with a total of just 4 fatalities in that period. At the same 
time, the number of fatal accidents and the accident rate in on-demand 
Part 135 operations continued their long-term improvement.
    Through 1996, the industry averaged a fairly stable 25 to 30 fatal 
accidents per year. In the past 10 years, despite growth in the 
industry, the number of fatal accidents has decreased steadily, 
reaching just 11 in 2005 and 10 in 2006.
    The fatal accident rate reached its all-time low in 2005, at just 
0.34 per 100,000 flight hours. The 2006 rate, not yet published by the 
National Transportation Safety Board, will be even lower than the rate 
experienced in 2005.
    Non-scheduled 135 operators: Many safety improvements have been 
achieved from initiatives in Alaska, particularly Capstone, which 
introduced and demonstrated the effectiveness of contemporary avionics 
in small aircraft, and weather cameras, which enable pilots and 
companies to obtain real-time views of conditions in remote locations 
that have high aircraft volumes.
    General Aviation (GA): Safety improvements have benefited from the 
same initiatives in Alaska and the number of fatal accidents continues 
to decrease.
    After a relatively steady average of about 425 fatal accidents from 
1990 through 1995, the number has decreased steadily, falling to 299 
for FY 2006.

    Question 10. What modernization measures should Congress consider 
to improve safety?
    Answer. The 2007-2011 FAA Flight Plan charts the path for the Next 
Generation Air Transportation System (NextGen). Congress should 
consider modernization measures that are described in the Joint 
Planning and Development Organization's (JPDO's) Concept of Operations 
for the Next Generation Air Transportation System (NGATS).
    The goals for NextGen focus on significantly increasing the safety 
of air transportation operations. These benefits are achieved through a 
combination of new procedures and technology. The NGATS Vision Briefing 
(2005) identifies key capabilities needed to achieve these goals:

   Network-Enabled Information Access

   Performance-Based Services

   Broad-Area Precision Navigation

   Aircraft Trajectory-Based Operations

   Equivalent Visual Operations

    Through the NextGen plan, we're developing a roadmap of new 
technologies and procedures such as Required Navigation Performance 
(RNP) and Automatic Dependent Surveillance-Broadcast (ADS-B) that will 
transform the National Airspace System (NAS) over the next two decades.
    Using data to drive decisions is a key element in improving safety. 
We continue to promote national data-sharing and analysis programs, 
like Flight Operational Quality Assurance, and Aviation Safety Action 
Program. To maintain the high level of safety the public has come to 
expect we'll need to be able to use data to ferret out potential risks 
before they manifest themselves in accidents.
    Modernization through continued delivery of automatic dependent 
surveillance to key sites will improve safety by providing text and 
graphical data through programs such as Automatic Dependent 
Surveillance-Broadcast, Traffic Information Service-Broadcast, and 
Flight Information Service Broadcast to the cockpit through flight 
information services. We will continue to increase situational 
awareness by improving the capabilities of small aircraft with 
integrated displays, data-link, and traffic information.
    To help reduce runway incursions, continued deployment of the 
Airport Surface Detection Equipment-Model X (ASDE-X) warning system is 
planned. The installation of ASDE-X and retrofit of ASDE-X equipment 
capability into selected Airport Movement Area Safety System (AMASS) 
installations will improve safety. We plan to continue developing, 
testing, evaluating, and deploying runway status lights at AMASS and 
ASDE-X airports.

    Question 11. There have been concerns raised over the level of 
controllers at FAA: Does the FAA have enough controllers? Have we acted 
quickly enough to address the pending retirement wave? Is FAA hiring 
enough controllers to meet your future needs? What have controller 
levels been over the past 10 years? Relative to workload? Relative to 
safety levels? How many controllers retired in 2006 and so far in 2007 
compared to FAA's forecasts?
    Answer. Yes, overall staffing is adequate. We do have some 
facilities where we are focusing our hiring efforts. The FAA developed 
the Controller Workforce Plan at the request of Congress and as a part 
of Vision 100 to ensure that we have a plan to replace retiring 
controllers. The Plan was designed to make sure that we have enough 
controllers in the right place at the right time to control traffic. 
The expected increase in retirements has begun, and this plan addresses 
it specifically. We knew it was coming; we planned for it; and we're 
getting it done. March 7 marked the third release of our plan.
    Yes, the Controller Workforce Plan outlines the FAA's Plan to hire 
and train more than 15,000 new air traffic controllers over the next 10 
years.
    The FAA has averaged approximately 15,000 air traffic controllers 
over the past 10 years.
    Relative to workload--Air traffic controller workload and traffic 
volume are dynamic; so are staffing needs. The FAA's goal is to staff 
to traffic. This requires that we have the flexibility to match the 
number of controllers at various facilities with traffic volume and 
workload. Staffing levels negotiated with the National Air Traffic 
Controllers Association bargaining unit from 1999 to 2003 did not 
adequately reflect traffic demand, complexity, or the most efficient 
utilization of both human and fiscal resources. As a result of these 
negotiations, the FAA agreed to maintain a minimum staffing level of 
15,000 full-time equivalents, or FTEs, for FY 1999 through FY 2001, and 
to increase the level by 2 percent per year in FY 2002 and FY 2003.
    During this period, the agency committed to maintain the required 
minimum levels by hiring as many controllers as necessary to offset 
retirements and other attrition out of the controller workforce. The 
minimum levels would govern regardless of changes in the number of 
aircraft operations handled by FAA controllers, preventing the agency 
from adjusting staffing should requirements fall below the agreed upon 
minimums, and from incorporating productivity improvements from new 
technology or streamlined procedures.
    Between 2000 and 2003, we experienced a 9 percent drop in air 
traffic volume, but saw a 4 percent increase in air traffic controller 
headcount, as shown in the table below. The contractual commitment to 
minimum staffing levels required us to increase staffing even as the 
number of FAA-handled operations plummeted. As a result, we were unable 
to address the dramatic fall off in traffic following the September 11, 
2001, terrorist attacks. While the agency continued to hire, our 
customers in the aviation industry were laying off tens of thousands of 
employees and drastically scaling back operations.



    At the end of FY 2006, we had 14,618 controllers onboard, with a 
goal of 14,807 by the end of FY 2007. These staffing levels are still 
ahead of traffic.
    Relative to safety levels--In FY 2006, we achieved our performance 
safety metric on operational errors. This number was down to 4.11 
errors per million activities. In FY 2007, the operational error rate 
is tracking even lower.
    In FY 2006, there were 583 controller retirements, which were 116 
more than anticipated. For FY 2007, we're planning for 700 retirements. 
Year to date actual retirements are 362.

    Question 12. How long was it taking to train controllers prior to 
your 2004 report, how long is it taking now, and what is your training 
goal for later in this decade once you implement the concepts in the 
December 2004 Workforce Plan? What are you doing specifically to pick 
up the tempo in training new controllers?
    Answer. Prior to our 2004 report, the average time that it took to 
train controllers to work in en route centers was 5 years and in 
terminal facilities, it was 3 years. Now, the average time to train en 
route controllers has been reduced to just under 3 years and for 
terminal controllers just over 2 years. Our goal was to reduce the time 
to full certification for air traffic controllers by 33 percent. The 
updated Controller Workforce Plan details the steps we've taken to 
``pick up the training tempo'' and are briefly summarized below:

   Installing simulators and classroom facilities at the FAA 
        Academy increased class size by 33 percent in both en route and 
        terminal initial courses.

   Establishing a performance-based contract to provide on-the-
        job training instructors to high level en route and terminal 
        facilities.

   Establishing a training ``budget'' for the expected number 
        of days that each controller candidate should spend in each 
        stage of his/her training.

   Establishing a national on-the-job training database to 
        track each controller candidate throughout the training process 
        and performing regular reviews of this database with each 
        facility (i.e., reviewing training ``budget'' days).

   Redesigning controller training to a competency-based 
        learning and development framework to emphasize expected 
        proficiency levels (i.e., performance) in essential 
        competencies at each stage of a controller's training/career.

    Question 13. The Workforce Plan raised concerns about past 
practices that hired so many controllers so rapidly that it overstaffed 
the ability of field facilities to train people efficiently. Is that 
happening again already? How do you know that it is or is not 
overwhelming the ability of the dated training system to perform?
    Answer. Due to better budget management we hire throughout the year 
versus waiting until July to see how much funding is left. FAA has 
placed an executive as senior coordinator of the overall air traffic 
controller hiring and training process to ensure that we do not repeat 
these types of problems. That coordinator meets weekly with all 
stakeholders involved (including en route and terminal representatives) 
to coordinate, synchronize, and implement all controller hiring and 
training actions in accordance with the Controller Workforce Plan. This 
level of attention has already yielded many benefits to include:

        1. Centralizing the controller hiring process to ensure 
        consistency and accuracy across en route and terminal 
        functions.

        2. Establishing monthly hiring targets that consider Academy 
        and facility initial class schedules to meet overall annual 
        controller on board targets.

        3. Reducing the overall completion time for both security and 
        medical clearances by reengineering outdated processes.

    Question 14. The 2004 plan proposed the introduction of high 
fidelity simulators and new training curricula to shorten the time it 
takes to train a controller. Yet, the proposed Air Traffic Control 
Optimum Training Solution (ATCOTS) training strategy is months behind 
schedule in getting an RFP out on the street to implement new 
sophisticated training simulators and new training techniques. What 
seems to be the problem in getting ATCOTS launched? Is ATCOTS fully 
funded in your FY 2008 budget and accommodated in your reauthorization 
proposal? When will the RFP be released?
    Answer. In order to ensure a viable future, the FAA is implementing 
many improvements in air traffic controller training. Some of those 
improvements are short-term and some are longer term. As addressed in 
the question, one such short-term improvement is the deployment of 
simulators to very specific air traffic control facilities. In the en 
route environment, the FAA has already begun the acquisition for four 
additional simulators. In the terminal environment, NASA--Ames recently 
completed an analysis of four simulators that were acquired under an 
interagency agreement with the Air Force. These four proof-of-concept 
simulators were the first ever to be deployed at civilian control 
towers. Based on the NASA study, the FAA is proceeding with a full and 
open competition that will be completed by the end of this fiscal year.
    One of the longer-term improvements is the Air Traffic Control 
Optimum Training Solution (ATCOTS). ATCOTS is exploring performance-
based methods of getting trained controllers more quickly to the 
facilities that need them. It is likely the contractor that wins the 
planned competition will have strong financial incentives as part of 
the contract to deliver highly trained controllers able to be quickly 
certified to the full performance level to FAA's facilities. Early 
pronouncements of when a draft Screening Information Request (SIR) 
would be available for industry comment did not fully consider the 
breadth and detail required to transform the FAA's training paradigm. 
Although a draft SIR has yet to be published, the FAA is making 
significant progress in defining the program and preparing the 
necessary documentation for release. ATCOTS does not yet have a 
baselined schedule, however, the current working schedule anticipates a 
draft SIR released for industry comment before April 30, 2007.
    The amount of funding to aid in the transition from the current 
training methodology to the ATCOTS solution is heavily dependent upon 
the results of the competition and the chosen solution. The FAA 
anticipates that any funding needed in FY 2008 will be minimal and can 
be accommodated within the FY 2008 budget proposal. Regarding 
accommodating ATCOTS in the reauthorization proposal, the FAA does not 
anticipate obtaining any solution that does not save money over the 
current baseline. Therefore, any costs for ATCOTS are well accommodated 
by the reauthorization proposal.

    Question 15. Airport funding for the AIP program is proposed to be 
cut significantly. How is this likely to affect capital projects at the 
airports?
    Answer. We are confident that, with the programmatic changes we are 
proposing for AIP and passenger facility charges, the proposed $2.75 
billion funding level will enable the FAA to reach all high priority 
safety capacity and security projects. In particular, there will be 
adequate funds to meet all current and anticipated Letter of Intent 
commitments, fund projects to meet the FAA's flight plan goal for 
improving runway safety areas and help airports meet their Part 1542 
security requirements. We will also be able to continue work on 
critical rehabilitation and phased projects.
    However, the AIP formula changes and passenger facility charge 
increase included in our reauthorization bill are critical to assuring 
that airports can strategically target that funding to meet high 
priority airport capacity, safety, security and environmental needs of 
the airport system. The AIP formula changes will also assure that AIP 
flows to the projects that further national goals and to the airports 
that depend most heavily on AIP to meet their capital financing needs.

    Question 16. PFCs--The Administration proposes to increase PFC 
limits: How much additional funding is this likely to bring airports? 
Which airports are likely to benefit from this? If AIP is cut, but PFCs 
increased, are there guarantees to ensure the smaller amount of AIP 
funding is directed to smaller airports?
    Answer. The Administration's proposed PFC increase is one part of a 
three-part reform for the Passenger Facility Charge program.
    The bill would raise the maximum PFC from $4.50 to $6.00. This 
could provide a total of $1.5 billion to airports nationally each year. 
Of this total, about $1 billion would flow to large airports and $500 
million would flow to small airports.
    The bill would expand eligibility to any capital improvement 
project at the airport or any other airport within the local airport 
system. This change is in response to requests from small airports for 
greater flexibility on the use of PFCs to enhance airport revenue 
generating potential and to help keep airline rates and charges low. 
Every dollar of the capital cost of a project that is financed with PFC 
under the proposed eligibility means a dollar more of revenue that 
flows to the airport's bottom line. Large airports that use PFCs to pay 
debt service will also benefit because the burden of separately 
tracking debt used to finance eligible and ineligible projects will 
also be eliminated. The financing community identified these tracking 
issues as a shortcoming of current PFC requirements.
    The bill includes streamlining for the administrative review 
process. This streamlining preserves the obligations of airports to 
consult with carriers and the local community before beginning 
collection of PFCs on new projects and preserves the rights of any 
interested party to object to a project before the FAA. However, the 
current administrative process includes many bureaucratic paperwork 
requirements that were imposed when the program was new, and we were 
unsure about how airports would go about implementing PFC collections. 
The PFC has now matured and controversies over funding of specific 
projects are very rare. We believe that many of the paperwork 
requirements of the current program are no longer required to protect 
the public, and we are proposing to eliminate them.
    This increase in PFC collections is balanced against discontinuing 
the passenger entitlements for the largest primary airports--the top 70 
or so. Currently these airports turn back 50 percent or 75 percent of 
their calculated passenger entitlements if they are collecting a PFC. 
Our proposal includes a two-year phaseout of the passenger entitlements 
giving airports time to do the paperwork needed to implement the 
increased PFC. Every primary airport will benefit from this proposal, 
seeing increases from the PFC increase from a few percent to over 400 
percent. The smaller increase is seen in the small primary airports. 
That is because these airports are retaining their passenger 
entitlements at current levels, while increasing their PFC revenue. So, 
their net increase in revenue is rather modest. However, for the 
largest primary airports, especially those not collecting a PFC, the 
increases are much more dramatic.
    The Administration proposal relies on both the PFC increase and the 
AIP formula changes to redirect funding to small airports. As noted 
above, the PFC increase could generate as much as $500 million for 
small airports. In addition, although large airports will have their 
passenger entitlements phased out, small airports will keep their full 
passenger entitlement they have received at current AIP funding levels. 
There will be no reduction when AIP is below $3.2 billion, as would 
happen under current law.
    Also, small airports will benefit from a dedicated small airport 
discretionary fund, as well as the proposed minimums in overall 
discretionary, which will ensure that all high priority safety, 
security, capacity and environmental projects at airports of all sizes 
will be funded.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Byron L. Dorgan to 
                         Hon. Marion C. Blakey
    Question 1. I understand the FAA's goal to make payments more 
transparent and linked to the cost imposed on the FAA. But even if fees 
collected by the airlines are linked to the costs they impose on the 
system, what controls can there be to ensure that they pass on the 
costs in an equal fashion as well? What would stop them from charging 
consumers in non-competitive markets more because they are less able to 
pass on the costs in competitive markets?
    Answer. The government does not regulate airfares, so the 
competitive market will determine how much of the fees are passed on to 
consumers, and that will likely vary market by market. However, it is 
important to note that overall, commercial carriers and their 
passengers would be paying significantly less into the system under our 
proposal than under the current financing structure.

    Question 2. I understand the FAA is proposing a BRAC type process 
to realign and close some FAA facilities and services. In the past this 
has seemed like a process to consolidate in more urban areas, while 
removing facilities from more rural areas. While I understand some 
efficiencies can be necessary, I think some guidelines are needed, 
safety simply cannot be compromised. In the draft proposal, I see that 
you would create a five person commission that would be charged with 
selecting what facilities would close.
    What criteria are there for the selection of who would be on the 
Commission? What criteria are there that should be followed by the 
Commission in making its recommendations? It seems to me that this 
proposal is quite vague and leaves enormous discretion with no 
assurances that safety and common sense will be a priority over cost 
savings?
    Answer. The purpose of Section 409, which establishes a process for 
the realignment or consolidation of services and facilities, is to help 
reduce the FAA's capital, operating, maintenance and administrative 
costs with no adverse effect on safety.
    The criteria for making the recommendations for realignment or 
consolidation of services or facilities are specifically required in 
the legislation to be made available for public comment before being 
finalized. The five-member commission would be appointed by the 
Secretary before the criteria are finalized, and thus they will have an 
opportunity for input. When the recommendations for realignment or 
consolidation are made by the Administrator, the commission will gather 
input from the public before making its report to the President--and 
transmit to the Congress their report at the same time they send it to 
the President.
    The authorizing legislation specifically requires there to be no 
adverse impact on safety. The criteria to be used will be developed 
with public input, keeping the emphasis on safety. The commission's 
recommendations will be based on public input, again keeping the focus 
on safety.
    Because of the significant opportunities for public input and 
Congressional oversight, we are confident the process will yield 
results that will help reduce our costs while maintaining the highest 
levels of safety.

    Question 3. Currently in North Dakota there are 54 airports that 
are part of the National Plan of Integrated Airport Systems (NPIAS). 
Twenty of those airports have less than ten aircraft based there. It is 
my understanding that the new proposal would eliminate AIP funding to 
those airports. Can you please explain how the revised funding 
allocations would affect such smaller airports, and the justification 
behind it?
    Answer. The Airport Improvement Program has long been a strong 
supporter of the smaller airports in the national aviation system. On 
average, about two-thirds of all AIP grants are given to the smaller 
airports in the system. The Administration's proposal continues that 
strong support for general aviation airports, the smallest airports, 
with three critical changes to the existing AIP formulas--an increase 
in guaranteed state apportionment, creation of a dedicated small 
airport discretionary fund, and a higher Federal share for the smallest 
GA airports.
    General aviation airports have enjoyed an individual entitlement 
since 2001, when AIP hit $3.2 billion. FAA supports the non-primary 
entitlement program. Therefore, we have proposed to maintain it at any 
level of AIP. Under current law, if AIP were to fall below $3.2 billion 
the non-primary airport entitlement would disappear. Our proposal 
eliminates this ``trigger.''
    However, under current law, all general aviation airports in the 
NPIAS can qualify for same $150,000 maximum entitlement. We thoroughly 
reviewed general aviation airport capital needs from both an 
engineering and planning perspective. Our review confirmed that not all 
GA airports are the same. Larger, busier, more complex GA airports have 
greater capital needs than low activity single runway GA airports. The 
uniform $150,000 maximum non-primary entitlement means some airports 
are not getting all the money they need on an annual basis, and other 
airports are getting more than they need.
    Therefore, we have proposed a tiered GA entitlement program that 
will be allocated, regardless of AIP level. For decades, our passenger 
entitlement formulas have recognized that all commercial service 
airports are not created equal, allocating entitlement funds based on 
the number of passengers who use that airport. This proposal applies 
the same concept to general aviation airports, with a formula that 
recognizes that they are not all equal.
    Our tiered proposal will provide the largest, busiest non-primary 
airports with $400,000 per year. For the smallest airports, the annual 
individual entitlement would be eliminated. However, these airports 
will continue to qualify for state apportionments and discretionary 
funds. In addition, for this one category of airports we are proposing 
to extend the 95 percent Federal share, which would otherwise revert to 
90 percent at the end of FY 2007.
    The smaller general aviation airports have capital development 
needs, however, this need is cyclical in nature, not annual. Moreover, 
when AIP is needed, the amount usually exceeds what could be funded 
with an annual apportionment need. These airports typically need a 
major runway and taxiway rehabilitation every 15 years or so, projects 
that can cost several million dollars. But in the years between, they 
may have no capital project need.
    Moreover, modifications to the state apportionment and 
discretionary fund calculation may help airports gain access to these 
funds. Today, the state apportionment is calculated in a two-step 
process. First, 20 percent of AIP is allocated to non-primary airports. 
Then, individual non-primary entitlements are totaled and deducted from 
the 20 percent. The balance is allocated among the states. In FY 2007, 
non-primary entitlements increased by an average of $25 million. This 
increase meant a corresponding decrease in the state apportionment even 
though AIP stayed level. Our proposal establishes the state 
apportionment as a separate calculation at 10 percent of AIP, with a 
minimum of $300 million. Thus, our proposal would provide $29 million 
more in state apportionment than was actually provided in FY 2007.
    Since the larger GA airports will be able to rely on their higher 
entitlement for more projects, more of the additional state 
apportionment will be available for use at smaller airports. Also, 
small GA airports will have access to the small airport fund.

    Question 4. It is my understanding that retirements by air traffic 
controllers are much higher this fiscal year than anticipated. In fact, 
I understand that more than 400 controllers have retired since the FAA 
imposed work rules last Labor Day. I have been informed that the FAA 
has predicted 643 controller retirements for this entire fiscal year. 
But, with seven and a half more months to go, more than 50 percent of 
projected retirements have already occurred. If the current pace of 
three retirements per day continues, our air traffic system will lose 
more than 1,000 veteran controllers in Fiscal Year 2007. That's 7 
percent of the entire workforce.
    It seems obvious that the workforce and pay rules the FAA has 
imposed on the air traffic controllers (the ``FAA Imposed Rules'') is 
causing some of our most experienced controllers to opt for retirement 
rather than continue to work under the new FAA Imposed Rules.
    Have you done any analysis of the higher-than-anticipated 
retirements? Have you done any analysis of the impact of the FAA 
Imposed Rules on air traffic controller retirements and/or morale? If 
so, please provide the Committee with than analysis. If not, why not 
and do you anticipate doing so?
    Answer. In the first 6 months of FY 2006, FAA's retirement 
projections tracked very close to actual retirements. However, in the 
second half of FY 2006, actual retirements versus projections began to 
diverge, for a total of 116 more retirements than expected by the end 
of the fiscal year. Even so, the FAA was able to proactively increase 
its planned new hires during the last quarter of the year to compensate 
for the increased retirements. The latest version of the Controller 
Workforce Plan was released on March 7 and includes an updated 
retirement projection of 700 retirements for FY 2007. We do not 
incorporate a monthly retirement forecast in the workforce plan; 
however 362 controllers have retired this fiscal year through February. 
Historically, retirements through February have been approximately 50 
percent of current totals. This year's total of 362 through February is 
in line with this trend. More controller retirements occur in January 
than in any other month--between 20-25 percent of the current total. 
This is consistent with other government employees, likely due in part 
to higher benefit payouts received from the Federal pay increase in the 
beginning of January. FY 2006 had a mid-year impact from the contract, 
so monthly comparisons to 2006 are not valid. If we compare 2007 
retirements to the averages from 2002-2005, then we are on track for 
the year. Retirement trends have been consistent, with approximately 25 
percent of those eligible to retire, retiring in the first year. This 
has not changed significantly since we began projecting retirements in 
FY 2004.
    These increases in controller retirements have been expected for 
awhile and we have been planning for them. While some of this increase 
may be attributed to contract impasse, government separation 
documentation does not require air traffic controllers to provide a 
reason for their retirement.

    Question 5. What plan, if any, do you have to replace the retired 
controllers? What plan, if any, do you have for replacing their many 
decades of experience and what do you plan to do to ensure that there 
are not mass retirements, leaving our air traffic control system with 
too few controllers? Do you have or have you discussed changes in the 
FAA Imposed Rules or returning to the bargaining table to address the 
air traffic controllers' concerns about the FAA Imposed Rules? If not, 
why not?
    Answer. The report, ``A Plan for the Future: 2007-2016, The Federal 
Aviation Administration's 10-year Strategy for the Air Traffic Control 
Workforce, March 2007'' is the agency's comprehensive plan to replace 
retiring air traffic controllers. This plan emphasizes a centralized 
hiring process and improved training program, which includes increased 
simulation capabilities at our Oklahoma City training Academy and 
select field facilities. We are confident that the new controller hires 
will be able to meet the needs of the future. Furthermore, staffing is 
and will continue to be monitored at all facilities, and we will 
continue to take action at the facility level should adjustments become 
necessary due to changes in volume, anticipated retirements or other 
attrition. We demonstrated this flexibility by proactively increasing 
our hiring pipeline during the last quarter of FY 2006 in order to 
compensate for increased losses. We are on track in our goal to have 
14,807 controllers onboard by the end of FY 2007.
    Regarding returning to the bargaining table, as you are award, the 
contract was implemented in September 2006. Consequently, bargaining 
has ended. Nonetheless, we have been in an ongoing discussion with 
NATCA in an attempt to reach a settlement of the unfair labor practice 
charges and grievances that the union has filed over implementation of 
the 2006 contract. To put the dispute into context, it should be noted 
that both management and the union had signed off on over 90 percent of 
the contract articles that were implemented last September. It was only 
after following the statutory procedure governing FAA bargaining 
impasses that the 2006 contract was implemented.

    Question 5a. In addition, I understand that the FAA has stated that 
under the FAA Imposed Rules new air traffic controllers would make more 
than $50,000 after 1 year and more than $96,000 after 5 years. Do you 
still expect that to be the case? If not, why not?
    Answer. Under the new pay scales, a controller hired in 2007 will 
make an average of almost $50,000 a year in cash (including base 
salary, locality, and premiums) in their first year and an average of 
$94,000 in their fifth year (this does not include benefits). In 
addition, the FAA pays new hires for the two to 3 years they are in 
training, as well as paying for all of their training costs.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                         Hon. Marion C. Blakey
    Question 1. In 2003, you increased the authorized number of air 
traffic controllers at Newark Airport from 37 to 40. Just last year, 
you told this Committee that the authorized number of controllers at 
Newark is now 35. As of December 2006, your spokesman in the New York 
region told the media that 31 controllers were authorized at Newark. 
Why has the number of controllers been reduced and what is the correct 
number for safe and efficient operations at Newark Liberty 
International Airport?
    Answer. Historically, the FAA has had various methods of 
calculating staffing levels. The numerous staffing levels reported to 
you is a result of the FAA refining and then making adjustments to our 
staffing levels. The old negotiated numbers of 37-40 included 
developmentals. In FY 2007 the FAA completed its transition to a 
concept of facility staffing ranges. The current staffing range for 
Newark is 30-36 Certified Professional Controllers (CPC) and Certified 
Professional Controllers In-Training (CPC-IT), combined. We expect that 
we will hire six developmentals by the end of FY 2007 in addition to 
being in the 30-36 range for CPC/CPC-IT's. The range represents the 
number of certified controllers we need to staff that facility 
adequately. While most of the work is accomplished by CPC's, it is 
important to note that during the certification process, work is also 
being accomplished in facilities by CPC-IT's and developmentals who are 
proficient, or ``checked-out'' in specific sectors or positions, and 
can handle workload independently. These position-qualified 
controllers, along with CPC's, are the focus of our staffing to traffic 
efforts.
    The process for establishing the 2007 controller staffing ranges 
involved the use of numerous data sources. In developing these ranges, 
the FAA considered actual traffic, forecasted traffic, past facility 
performance, the performance of other similar facilities, productivity 
improvements, industrial engineering standards and recommendations from 
the National Academies of Science, along with input from managers in 
the field, overtime trends, time on-position data, and expected 
retirements and other losses. Previous staffing numbers did not 
adequately reflect the fluidity of traffic demands, complexity, 
controller attrition, or the most efficient utilization of both human 
and fiscal resources. We developed these ranges to ensure that there 
are enough controllers to safely and efficiently manage the current and 
future traffic demands.

    Question 2. Will you use scheduled overtime as a staffing tool this 
summer during the high travel season? Have you budgeted funds for 
Newark Liberty International Airport tower operations for such purpose?
    Answer. During Newark's, or any facility's, peak traffic period, it 
is anticipated that ``scheduled overtime'' will be used to some degree. 
Facility managers are authorized to use overtime as needed to operate 
safely and efficiently. However, the FAA and its facility managers 
recognize there is a need to be fiscally responsible. It is expected 
that, if feasible, facility managers would, along with ``scheduled 
overtime,'' consider schedule adjustments and/or redirecting resources 
to the operation, i.e., utilizing support staff or supervisors to 
temporarily work positions during periods of high traffic demands.
    The amount of overtime used by a facility during periods of peak 
traffic also varies by type. Incidental overtime, is overtime used for 
an unplanned resource event such as a controller using sick leave. 
Scheduled overtime is planned in advance and used for anticipated 
resource issues such as peak travel periods, air shows, etc.
    The use of staffing ranges is now helping the FAA to better predict 
the degree to which scheduled overtime will be necessary. A facility's 
``on board'' staffing level fluctuates throughout the year as people 
retire, transfer, lose their medical qualifications, etc. Taking into 
account the fluidity of on-board staffing, if a facility's on-board 
staffing is in the upper end of their staffing range it can be 
anticipated that the scheduled overtime usage would be very low, with 
the opposite being true for a facility whose on-board staffing is in 
the low end of the range.
    Our current attrition projections indicate that at the end of FY 
2007, Newark will have 35 controllers on-board, which is on the high 
end of its 30-36 staffing range. So, we anticipate overtime usage will 
be relatively low at this facility, even during periods of peak 
traffic.

    Question 3. Why is the FAA hiring another manager at Newark for a 
total of three upper-level managers?
    Answer. Newark has been authorized three ``upper-level managers'' 
consisting of an Air Traffic Manager, Support Manager, and an 
Operations Manager for many years. Due to various budgetary concerns, 
the Support Manager position at Newark has been unfilled for the last 2 
years. Newark is currently trying to fill this position.
    To understand why this position is needed, it helps to understand 
Newark's operation within the context of the New York District. Newark 
is one of 13 facilities that make up this district. La Guardia tower's 
Air Traffic Manager, besides serving in that capacity, is also the 
district manager for the New York District. This district as a whole is 
authorized four Operations Managers and three Support Managers. Along 
with addressing operational and administrative issues at their own 
facilities, the Operations and Support Managers address operational and 
administrative issues for those facilities within the New York District 
that do not have the same levels of support.
    So, the added Support Manager will not only serve the operation at 
La Guardia, but will provide needed support for the district at large.

    Question 4. Why did you cut the Controller Incentive Pay (CIP) 
program for controllers, but not managers? And how will this impact the 
ability of the FAA to get certified controllers to work at Newark? I 
understand that the historical failure rate of controllers with no air 
traffic experience at Newark is greater than 75 percent. Is this true? 
And if so, why not bring in experienced controllers from other 
locations? Is there a disincentive to transfer to Newark as a result of 
the discontinuance of the CIP program?
    Answer. Design of a new pay system for frontline and facility 
managers is in process. While the work is still being done to design 
the new pay system for frontline and facility managers, the expectation 
is that Controller Incentive Pay (CIP) will be phased out when the new 
system is implemented (similar to the phasing out of CIP for bargaining 
unit controllers). Guiding principles for the new pay system include 
continuing the FAA's progress in moving all portions of the workforce 
into the agency's Core Compensation Plan, providing incentives for 
career progression into management, and finding cost savings.
    In terms of the impact of phasing out CIP for controllers, a number 
of new incentive pay options are being employed now to attract 
controllers to higher level and hard-to-fill facilities.
    The historical failure rate for controllers undergoing on-the-job 
facility training is 8 percent. This level of attrition does not 
necessitate other options that the FAA can use to supplement specific 
facilities with additional controllers, but all options remain on the 
table for our ``focus facilities.''

    Question 5. Regarding the Airspace Redesign project in the New 
Jersey/New York/ Philadelphia regions, an FAA official dismissed the 
noise problem as ``at best, a side issue.'' Why has the FAA continued 
to ignore the air noise issues during the redesign efforts? Do you 
recommend that Congress address it?
    Answer. Environmental factors, including noise, are a significant 
consideration in developing airspace and procedural changes. We 
consider noise, and we do our best to minimize the impact of noise. We 
have dedicated significant resources toward addressing the 
environmental and noise issues that arose as part of the New Jersey/New 
York/Philadelphia Metropolitan Area Airspace Redesign. Over half of the 
spending on this project in 2006 and 2007 has been spent on developing, 
analyzing, and reporting the noise mitigation strategies for the 
airspace. The results of this significant effort were released to the 
public on March 23, 2007. There are public meetings scheduled for late 
April/early May. We appreciate Congressional interest, but believe 
additional action is not required. The Federal Aviation Administration 
takes its role as an environmental steward seriously and has followed, 
and often exceeded, the environmental consideration required by law 
with this airspace project.

    Question 6. The FAA's budget includes an ``adjustment'' in fuel 
taxes on general aviation users. Will these increases be equal for all 
types of general aviation, including corporate jets, air ambulances, 
and agricultural pilots?
    Answer. Air ambulances will continue to be exempt from taxes, just 
as they are under the current tax structure. Under our proposal, the 
cost to provide service to air ambulances would be paid from the 
General Fund. The fuel tax for corporate jets would increase from 21.8 
cents per gallon to 70 cents per gallon. The fuel tax for agricultural 
pilots (assuming they use piston airplanes) would increase from 19.3 
cents per gallon to 70 cents per gallon. However, the total amounts 
paid by these types of users would be vastly different because 
corporate jets burn significantly more fuel than piston airplanes. This 
is why, under our proposal, jets and other turbine GA aircraft account 
for 10 percent of the user funding, while piston aircraft account for 
only 1 percent.

    Question 7. Has the FAA performed or analyzed recent studies 
regarding the adequacy of the ``Age 60'' rule for pilots? Is the FAA 
considering revisiting this rule? What would be the safety impact of 
doing so, considering what you stated on the record in March of last 
year:

        ``The FAA has conducted five studies, using various analytic 
        methodologies, on the relationship of pilot age to accidents. 
        The most recent study, published in April of 2004, corroborates 
        the findings of two previous empirical studies--specifically 
        that accident rates appear to increase with pilot age. Recent 
        non-FAA research, published in 2005 in open, peer-reviewed 
        scientific literature, reported that the risk of violations of 
        flight regulations increased with age in a longitudinal study 
        of commuter air carrier and air taxi pilots. Violations of 
        flight regulations are important indicators because pilots with 
        violations are more likely to be involved in accidents or 
        incidents than pilots without violations.''

        ``The `Age 60' rule has served well as a regulatory limit in 
        the United States. The FAA recognizes that science does not 
        absolutely dictate what age is most appropriate for retirement. 
        No physiological and cognitive decline is associated with aging 
        because it is variable in severity and onset among individuals. 
        The consistency of findings across empirical studies, however, 
        suggests that changes to the `Age 60' rule should be approached 
        cautiously; so, we presently have no plans to revise the 
        rule.''

    Answer. The FAA has reviewed the Age 60 rule several times over the 
course of many years to determine whether new and sufficient evidence 
exists to warrant amendment. In response to many challenges received 
over the years, the FAA has conducted studies, provided testimony and 
position papers, contracted independent studies, reviewed external 
studies, and invited public comment. Numerous age studies have been 
accomplished with results largely inconclusive. What is clear is that 
there is no absolute formula, no single right answer.
    Conducting further study on the issue no longer appears productive. 
The probability of a catastrophic event is so small that a prospective 
risk analysis would take years, be extraordinarily expensive, and most 
likely still be inconclusive. Efforts are better focused on continuing 
to gather economic and safety data from industry partners, who continue 
to participate with us on the Age 60 Aviation Rulemaking Committee, and 
undertaking public rulemaking as announced on January 30.
    Many technological and medical changes have occurred since an Age 
60 limit was set in 1959. Current simulation technology, sophisticated 
aircrew training procedures and standards, and enhanced flight safety 
measures we have now were nonexistent then. Life expectancy is longer 
and individuals are more active and health-conscious. The Aerospace 
Medical Association has testified that pilots should not be restricted 
from the cockpit based on age alone and is in favor of rule change. 
According to ASMA it is misleading to assume all risk resides in older 
pilots. The Civil Aviation Medical Association also has publicly 
recommended that the rule be changed.
    Recently adopted international standard allows pilots certificated 
outside the United States and flying for a foreign air carrier on a 
non-U.S. registered aircraft to fly into the United States over the age 
of 60. The Age 60 rule, however, precludes U.S. pilots from exercising 
airline transport privileges domestically after turning 60 unless they 
chose to fly for a foreign air carrier that has adopted an over-age-60 
standard.
    During rulemaking deliberations, the FAA expects to be able to make 
the case that proposing rule change would not adversely affect safety. 
As with all rulemaking, however, the agency will proceed cautiously in 
the interest of maintaining the current level of safety. Adopting a 
final rule will occur only after careful consideration of all public 
input received on the proposal.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Mark Pryor to 
                         Hon. Marion C. Blakey
    Question 1. Last month you announced that the FAA intends to raise 
the mandatory retirement age for commercial airline pilots to 65. This 
rulemaking will bring our Nation's pilots in line with the 
International Civil Aviation Organization's new Age 65 rule. The FAA 
already convened an Aviation Rulemaking Committee that addressed 
implementation concerns. Does the FAA need another Aviation Rulemaking 
Committee to discuss this issue?
    Answer. Although the Age 60 Aviation Rulemaking Committee (ARC) did 
not come to consensus on whether the FAA should adopt the International 
Civil Aviation Organization (ICAO) standard regarding an upper age 
limit, the ARC provided very useful information in its report and 
associated appendices. The FAA has recently contacted the ARC with a 
request for economic information. We do not anticipate establishing 
another ARC to discuss this issue.

    Question 2. I understand that the Notice of Proposed Rulemaking 
process may take a long time to complete. In the meantime, many pilots 
will turn 60 and be subject to the Age 60 Rule. Dos the FAA have any 
plans to expedite the Notice of Proposed Rulemaking process? Does the 
FAA have plans for considering issuing waivers or exemptions to those 
pilots turning 60 this year?
    Answer. Except in limited circumstances, the Administrative 
Procedure Act requires that a Notice of Proposed Rulemaking be issued 
before any final regulatory change can be made. This allows the public, 
the industry, and individual pilots an opportunity to comment. The 
rulemaking process is deliberative and purposeful, thus taking time. 
That said, we intend to expedite the rulemaking process to the extent 
possible. While rulemaking is ongoing it would be inappropriate to 
presuppose the outcome of the deliberative process by issuing 
exemptions to individual pilots.

    Question 3. There are many airports in Arkansas that rely on 
Essential Air Service funding to keep ticket costs reasonable and 
service available for rural customers. Each year for the past several 
years, the President has requested $50 million for EAS with a number of 
proposed requirements. This amount is half of the money necessary to 
maintain EAS current services. What have you laid out in this proposal 
for the future of rural airports that currently benefit directly from 
EAS and the Small Community Air Service Program?
    Answer. The EAS program has had an important impact on ensuring 
rural America access to our Nation's air transportation system. The 
Administration believes that it is time to take a fresh look at the 
program to ensure that it is accomplishing its objectives as 
effectively and efficiently as possible. The laws governing our 
administration of the EAS program have not changed significantly since 
its inception almost 30 years ago, notwithstanding the dramatic changes 
that have taken place in the airline industry. The advent of low-cost 
carriers has resulted in passengers' being willing to drive farther 
distances to get lower fares. As a result, many EAS flights are nearly 
empty as passengers continue to drive to nearby, major airports. 
Nonetheless, there is a core of communities for which EAS truly is 
essential, such as those that have no roads at all. The 
Administration's proposed changes focus the resources on the most 
isolated communities, ensuring that they would continue to enjoy the 
same service levels that have been supporting them for nearly 30 years.
    It is important to note the extensive support that the Department 
provides for small airports in terms of supporting the infrastructure 
that make any service possible. In the last 2 years (FY 2005 and FY 
2006), the FAA has provided over $4 billion in grants for small 
airports, or nearly \2/3\ of the Airport Improvement Program (AIP). 
Furthermore, the Department's reauthorization proposal would continue 
to direct AIP to small airports. AIP will provide over $8.5 billion to 
airports of all sizes through the term of the bill. The reauthorization 
proposal would also add new AIP eligibility for ADS-B ground stations 
and expanded eligibility for revenue producing projects at small 
airports that will help their financial stability.

    Question 4. What are the generally accepted methods and principles 
for assigning costs of ATC services to users?
    Answer. The International Civil Aviation Organization (ICAO) 
specifically calls on states to ensure that no users are burdened with 
air navigation services costs not properly allocable to them according 
to sound accounting principles. Where cost allocation needs to take 
place among users, the total costs should be allocated equitably among 
the different categories of users served by the route facilities and 
services concerned. Every air navigation service provider we studied 
uses accounting principles similar to FAA's for cost allocation. Most 
use economic principles such as ability/willingness to pay in cost 
recovery (as does the FAA's proposal by allowing aircraft weight to be 
a factor in the terminal fees). However, allocation and recovery are 
separate issues. NAV CANADA uses an accounting method known as 
``activity-based costing'' to allocate costs among services, but does 
not allocate costs among users. (In Canada, all users pay user fees, 
except for low-end GA, which pays an annual fee that is not intended to 
cover its cost.)

    Question 5. How do the views of carriers and the general aviation 
community compare and contrast with regard to the assignment of costs 
proposed in your plan for ATC services?
    Answer. The air carriers generally support our assignment of costs, 
though feel that we should have assigned more costs to GA in cases 
where GA uses a TRACON, but lands at a secondary airport. High-end 
general aviation believes that we assigned them too much cost because 
the system was built for commercial airlines and we treated airline 
jets and corporate jets equally when they used the same facilities. (To 
the extent corporate jets do not use the large airports favored by 
airlines, they do not get burdened with the costs of those facilities.) 
Low-end general aviation agrees with our allocation that they are 
marginal users, although the allocation still likely assigns them a 
higher total cost than they would like.

    Question 6. How do the FAA and airport industry estimates of 
planned airport capital development compare?
    Answer. While it appears that the actual increase in airport 
capital needs is far greater than the 4 percent that FAA has been 
reporting, once the figures are normalized and the rules applied 
similarly, the difference is very small.
    Differences between the ACI and NPIAS estimates for 80 airports 
totaled $34 billion. FAA and ACI agreed to compare estimates for the 14 
airports that accounted for $29 billion, or 85 percent of the 
difference. When the ACI numbers are adjusted to be comparable to the 
NPAIS (2005-2009, AIP-eligible, unfunded development only) the total 
difference for the 14 airports was reduced from $29 billion to $201 
million, i.e., 99 percent of the difference was eliminated.
    Industry estimates include funding that is already identified, but 
not yet paid-out (PFCs, local or state funds, bonds, cash earnings). 
However, once a funding source has already been identified, FAA does 
not consider that as an unfunded need and those costs are removed from 
the ``needs'' column. This accounts for $10 billion of the difference.
    The industry estimates include $6 billion beyond the 5-year period 
covered in the NPIAS report. The industry estimates include $8 billion 
in ineligible projects that cannot be funded with AIP. Finally, the 
industry groups include $5 billion in a category called ``other'' which 
is not included in the FAA estimate since our estimates only include 
identified and specific items.

    Question 7. How much are airports spending on capital development 
and where is the money coming from?
    Answer. Historically, AIP has accounted for approximately 20 
percent of capital investments at all airports as is reflected in GAO 
reports and testimony issued in 1998 and 1999. Other sources of funding 
include airport revenue bonds, rates and charges assessed against 
carriers, commercial revenue (e.g., parking lots and concession 
revenue) aviation fuel taxes and (for commercial service airports) 
passenger facility charges. However, within the commercial service 
airport category, the percentage of AIP participation varies with the 
size of airports. Smaller airports are generally more dependent on AIP 
funding to meet capital development needs.
    According to GAO testimony in 2007, from 2001 through 2005, 
airports received an average of about $1.3 billion a year for planned 
capital development including eligible and ineligible work. The primary 
source of funding was bonds, which averages almost $6.5 billion per 
year (or about 50 percent), followed by Federal grants and passenger 
facility charges, which account for $3.6 billion (27 percent) and $2.2 
billion (17 percent) respectively.

    Question 8. If projected funding is less than planned development 
for some airports, what options exist for increasing funding for 
airports?
    Answer. Generally 5-year planned development for airports as shown 
in the National Plan of Integrated Airport Systems exceeds the funding 
available for airports in that same period. On an annual basis, AIP 
grants have typically funded less than half of the Nation's planned 
airport development. The balance of the funds come from a combination 
of state or local investment, private financing, airport revenue and 
Passenger Facility Charges. The proposed increase in the Passenger 
Facility Charge will bring an additional $1.5 billion to airports to 
use for capital development projects. The increase in PFCs flowing to 
the 70 or so largest airports will more than offset the proposed 
reduction in passenger entitlements for those airports.
    However, FAA recognizes that airport financial need is stratified, 
with the largest of the primary airports in a stronger financial 
position with a greater ability to raise capital, fund projects with 
little or no direct Federal assistance, and work directly with the 
financial markets on their largest projects.
    Smaller airports rely more heavily on Federal funds for their 
capital development. For this reason, we have proposed two provisions 
specifically targeted to smaller airports. For smaller primary 
airports, we have proposed keeping entitlements at current levels, 
keeping the minimum entitlement at $1 million. We would eliminate the 
trigger that reduces the minimum entitlement level to $650,000 and 
otherwise cuts an airport's entitlements in half whenever AIP is below 
$3.2 billion.
    For the non-primary airports, we have proposed tiering the non-
primary entitlements, which will direct more annual entitlement funding 
to the general aviation airports that have the greatest planned 
development needs. We have also proposed increasing the state 
apportionment and adding a minimum state apportionment level of $300 
million. (Currently, there is no minimum amount of state 
apportionment.) We also propose to increased the minimum discretionary 
that FAA can use for high priority projects and create a separate Small 
Airport Discretionary fund. This larger amount of discretionary money 
will make it easier for small airports to compete for their high 
priority projects. These two changes will make a big difference to 
small non-primary airports, since most grant funding is from a 
combination of state apportionment and discretionary dollars, not the 
non-primary entitlement.

    Question 9. I understand that the FAA plans to hire nearly 12,000 
new air traffic controllers by 2016. Currently, applicants are only 
accepted from the Controller Training Initiative (CTI) or the Veteran's 
Readjustment Appointment (VRA). What are the eligibility requirements 
for veterans?
    Answer. In addition to applicants from CTI and VRA, we are also 
currently accepting applicants from the general public, former FAA 
controllers, and employees of other agencies. Veterans without 
experience in air traffic control can apply to the general public 
announcements. Veterans' preference applies when we hire from the 
general public. Additionally, we have recently entered into a job 
training agreement with the Department of Veterans Affairs (VA), 
Veterans Benefits Administration (VBA). The VA will recruit veterans 
enrolled in VBA's Vocational Rehabilitation and Employment (VR&E) 
Program. Under the VR&E Program, the VBA can pay for the veterans' 
training at the FAA Academy, and FAA will provide individuals who 
successfully complete Academy training with their own separate hiring 
mechanism within the FAA's controller hiring processes.
    The FAA has adopted the same basic requirements for VRA that the 
rest of government uses. These are listed below. The FAA's VRA 
announcements are targeted to former military controllers, so the 
applicants must also have appropriate credentials as controllers from 
the military and meet the other eligibility requirements for the air 
traffic control occupation.
    VRA Eligibility Requirements: The following veterans are eligible:

   Veterans who have a compensable service-connected disability 
        rating of 10 percent or more;

   Veterans who served on active duty in the Armed Forces 
        during a war or in a campaign or expedition for which a 
        campaign badge or expeditionary medal was awarded;

   Veterans who served on active duty in the Armed Forces 
        during a military operation for which an Armed Forces Service 
        Medal was awarded on or after June 1, 1992; or

   Veterans who have separated from active service (for other 
        than training purposes) within the last 3 years. In addition to 
        the above criteria, all veterans must have been discharged 
        under general or honorable conditions.

    Question 10. The reason I ask is because I have been contacted by 
an Arkansas veteran experiencing difficulty with the air traffic 
controller hiring process. I believe our country's experienced veterans 
would be a great asset to the FAA. Does the FAA plan to re-evaluate the 
hiring process or extend eligibility to ensure qualified veterans are 
given adequate consideration and positions are filled based on merit 
and qualifications, not on eligibility technicalities?
    Answer. The FAA has adopted the same basic requirements for VRA 
that the rest of government uses. These are listed in the response to 
Question 9. The FAA's VRA announcements are targeted to former military 
controllers, so the applicants must also have appropriate credentials 
as controllers from the military and meet the other eligibility 
requirements for the air traffic control occupation. As noted in 
response to Question 9, veterans without experience in air traffic 
control can apply to the general public announcements. Veterans' 
preference applies when we hire from the general public.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Thomas R. Carper to 
                         Hon. Marion C. Blakey
    Question 1. Noise impacts have begun to become such a big problem 
that the airport expansions are meeting with greater and greater 
opposition. How does the FAA plan to reduce the noise impacts on 
surrounding neighborhoods?
    Answer. The Administration proposal has a four-part approach to 
reducing noise impacts on neighborhoods that surround airports. First, 
we have recommended extending a new program that supports noise-
impacted communities with grants for planning and projects to reduce 
non-compatible land uses. This program started as a pilot program in 
Vision 100, but was scheduled to sunset September 30, 2008.
    Next, we have expanded AIP eligibility to include environmental 
assessment of flight procedures that are determined to have impact on 
noise reduction under 14 CFR Part 150, Airport Noise Compatibility 
Planning. Operational procedures offer significant promise for near-
term environmental improvements.
    Third, we have taken a longer-term view by adding $5 million in the 
Airport Cooperative Research Program for dedicated environmental 
research and standing-up a new ``Proof of Concept'' program that will 
allow current environmental research, including noise reduction, to be 
field-tested on airports.
    Finally, we propose to provide a more stable funding source for 
airport noise compatibility programs by converting the calculation of 
the set aside from a percentage of discretionary AIP funds to a 
percentage of total AIP funds. The set-aside will no longer be subject 
to reduction if the level of AIP apportionments or apportionment carry-
over funds goes up.
    This four-part program will help communities see immediate and 
long-term reduction of impacts from airport noise.

    Question 2. What strategies can airports employ with regard to 
routing planes and keeping them at higher altitudes for longer?
    Answer. There are several strategies that may be included in 
airspace designs to mitigate the impact of noise on communities near 
airports. Designers may be able to concentrate departure traffic over 
less noise sensitive areas, such as developing tracks that fly over 
water. Aircraft might be kept at higher altitudes by optimizing 
vertical profiles for arrivals and by raising altitudes for level 
flight segments. Modern navigation methods, such as Area Navigation 
(RNAV), might be used to adjust ground tracks over nonresidential 
areas. It is important to note that noise, especially close to an 
airport, cannot be eliminated by just moving routes. Rerouting aircraft 
may redistribute noise, potentially minimizing exposure to residential 
areas.

    Question 3. What is the state of development of new, quieter 
aircraft? How might Congress further research into new, quieter 
technologies for the next stage of aircraft?
    Answer. We are currently facing larger research and development 
challenges at a time when we need to make larger technological leaps to 
continue to reduce noise while the aviation system grows. NASA and 
industry have conceived some promising concepts under the Quiet 
Aircraft Technology (QAT) program. Examples include:

   quieter engine liners

   variable shape chevrons

   advanced features in flight management systems for quiet and 
        efficient climb and landing procedures

    The QAT program has come to a conclusion, and there is no follow-up 
NASA program to mature the research. Therefore, we need more advanced 
and applied research and development to move promising concepts from 
the lab to the aircraft. To bring technology improvements online for 
NextGen requires successful technology maturation and certification 
within the next 5-8 years.
    Congress can give favorable consideration to our proposal in 
section 606 of our bill for a research consortium to bring new aircraft 
technologies to maturity, with performance objectives for noise (10 
decibel reduction to limit significant noise impact inside the airport 
boundary)--as well as for emissions, energy efficiency, alternative 
fuels. Work would be funded through NextGen.

    Question 4. What is the FAA doing to advance the use of quieter 
Stage 3 aircraft in the cargo industry where the lifespan of planes is 
much longer?
    Answer. All large subsonic turbojet airplanes (over 75,000 lbs) 
that operate in the contiguous U.S. are Stage 3. There is no difference 
in Stage 3 requirements for airlines or cargo aircraft. The current 
requirement was mandated in the Airport Noise and Capacity Act of 1990, 
where Congress directed that domestic and foreign civil subsonic 
turbojet airplanes with maximum weight of more than 75,000 pounds meet 
Stage 3 standards to operate within the contiguous United States after 
December 31, 1999.

    Question 5. How many air traffic controllers have left or retired 
since contract negotiations fell apart and work rule changes were 
imposed? What do you believe has been the impact of the rule changes on 
employee retention?
    Answer. In FY 2007 year-to-date, 362 air traffic controllers have 
retired and another 41 retired in the last few weeks of September 2006 
(FY 2006) after the contract was implemented. In the first 6 months of 
FY 2006, FAA's retirement projections tracked very close to actual 
retirements. However, in the second half of FY 2006, actual retirements 
versus projections began to diverge, for a total of 116 more 
retirements than expected by the end of the fiscal year. Even so, the 
FAA was able to proactively increase its planned new hires during the 
last quarter of the year to compensate for the increased retirements.
    In FY 2007, we projected 700 retirements. Historically, retirements 
through February have been approximately 50 percent of current totals. 
This year's total (362 through February 2007) is in line with this 
trend. More controller retirements occur in January than in any other 
month--between 20-25 percent of the current total. This is consistent 
with other government employees, likely due in part to higher benefit 
payouts received from the Federal pay increase in the beginning of 
January.
    These increases in controller retirements have been expected for a 
while and we have been planning for them. While some of this increase 
may be attributed to contract impasse, government separation 
documentation does not require air traffic controllers to provide a 
reason for their retirement.

    Question 6. Much of the needed modernization that is needed is in 
the air traffic control system. What has been the involvement of the 
controllers in the development of that new system?
    Answer. The Operational Evolution Partnership office with the ATO 
has an air traffic controller on full time detail. The current plan is 
to keep at least one controller assigned to that office at all times.

                                  
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