[Senate Hearing 110-1214]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 110-1214
 
     OUTLOOK FOR SUMMER AIR TRAVEL: ADDRESSING CONGESTION AND DELAY

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



                                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

                             SECOND SESSION

                               __________

                             JULY 15, 2008

                               __________

    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

                             SECOND SESSION

                   DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska, Vice Chairman
    Virginia                         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           ROGER F. WICKER, Mississippi
AMY KLOBUCHAR, Minnesota
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Lila Harper Helms, Democratic Deputy Staff Director and Policy Director
   Christine D. Kurth, Republican Staff Director and General Counsel
                  Paul Nagle, Republican Chief Counsel
                                 ------                                

       SUBCOMMITTEE ON AVIATION OPERATIONS, SAFETY, AND SECURITY

JOHN D. ROCKEFELLER IV, West         KAY BAILEY HUTCHISON, Texas, 
    Virginia, Chairman                   Ranking
JOHN F. KERRY, Massachusetts         JOHN McCAIN, Arizona
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           ROGER F. WICKER, Mississippi
AMY KLOBUCHAR, Minnesota

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 15, 2008....................................     1
Statement of Senator Klobuchar...................................    50
Statement of Senator Pryor.......................................    55
Statement of Senator Rockefeller.................................     1
Statement of Senator Stevens.....................................     3
    Prepared statement...........................................     3

                               Witnesses

Fleming, Susan, Director, Physical Infrastructure Issues, U.S. 
  Government Accountability Office...............................    15
    Prepared statement...........................................    16
Krakowski, Henry P. ``Hank'', Chief Operating Officer, Air 
  Traffic Organization, Federal Aviation Administration; 
  accompanied by Hon. Tyler D. Duvall, Assistant Secretary for 
  Transportation Policy and Acting Under Secretary for Policy, 
  Department of Transportation...................................     5
    Prepared statement...........................................     6
Meenan, John M., Executive Vice President and COO, Air Transport 
  Association of America, Inc....................................    34
    Prepared statement...........................................    35

                                Appendix

Boxer, Hon. Barbara, U.S. Senator from California, prepared 
  statement......................................................    65
Smith, Hon. Gordon H., U.S. Senator from Oregon, prepared 
  statement......................................................    65
Response to written question submitted to Hon. Tyler D. Duvall 
  by:
    Hon. Barbara Boxer...........................................    66
    Hon. Daniel K. Inouye........................................    66


     OUTLOOK FOR SUMMER AIR TRAVEL: ADDRESSING CONGESTION AND DELAY

                              ----------                              


                         TUESDAY, JULY 15, 2008

                               U.S. Senate,
  Subcommittee on Aviation Operations, Safety, and 
                                          Security,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:03 a.m. in 
room SR-253, Russell Senate Office Building, Hon. John D. 
Rockefeller IV, Chairman of the Subcommittee, presiding.

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

    Senator Rockefeller. Well, we're meant to have eight in 
attendance, and they are coming, I do sorely hope.
    Aviation and all of its glories. The summer travel season 
has actually gone relatively smoothly, thus far. For those for 
whom it has not gone smoothly, they will not agree with that 
statement. But, relative to what might be, the weather has 
generally cooperated. The navigation infrastructure 
improvements the FAA has brought online last year, and capping 
flights at New York's three regional airports, appears to have 
made an impact on preventing the extraordinary delays that 
passengers experienced last summer.
    Now, these improvements have saved us from a worse summer, 
but far too many planes still are delayed. I've not been in my 
office this morning, but I know three people are going to start 
screaming at me, as soon as I get there, because of delays. Far 
too many flights are being cancelled. Far too many passengers 
are still being inconvenienced.
    I met, recently, with the Chief Executive Officer of a 
major airline--U.S.--and he stated that the exploding cost of 
fuel, which is about 40 percent of the cost of everything they 
do, has created a serious and immediate crisis in the industry. 
However--and this is interesting--he still believes that our 
aging antiquated air traffic control system remains the single 
biggest threat to the Nation's--to the industry's long-term 
viability, and, I would add, to our Nation's ability to compete 
globally. Mongolia, as I like to say, is ahead of us on this 
count. And--have that as you will.
    The current price of fuel threatens the future of a number 
of airlines. During the Senate debate over the FAA bill, I gave 
an absolutely brilliant speech, which nobody paid any attention 
to. But I did, and I enjoyed it, and it--well, I didn't enjoy 
it, because it was a dreadful thing to have to do. And it was a 
speech on the weakened financial state of the airline industry. 
And what I said then is much worse now.
    So, the airlines are cutting jobs, they're reducing 
capacity and adding a host of new fees to manage their current 
financial crises. Not all are, but most are. I believe that our 
commercial aviation system is teetering, to be quite honest, on 
the brink of collapse.
    We hear that in Washington, and don't pay much attention, 
because everything's always about to collapse. But, an aviation 
system which is losing money and having to do things which are 
cutting consumers' capacities to board the airlines, and then 
all of this in the middle of a national recession, is not good.
    The changes in the industry are going to be painful for the 
airlines. They're going to be painful to their employees, and 
they're going to be painful for the communities that they 
serve, particularly the ones in small states, such as West 
Virginia, which I represent. All of us are going to be affected 
at some level.
    When the current crisis abates--and I believe it will, in 
time; I say that without knowledge, but I say that if you're 
not optimistic in life, you don't get anywhere, so I just make 
that statement: it's going to abate--the challenges and issues 
we face in modernizing our air traffic control system, if all 
of these other matters abate, that will still be there.
    That will still be there. Despite the recent economic 
downturn, the number of airline passengers will continue to 
grow. The air taxi industry will continue to expand, and more 
business jets will compete for the same limited airspace.
    We all know that the current air traffic control system 
cannot meet current, much less future, demand. I talk about 
this endlessly, and I will talk about it forever, until it's 
fixed.
    And although air travelers have every reason to be unhappy 
with significant delays when traveling, we have to be honest, 
and we have to tell them that there aren't any easy solutions, 
and certainly not quick ones.
    We must recognize that unless we invest in our air traffic 
control system, which we are probably going to do, although not 
this year, but when we do our authorization, probably next 
year, which is a story in itself, our airports can adopt 
policies that allow for economically viable airlines, the 
situation's going to get worse, a whole lot worse, before it 
gets better. When we take up the reauthorization of the FAA 
again, in all likelihood next year, Congress will again be 
faced with the challenge of finding a way to pay for the 
billions in air traffic control infrastructure that the system 
needs. This change will remain--the need for this change.
    This hearing is going to provide the Subcommittee the 
ability to assess the effectiveness of the policies that FAA 
has put in place to address congestion and airline delays this 
summer. And they have made some progress.
    The hearing will also give us an opportunity to explore how 
the changes in the airline industry will affect congestion 
delays, how pieces of the country and airports--how they 
interact with each other. I have very specific questions on 
that. And all of this, in both the near and the long term.
    Despite the first weeks of summer air travel season is 
going, as I indicated, relatively well, with some exceptions, 
we cannot guarantee that the weather will hold--it doesn't 
totally appear to me that it has held, but that it will stay at 
least as good as it is--or some other event will not create 
havoc in the skies creating massive disruptions for airlines 
and their passengers.
    But, every time the aviation system collapses under the 
strains of weather or equipment failures, it's another dramatic 
and painful reminder of how much work we have to do to make 
sure our Nation has a modern air traffic control system capable 
of meeting our future needs.
    Those are my comments. And when Senator Stevens arrives, 
which he will, I will ask for some comments from him.
    But, I seem to be having my own hearing, here, and I'm 
going to enjoy it.
    [Laughter.]
    Senator Rockefeller. Mr. Krakowski, I think that many 
passengers become frustrated----
    Ah, Senator Stevens. We cannot proceed without an opening 
statement from you, sir. Comments, ruminations, we accept 
anything.

                STATEMENT OF HON. TED STEVENS, 
                    U.S. SENATOR FROM ALASKA

    Senator Stevens. Have you finished?
    Senator Rockefeller. I have.
    Senator Stevens. I missed that statement? Good morning. I'm 
sorry to be late. I'll just ask that you put my statement in 
the record as though read, and we will proceed with the 
witnesses.
    Senator Rockefeller. Well, that's disappointing, but I will 
obey your wishes.
    [Laughter.]
    Senator Stevens. Thank you.
    [The prepared statement of Senator Stevens follows:]

    Prepared Statement of Hon. Ted Stevens, U.S. Senator from Alaska
    Thank you, Senator Rockefeller, for holding today's hearing. The 
summer travel season last year was certainly difficult for both the 
airlines and their passengers, and the airline delays and cancellations 
experienced so far this year have impacted the travel schedules of many 
travelers.
    This coupled with the announced airline capacity reductions and 
workforce reductions, has made for a very difficult summer and the 
situation does not look any brighter for the rest of the year.
    While most of the traveling public has become tolerant of modest 
flight delays, government agencies and the airlines need to take note 
of the lessons learned from previous summers. I recognize delays will 
never be avoided altogether, but how we deal with them and track them 
can certainly be improved.
    I understand the frustration felt as a result of airline delays and 
cancellations. When I travel to Alaska, on average, the flight time to 
transit from Washington D.C. to Anchorage, can take almost 10 hours and 
that doesn't include additional time due to flight delays.
    With the financial state of the airline industry, rising fuel 
costs, and a downturn in the economy, the Government and the airlines 
are faced with the near impossible challenge of coping with those 
factors while at the same time developing and implementing a modern air 
traffic control system to reduce delay and congestion.
    The Department of Transportation, the Federal Aviation 
Administration, and Congress are in an opportune position to 
significantly modernize our antiquated air traffic control system and 
should make every effort to take advantage of that opportunity. 
Coordination between the government and industry on this effort is 
essential.
    Our Nation also is confronted with a troubling energy crisis as 
well. The cost of airline operations are increasing due to rising fuel 
costs, which has the greatest impact on rural states like Alaska. The 
industry is going to have to restructure itself in order to become 
solvent, and it is important it is done quickly.
    The time is now to confront our energy needs and an essential 
component of that solution is producing and utilizing our domestic oil 
and gas reserves to increase supply. The effect of utilizing domestic 
oil and gas reserves will go a long way toward bringing fuel prices 
down and creating a more stable aviation transportation system.
    I look forward to hearing from the witnesses on this issue and 
working with my colleagues and the industry to construct solutions to 
this problem.

    Senator Rockefeller. I was just going to ask Mr. Krakowski 
the--and I should identify each of these folks. And Hank 
Krakowski is the Chief Operating Officer of the Air Traffic 
Organization, Federal Aviation Administration; Mr. Tyler 
Duvall, Acting Under Secretary of Transportation for Policy, 
U.S. Department of Transportation; Ms. Susan Fleming, Director 
of Physical Infrastructure, Government Accountability Office--I 
envy you, not; Mr. John Meenan--and there was a question as to 
whether you were going to be here.
    Mr. Meenan. Not from me, Mr. Chairman.
    Senator Rockefeller. Is that right? OK. Well, anyway, 
you're here, and I'm glad. And you're the Executive Vice 
President and Chief Operating Officer of the Air Transportation 
Association, so it was important that you do be here.
    Mr. Krakowski, this is about delay. I want to understand 
it, and I want to help you understand--the Committee as a whole 
before you here, to help us understand how this works.
    I think many passengers become frustrated when they see 
clear weather outside and cannot understand why their flight is 
delayed because of weather or air traffic control problems. I'd 
like you to walk me and other members of this Committee through 
how the National Airspace System, NAS, is affected by, say, 
severe weather in Chicago or New York. Please describe what 
actions FAA takes when weather or other events force you to 
stop traffic into an airport, or greatly reduce the operations 
at an airport. I want the Committee to know how problems in one 
region of the country can cascade into systemwide delays, how 
all of this system sort of operates together--O'Hare, 
LaGuardia, Peterborough, Newark, the whole--Atlanta, 
everything. And please describe how FAA begins to get the 
system again running smoothly after the weather has passed.
    And then, Mr. Meenan, I'd like to have you, sir, add your 
thoughts on whether the airlines are generally pleased with how 
FAA handles delays.
    So, just take us through and do this interconnection of 
airports and the special problem in the Northeast and the rest 
of it. Just have at it.

        STATEMENT OF HENRY P. ``HANK'' KRAKOWSKI, CHIEF 
         OPERATING OFFICER, AIR TRAFFIC ORGANIZATION, 
 FEDERAL AVIATION ADMINISTRATION; ACCOMPANIED BY HON. TYLER D. 
   DUVALL, ASSISTANT SECRETARY FOR TRANSPORTATION POLICY AND 
ACTING UNDER SECRETARY FOR POLICY, DEPARTMENT OF TRANSPORTATION

    Mr. Krakowski. OK, thank you, Mr. Chairman. Senator 
Stevens, good to see you.
    I will also come from the context of actually being----
    Senator Rockefeller. Oh, yes. I made a rather large 
mistake. I have no right to ask questions until you have given 
statements. And so, Mr. Krakowski, will you so do?
    Mr. Krakowski. Would you like me to read the whole 
statement, or submit----
    Senator Rockefeller. No, not particularly.
    [Laughter.]
    Mr. Krakowski. OK.
    Senator Rockefeller. But, because of the question that you 
were about to answer, I have to assume your mind is so concise 
and so ordered that you can boil it down to a nice 5 minutes.
    Mr. Krakowski. Very good. OK.
    With me today is Tyler Duvall, the Department of 
Transportation Acting Under Secretary for Policy. He will be 
available to answer questions relative to consumer issues and 
slots at congested airports. I'll stay more on the operational 
side, which is what I do.
    I'd like to start with something Bobby Sturgell said to our 
people. This 4th of July, we saw a 30-percent dropoff in 
traffic--35 percent in IFR traffic. This is one of the biggest 
drops we've seen in a holiday period ever. With the 
announcements that we've already seen from the airlines, we're 
looking at a potential of a 10-percent reduction of operations 
by year's end. If you look at the small airlines that have just 
gone out of business, we see 700 flights already coming out of 
the system. So, we're really seeing, the pressure of the system 
go down, overall.
    But, unfortunately, because many of those reductions are 
not happening at the big hubs, like Kennedy Airport and Newark 
and O'Hare, you're going to see less of an effect, in terms of 
delay improvement when the weather gets bad, because that's 
where they're keeping their assets, and that's where they're 
keeping the operations going. And that's what's happened in 
previous recessionary times, or post-9/11; the big hubs tend to 
keep the traffic.
    But----
    Senator Rockefeller. So, we'll need to discuss America's 
pullout, right?
    Mr. Krakowski. Yes. I think all of this is something to 
consider. And, you know, we, at FAA, are watching this very 
carefully, because as we try to figure out how to manage the 
system as the airlines redeploy their assets into their new 
route structures to accommodate these aircraft pulldowns, we 
have to be able to serve that effectively for them. So, it's of 
great interest to us, obviously.
    But, in actuality, to your question, 70 percent of the 
delays do come from weather and are driven by weather in the 
system, but we're trying to do some things to help mitigate 
that. We have new routes over the Atlantic, particularly from 
the Caribbean up through Boston, up through the oceanic 
airspace into Europe, which is helping reduce some delay. We 
have some new routes coming westbound out of New York, so we 
can now offload the airport faster when the weather clears--
again, to your question. These are playbook routes, new routes 
that we've put into effect.
    We think we've increased our collaboration with industry in 
our convective weather forecasting abilities as we work the 
tactical operation every day. And, more importantly, we have 
new tools, so that when slots become open because airlines 
cancel flights, more so now this year than last year, we can 
actually move flights into those slots much faster, much more 
effectively, and I think that benefits everybody. That 
program's called ``adaptive compression.''
    Probably the most significant improvement we're looking 
forward to this year are three new runways--at Chicago O'Hare, 
Seattle, and Washington/Dulles. Particularly at Chicago, which 
has a lot of crossing runway issues, when you start to 
straighten out the airports and add parallel runways, that is a 
significant safety and capacity improvement that we're looking 
forward to.
    Of course, there is NextGen, the modernization program. 
We're going to be deploying the ADS-B technology through 
Florida this year as, the first model, the first laboratory to 
use this new technology, which is foundational to our NextGen 
program going forward, and we thank the Committee's help with 
supporting that, as well.
    And, of course, up in New York we have 77 initiatives that 
we're working on. We have over 17 of those done for the summer 
travel period. As you pointed out, Mr. Chairman, we believe 
they're effective. We actually do see delay reduction at New 
York Kennedy's Airport because of these, also at Newark, a 
little less so at LaGuardia.
    The Department of Transportation has several other policy 
efforts underway in the New York region related to the 
congestion and the rulemaking. My colleague Mr. Duvall will be 
happy to address those topics during the question-and-answer 
period.
    That concludes my remarks, sir.
    [The prepared statement of Mr. Krakowski follows:]

  Prepared Statement of Henry P. ``Hank'' Krakowski, Chief Operating 
  Officer, Air Traffic Organization, Federal Aviation Administration; 
     Accompanied by Hon. Tyler D. Duvall, Assistant Secretary for 
Transportation Policy and Acting Under Secretary for Policy, Department 
                           of Transportation
    Chairman Rockefeller, Senator Hutchison, Members of the 
Subcommittee:

    Thank you for inviting me here to testify about aviation congestion 
and delays. With me today is Tyler D. Duvall, Assistant Secretary for 
Transportation Policy and Acting Under Secretary for Policy from the 
Department of Transportation (DOT). With the summer travel season upon 
us, the Federal Aviation Administration (FAA) and the DOT have a number 
of efforts underway to address aviation congestion and delays.
State of the Industry
    In order to frame the issues properly, we must first take a look at 
the state of the aviation industry today. Record oil prices, a slowing 
economy, and increased competition are just a few factors that have 
created a number of significant challenges for airlines--challenges 
that certainly will change the face of the aviation industry in the 
years to come.
    To meet these challenges, many carriers are raising fares, 
streamlining operations, and reducing service. With a few notable 
exceptions--JFK, Denver and San Francisco, for example--air traffic is 
down. General aviation operations are also down, due to fuel and 
insurance costs, further de-stressing the system. System-wide, FAA data 
shows the number of flights have decreased just over 2 percent, 
comparing May 2008 to May 2007.
    While airlines are announcing reductions in service, and air 
traffic overall is down, it is likely that the busiest and most 
congested airports, particularly in the New York/New Jersey region, 
will not see a significant reduction. Even if they do see a downturn in 
the short run, history tells us that the aviation industry is very 
cyclical and that service will eventually return to--and exceed--the 
record levels we saw last year. Of the current delay minutes, 32.9 
percent were at the three largest airports in the New York area (Newark 
Liberty International, LaGuardia Airport, and John F. Kennedy 
International Airport), as compared to 33.4 percent from last year. 
Approximately one-third of the Nation's flights and one-sixth of the 
world's flights either start or traverse the airspace that supports the 
New York/New Jersey/Philadelphia (NY/NJ/PHL) region.
    In 2007, the aviation industry recorded the second worst year for 
delays since 1995; 27 percent of flights were delayed or canceled in 
2007. Both the frequency and the severity of ground delays were 
unprecedented. The costs of delays are huge--the Senate Joint Economic 
Committee estimates that last year flight delays alone cost passengers, 
airlines, and the U.S. economy over $40 billion. Additionally, the 
Travel Industry Association estimates that air travelers avoided over 
41 million trips last year--leading to lost revenues and taxes of over 
$26 billion.
    Even if carriers reduce flights this summer enough to reduce 
congestion, we still must do something to fix the problems that caused 
last summer's horrible delays. We continue to work toward developing 
and providing solutions for all of the users of the Nation's airspace 
system.
    As we frame the problem, we should note that we are living in the 
safest period in aviation history and we are constantly striving to 
make it safer still. In the past 10 years, the commercial fatal 
accident rate has dropped 57 percent. General aviation accidents are 
down. Safety is and will always be the primary goal of the FAA. Nothing 
we do to address congestion and delays will compromise the FAA's safety 
mandate.
Summer 2008
    A snapshot of the system comparing May 2008 to May 2007 for the 35 
Operational Evolution Partnership airports is telling. As you know, we 
had far more severe weather during May 2008 than we had in May 2007, 
particularly in the Midwest. Previously, this would have caused major 
delays throughout the NAS, and had the FAA done nothing, we would have 
seen thousands of delayed and stranded passengers all over the country. 
Instead, our projected data estimates that the average minutes of delay 
for all flights decreased slightly (by almost 1 percent), while the 
number of flights with more than 1 hour of delay decreased by 8 
percent. Although the data from the Bureau of Transportation Statistics 
has not been finalized, we are expecting to see that cancellations for 
May 2008 have decreased approximately 8 percent and on-time arrivals 
increased nearly 1 percent over May of last year.
    According to FAA data, bad weather causes 70 percent of all delays. 
The situation is worse during the summer, unlike winter storms, which 
take time to develop and move slowly, summer storms can form quickly, 
stretch for hundreds of miles and travel rapidly over large portions of 
the country, grounding flights and sending chain reaction delays 
throughout the NAS. While we cannot control the weather, we can control 
how we manage the delays. With new dispersal headings, the use of 
Adaptive Airspace Flow Programs (detailed below), new westbound 
departure routes out of New York, and other improvements, we are 
dealing more effectively with delays, using people, procedures, and 
technology.
    In 1998, the FAA initiated Collaborative Decision Making (CDM), 
which represented a change in how the FAA communicates with the 
airlines in order to reduce delays. Prior to CDM, airlines were 
hesitant to share certain information for competitive reasons. Airlines 
now share schedule information with the FAA's Command Center in 
Herndon, VA, including flight delays, cancellations and newly created 
flights. The Command Center uses this information to monitor airport 
arrival demand and take steps to reduce delays caused by heavy traffic 
and severe weather. Daily teleconferences are held every 2 hours 
between FAA air traffic managers, the airlines, and general aviation 
users, to discuss problems affecting capacity in the system and decide 
the most efficient, and collaborative solution as these situations 
arise.
    For 2008, the FAA is implementing a number of new procedures and 
tools to enhance this system and to help manage and reduce congestion, 
outlined below:

        Western Atlantic Route System

        This initiative will increase capacity along the East Coast 
        over the Atlantic this summer by reducing lateral separation 
        from 90 miles to 50 miles for aircraft with avionics that 
        provide an appropriate level of accuracy. The area includes 
        parts of Miami and New York high altitude airspace, as well as 
        the San Juan Center Radar Approach Control airspace.

        In the past, lateral separation in oceanic airspace has been 
        set at 90 miles between aircraft to maintain safe separation. 
        This initiative takes advantage of more precise aircraft 
        position technology to allow for more Atlantic routes, 20 more 
        transition route fixes and ultimately more access to the 
        available airspace. The procedures became fully operational on 
        June 5, 2008.

        New Playbook Routes

        Playbook routes are pre-coordinated routes that are developed 
        to route aircraft around convective weather. New playbook 
        routes will be in place this summer to provide alternate route 
        options during periods of severe weather. Nineteen new playbook 
        routes will be available, including four Virginia Capes Area 
        (VACAPES) routes designed for use in military airspace when it 
        is available.

        Integrated Collaborative Rerouting Tool

        This is a new automated tool that depicts constrained airspace 
        to airlines and other users of the NAS. This alleviates the 
        need for the FAA to implement required reroutes, which may be 
        less favorable to the users. It gives the airlines scheduling 
        options and a more efficient utilization of the available 
        airspace. The tool will allow pilots to provide early intent of 
        their preferred routing around constrained areas, such as 
        storms-affected areas.

        Adaptive Airspace Flow Programs (AFPs)

        The Airspace Flow Program was deployed in June 2006 and enables 
        the FAA to manage adjustments to changing weather patterns. 
        This is crucial during the summer convective weather season 
        when storms grow rapidly and move across large swaths of the 
        country. Before the FAA developed the technology to implement 
        AFPs, the FAA's primary tool was a ground delay programs to 
        prevent aircraft from taking off if they were headed for a 
        delayed airport from any direction. Ground delay programs 
        remain valuable under appropriate circumstances, but sometimes 
        have the unintended consequence of delaying flights that would 
        otherwise not encounter severe weather.

        Last summer from May 2 through August 30, 2007, a total of 58 
        AFPs were used. Use of these AFPs provided approximately $68 
        million in savings for the airlines. AFPs, which focus on 
        particular areas in the sky where severe weather is expected, 
        generally are a more equitable and efficient way of handling 
        flights during severe weather.

        The Adaptive Airspace Flow Program is an enhancement to the 
        original program. This summer, the FAA can adjust the 
        parameters of an AFP based on changing weather intensity, 
        providing a more effective way to manage traffic during severe 
        summer storms that will minimize delays.

        Using AFPs, the FAA is able to target only those flights that 
        are expected to encounter severe weather. The targeted flights 
        are issued an Expect Departure Clearance Time (EDCT), giving 
        the airlines the option to accept a delayed, but predictable 
        departure time, to take a longer route to fly around the 
        weather or to make alternate plans.

        Adaptive Compression

        This program, launched in March 2007, automatically identifies 
        unused arrival slots at airports affected by AFP or ground 
        delays and moves other flights into those slots. This means 
        that maximum arrival rates will be maintained, easing 
        congestion and delays. Adaptive Compression saved $27 million 
        for the airlines and 1.1 million delay minutes for the airlines 
        and the flying public in its first year of operation.
Expanding Capacity
    Expanding capacity in the overall NAS is always our preference, 
both on land and in the air. Airport capacity is critical. Along with 
our partners in the airport community, we have achieved significant 
progress in increasing capacity and we intend to continue to support 
this with our ongoing airport improvement programs. A brief overview of 
the status of recent airport projects as well as projects in the 
planning stages might be helpful.
    The 35 airports included in the Operational Evolution Partnership 
(OEP) account for about 75 percent of all passenger enplanements. Much 
of the delay in air traffic can be traced to inadequate ``throughput'' 
(measured as arrival and departure rates) at these airports. Airfield 
construction (new runways, runway extensions, new taxiways, end around 
perimeter taxiways, and airfield reconfigurations) is the most 
effective method of increasing throughput. Consequently, constructing 
new and/or extending runways, taxiways, and airfield reconfiguration 
are solution sets of the OEP's Airport Development Domain.
    Arrival and departure rates at the Nation's busiest airports are 
constrained by the limited number of runways that can be in active use 
simultaneously. The addition of new and extended runways or airfield 
reconfigurations will expand airport throughput at the target airports, 
and possibly for other airports in the same metropolitan area. In most 
cases the airfield projects are sufficient to keep pace with forecasted 
demand. Since FY 2000, 14 of the 35 OEP airports have opened 15 
airfield projects (including 13 new runways providing 20 miles of new 
runway pavement, 1 end around taxiway, and 1 airfield reconfiguration). 
The projects have provided these airports with the potential to 
accommodate 1.6 million more annual operations and decrease average 
delay per operation at these airports by about 5 minutes, and reduce 
the potential for runway incursions. The complete listing of airfield 
projects included in the OEP is shown in the table below.

------------------------------------------------------------------------
              Airport                            Date Opened
------------------------------------------------------------------------
Philadelphia                        December 1999
------------------------------------------------------------------------
Phoenix                             October 2000
------------------------------------------------------------------------
Detroit                             December 2001
------------------------------------------------------------------------
Cleveland                           December 2002 (Phase 1--1st 7,145
                                     feet)
                                    August 2004 (1,775 runway extension)
------------------------------------------------------------------------
Denver                              September 2003
------------------------------------------------------------------------
Miami                               September 2003
------------------------------------------------------------------------
Houston                             October 2003
------------------------------------------------------------------------
Orlando                             December 2003
------------------------------------------------------------------------
Minneapolis-St. Paul                October 2005
------------------------------------------------------------------------
Cincinnati/No. KY                   December 2005
------------------------------------------------------------------------
Lambert-St. Louis                   April 2006
------------------------------------------------------------------------
Atlanta Hartsfield                  June 2006
------------------------------------------------------------------------
Boston Logan                        November 2006
------------------------------------------------------------------------
Atlanta End Around Taxiway          April 2007
------------------------------------------------------------------------
Los Angeles (Reconfiguration--      Relocated RW April 2007
 Relocated Runway and Center        Center TW June 2008
 Taxiway)
------------------------------------------------------------------------

    The total cost of these projects is $5.6 billion with approximately 
$1.9 billion in Airport Improvement Program (AIP) grant funding. End 
around taxiways provide another means to decrease delays at a busy 
airport by providing an alternative to having aircraft cross an active 
runway. With the opening of the end around taxiway at Atlanta in April 
2007 about 612 runway crossings per day were eliminated at the busiest 
airport in the U.S.
    Currently, seven OEP airports have airfield projects (3 new 
runways, 1 airfield reconfiguration, 1 runway extension, and 2 
taxiways) under construction. The projects will be commissioned through 
2012 and will provide these airports with the potential to accommodate 
about 400,000 more annual operations, decrease average delay per 
operation by almost 2 minutes, and significantly reducing runway 
crossings. The cost of the 7 airfield projects, listed below, is 
approximately $3.9 billion with about $1.2 billion in AIP funding.

------------------------------------------------------------------------
             Airport                      Anticipated Opening Date
------------------------------------------------------------------------
Seattle-Tacoma                     November 2008
------------------------------------------------------------------------
Washington Dulles                  November 2008
------------------------------------------------------------------------
Chicago O'Hare Runway              November 2008
  9R/27L extension                   September 2008
  Runway 10C/28C                     Late 2011
------------------------------------------------------------------------
Philadelphia Runway Extension      March 2009
------------------------------------------------------------------------
Dallas-Ft. Worth End Around        December 2008
 Taxiway
------------------------------------------------------------------------
Boston Logan Centerfield Taxiway   November 2009
------------------------------------------------------------------------
Charlotte                          February 2010
------------------------------------------------------------------------

    There are also ten other projects (3 airfield reconfigurations, 3 
runway extensions, and 4 new runways) are in the planning or 
environmental stage at OEP airports through 2017.

------------------------------------------------------------------------
     Airport or                             Completion of  Environmental
  Metropolitan Area         Project              Study  (Estimated)
------------------------------------------------------------------------
Ft. Lauderdale        Extension                                    2008
------------------------------------------------------------------------
Philadelphia          Reconfiguration                              2009
------------------------------------------------------------------------
Portland Int'l        Extension                                    2008
------------------------------------------------------------------------
Houston               New Runway                                    TBD
 Intercontinental
------------------------------------------------------------------------
Denver Int'l          New Runway                                    TBD
------------------------------------------------------------------------
Chicago O'Hare        Reconfiguration--Ph                          2005
                       ase 2
------------------------------------------------------------------------
Los Angeles           Reconfiguration--No  TBD--Reconfiguration studies
                       rth                              are in progress
                      Runway Complex
------------------------------------------------------------------------
Washington Dulles     New Runway                                   2005
------------------------------------------------------------------------
Salt Lake City        Runway Extension         TBD--Planning will begin
                                                            around 2010
------------------------------------------------------------------------
Tampa                 Runway                   TBD--Planning will being
                                                            around 2013
------------------------------------------------------------------------

    In addition, four communities (Chicago, Las Vegas, Atlanta and San 
Francisco) have planning or environmental studies underway to examine 
how their metropolitan area will accommodate future demand for 
aviation.

------------------------------------------------------------------------
   Metro Area        Study          Sponsor              Purpose
------------------------------------------------------------------------
Chicago          New Airport    State of         EIS/Master Plan
                                 Illinois         covering development
                                                  for the Inaugural
                                                  Airport is on hold.
------------------------------------------------------------------------
Las Vegas        New Airport    Clark County     EIS Notice of Intent
                                                  published in Sept.
                                                  2006.
------------------------------------------------------------------------
Atlanta          Regional       City of Atlanta  Explore options for how
                                                  commercial aviation
                                                  demand can be met in
                                                  the Atlanta
                                                  metropolitan area. The
                                                  study will be
                                                  coordinated with all
                                                  levels of local/state
                                                  government and will
                                                  take 2 years to
                                                  complete.
------------------------------------------------------------------------
San Francisco    Regional       San Francisco    A study is being
                                Metro             undertaken to examine
                                Transportation    aviation demand in the
                                Commission        San Francisco
                                                  Metropolitan Area.
------------------------------------------------------------------------

    AIP program planning will continue to reflect a special emphasis on 
increasing capacity and improving the airport arrival efficiency rate.
Controller Staffing
    We know that controller staffing and how it affects delays are 
issues of concern to this Committee. The FAA is its workforce, and we 
consider controller staffing issues to be of the utmost importance to 
maintaining the safest aviation system in the world. To deal with the 
long-predicted retirement eligibility of today's generation of 
controllers, the FAA began a large-scale recruitment and selection 
process to rebuild the controller workforce. By 1992, the controller 
workforce was once again fully staffed. However, the realities were 
that, because of the concentrated, post-strike period of hiring, the 
FAA would have to once again begin a major recruitment effort as these 
controllers began to age out of the system. The vast numbers of 
controllers hired in the 1980s were long-predicted to retire once they 
reached retirement eligibility after 25 years of service.
    To deal with this, the FAA initially developed a 10-year controller 
workforce staffing plan in 2004, which we refine each year. In 2007, 
the anticipated retirement wave of controllers began, and we project 
that retirements will continue to hit record numbers in 2008 and 2009. 
Our strategic hiring plan takes into account both projected retirements 
as well as expected attrition in new hires. From 2008-2017, we plan to 
hire approximately 17,000 new air traffic controllers.
    To achieve these ambitious goals, the FAA has been recruiting 
aggressively through a variety of traditional and non-traditional 
outlets. In an effort to diversify our workforce, we are actively 
recruiting more women and minorities, as well as disabled veterans. 
And, in October 2007, the FAA chose an additional nine colleges and 
universities to be part of the Air Traffic Collegiate Training 
Initiative (AT-CTI) program, which brings the number of schools 
currently in the program to 23. We plan to continue to offer the 
opportunity to other schools to apply to the program.
    We have also been offering a recruitment bonus of up to $20,000 for 
qualified new hires and offering retention incentives to retirement-
eligible controllers on a case-by-case basis. Retention bonuses are 
typically 25 percent of an individual's salary with a cap of $25,000. 
Controllers may also be eligible for relocation and reassignment 
bonuses for certain key facilities. Thus far, 44 retention bonuses have 
been accepted, and another 26 are pending consideration.
    Thus far, we have increased our controller workforce by a net gain 
of 256 in FY 2007, and we are on target to increase it an additional 
256, to an end of year target of 15,130 for FY 2008. The President's 
budget for FY 2009 calls for a further net increase of over 300 
controllers. Given the current airline reductions and current staffing 
statistics, we believe our staffing goals and plans are on target.
NextGen
    In addition to ensuring sufficient controller staffing, we need to 
put the right tools into our controllers' hands. Our long-term plan to 
address congestion and delays is the Next Generation Air Transportation 
System (NextGen). We appreciate this Committee's strong support for the 
NextGen effort. NextGen will transform the aviation system and how we 
control air traffic. We must be able to handle the demands of the 
future for aviation travel--projected to be one billion passengers by 
2015--particularly in areas (such as New York/New Jersey) where 
capacity cannot be expanded.
    As you know, NextGen is a steady, deliberate, and highly 
collaborative undertaking, which focuses on leveraging our latest 
technologies, such as satellite-based navigation, surveillance and 
network-centric systems. It is designed to be flexible to take 
advantage of even newer and better technologies as they become 
available. We want to make sure that our air transportation system can 
accommodate innovations without becoming entrenched in technology that 
is new today but obsolete tomorrow.
    The FAA is hard at work bringing new technology and techniques on-
line to unsnarl air traffic delays, and we appreciate the funding 
Congress has appropriated for these purposes. In recognition of these 
critical enhancements, the President's FY 2009 Budget Request would 
more than triple the investment in NextGen technology--providing $688 
million for key research and technology to help meet the Nation's 
rapidly growing demand for air travel, including the transformation 
from radar-based to satellite-based air traffic systems.
    The FAA will begin rolling out several elements of the NextGen 
system this summer. This rollout will include the national debut of 
Automatic Dependent Surveillance-Broadcast (ADS-B) technology, the 
cornerstone of NextGen. We are particularly proud that the ADS-B team, 
which includes the FAA, along with its industry, government, and 
university partners, recently won the Robert J. Collier Trophy, one of 
the most prestigious awards in aviation. The award is awarded annually 
by the National Aeronautic Association ``for the greatest achievement 
in aeronautics or astronautics in America, with respect to improving 
the performance, efficiency, and safety of air or space vehicles, the 
value of which has been thoroughly demonstrated by actual use during 
the preceding year.'' It recognizes the development team that worked 
for more than a decade to create the pioneering systems to improve 
efficiency and safety in the national airspace.
    The FAA has chosen Miami as the key site for the installation and 
testing of Traffic Information Services-Broadcast (TIS-B) and Flight 
Information Services-Broadcast (FIS-B). These broadcast services are 
the transmission of weather and traffic information to the cockpit of 
properly equipped aircraft. In order to provide the services in roughly 
the southern half of the state, the contractor, ITT will install and 
test eleven ground stations in this area, including five at airports 
(Lakeland Linder Regional, Dade-Collier, Florida Keys Marathon Airport, 
Boca Raton Airport, and Sebastian Municipal).
    The ITT installed equipment is currently undergoing a Service 
Acceptance Test (SAT) which began in May. In November 2008, the agency 
expects to commission (the FAA calls this an In-Service Decision or 
ISD) these broadcast services (TIS-B and FIS-B). Following the 
successful completion of ISD, the FAA can exercise an option in the ITT 
contract to deploy the services nationwide
    The transition to ADS-B technology will allow the Nation's air 
traffic control system to change from one that relies on radar 
technology to a system that uses precise location data from a global 
satellite network. Over the next few years, the FAA will also install 
and test ADS-B for use in Air Traffic Control Separation Services. The 
key sites for this initiative are Louisville, Philadelphia, the Gulf of 
Mexico, and Juneau. The FAA plans to commission the ADS-B services in 
September 2010 and complete a nationwide rollout by 2013.
NY/NJ/PHL Airspace Redesign
    As mentioned above, one-third of all domestic and one-sixth of all 
international air traffic pass through New York airspace. Improvements 
in this region have effects throughout the system. Likewise, a bad 
storm or other delays in this region cascades throughout the system. In 
order to address these issues, the FAA is in the process of 
implementing the New York/New Jersey/Philadelphia Airspace Redesign.
    The old, inefficient airspace routes and procedures pieced together 
over the past several decades were overdue to be reconfigured to make 
them more efficient and less complicated. In addition to more jet 
routes with increased and better access, the Airspace Redesign includes 
improved use of available runways, fanned headings for departures and 
parallel arrivals, and more flexibility to manage delays in severe 
weather. We project that under the Airspace Redesign, delays will be 
cut by 200,000 hours annually. This is the single greatest improvement 
to address congestion we see in the near future for the New York/New 
Jersey metropolitan area.
    We also project that this will save $248 million annually in 
operating costs for airlines. Additionally, the increased flexibility 
during severe weather is projected to save another $37 million 
annually. Finally, the environmental advantages include reduced carbon 
dioxide emissions of a projected 430 million pounds per year, and the 
residents affected by aviation noise will be reduced by more than 
600,000. These are impressive gains.
    Reconfiguring the airspace will enable the FAA to take several 
direct actions to take advantage of improved aircraft performance and 
emerging ATC technologies. Leveraging these technologies, the FAA can 
implement new and modified ATC procedures, including dispersal 
headings, multiple departure gates and simplified arrival procedures by 
2011. The FAA will also use these technologies to employ noise 
mitigation measures, such as use of Continuous Descent Approaches 
(CDA), and raising arrival altitudes.
    Implementation of the Airspace Redesign Project will be able to 
make use of procedures like Area Navigation (RNAV) and Required 
Navigation Performance (RNP), which collectively result in improved 
safety, access, predictability, and operational efficiency, as well as 
reduced environmental impacts. RNAV operations remove the requirement 
for a direct link between aircraft navigation and a ground-based 
navigational aid (i.e., flying only from radar beacon to radar beacon), 
thereby allowing aircraft greater access to better routes and 
permitting flexibility of point-to-point operations. By using more 
precise routes for take-offs and landings, RNAV enables reductions in 
fuel burn and emissions and increases in efficiency.
    RNP is RNAV with the addition of an onboard monitoring and alerting 
function. This onboard capability enhances the pilot's situational 
awareness providing greater access to airports in challenging terrain. 
RNP takes advantage of an airplane's onboard navigation capability to 
fly a more precise flight path into an airport. It increases access 
during marginal weather, thereby reducing diversions to alternate 
airports. While not all of these benefits may apply to every community 
affected by the Airspace Redesign Project, RNAV and RNP may prove 
useful in helping to reduce overall noise and aggregate emissions.
    The Airspace Redesign Project is very large and complex and the 
implementation will take several years. There will be four stages of 
the implementation, distinguished by the degree of airspace realignment 
and facility changes required to support each of the overlying 
operational enhancements. Implementation is estimated to take at least 
5 years, with each stage taking approximately 12-18 months to complete. 
The FAA is presently finalizing a detailed implementation plan that 
will cover all elements of this project's implementation and we 
anticipate completion of stage 1 later this year. We have also begun 
additional operation validation of some of the key elements of stage 2.
Additional DOT Efforts to Reduce Congestion
     In addition to the capacity enhancements, operational 
improvements, and ongoing efforts in the NextGen arena that have 
already been discussed, the Department is constantly searching for new 
ways to reduce congestion and improve customer satisfaction. Given the 
record delays last summer, in July 2007, Secretary Peters formed an 
internal New York Air Congestion Working Group and tasked them with 
developing an action plan to reduce congestion and delays at airports 
in the New York City region and improve customer satisfaction. The 
working group developed a plan, which, among other things, included 
establishing a New York Aviation Rulemaking Committee (ARC), holding 
scheduling reduction meetings, implementing operational improvements, 
and enhancing customer satisfaction. ARC participants included, among 
others, the airlines and the Port Authority of New York and New Jersey. 
Since forming the Working Group, the Department has taken a number of 
actions to reduce congestion and increase customer satisfaction, 
including:

   Completion by the end of this summer of 17 key operational 
        improvements proposed by the ARC;

   Establishing an executive-level Director position at the FAA 
        to head the New York Area Program Integration Office;

   Amending the Airports Rates and Charges Policy, allowing 
        airports to manage congestion at the local level;

   Publishing a final rule on denied boarding compensation;

   Creating a Tarmac Delay Task Force;

   Publishing a final rule to enhance delay data reporting;

   Publishing an Advance Notice of Proposed Rulemaking to 
        enhance consumer protections, including tarmac delay 
        contingency plans, requiring responses to consumer complaints, 
        and requiring publication of consumer data; and

   Creating a chronically delayed flight enforcement regime to 
        pursue unrealistic scheduling.

    The Department has also set forth significant rulemaking proposals 
aimed directly at reducing congestion in the system. As mentioned, one-
third of all U.S. air traffic passes through New York airspace. This 
concentration of traffic has prompted the Department to take special 
action in the New York area. Recently, the Department published notices 
of proposed rules intended to manage congestion and introduce 
competition at LaGuardia Airport (LaGuardia), John F. Kennedy 
International Airport (JFK), and Newark Liberty International Airport 
(Newark). We believe these proposals will ultimately provide travelers 
with more reliable service while maintaining competition among the many 
carriers in a vibrant New York market.
    As you know, the three New York airports are all operating under a 
cap. Caps solve the problem of congestion because they simply freeze 
capacity and stop additional flights from flooding the system. Airlines 
are often enthusiastic in their support of caps at an airport they 
already serve. When a cap is established, incumbent airlines are 
protected because they typically maintain their market share and the 
potential for new competition is diminished. The incumbent airlines' 
support for such a policy makes sense, because limited competition 
makes them more profitable and protects them from new entrants that 
might want to compete by offering lower fares. This limitation on 
capacity and competition naturally leads to fare increases at an 
airport, because it creates a scarce commodity, and passengers pay a 
premium for that commodity.
    Unfortunately, straight caps without some mechanism to ensure an 
efficient allocation of scarce slot resources is economically 
inefficient and stifles competition--leading to reduced service and 
higher fares for consumers. Granting slots without market-based 
mechanisms creates a system where incumbent airlines fight to maintain 
large shares of the airport traffic and to limit the ability of low-
cost carriers to compete. The 1996 DOT report Low Cost Airline Service 
Revolution details this anticompetitive culture at capped or dominated 
airports. The report identifies slot hoarding as one of the key 
characteristics of such a culture. Federal regulations require airlines 
to use their slots at least 80 percent of the time in order to retain 
possession of them. However, by splitting up larger flights into 
smaller ones (``down-gauging'') or by setting up a rotating schedule, 
airlines have unnecessarily taken up more slots than they would require 
to competitively serve their customers. Slot hoarding prevents new 
entrants from taking available slots and increases airplane throughput 
without increasing passenger throughput, adding greatly to congestion. 
The report maintains that the high fares charged at these dominated 
airports create incentives for an airline to use anticompetitive 
measures to discourage new entrants.
    Using the historical backdrop of slots as a guide, we believe that 
integration of a market-based system into the proposal for slot caps is 
necessary to protect consumers and a competitive market. Estimates from 
the DOT's 1996 report valued savings from new entry competition at 35 
percent for round-trip flights and 40 percent for one-way flights. A 
case-specific study on the effect of Southwest Airlines noted that with 
the opening of just one route between Oakland International Airport and 
Ontario International Airport in Los Angeles, fares dropped 60 percent 
and traffic tripled, increasing both passenger throughput as well as 
savings for consumers. Even nearby airports not directly offered 
service experienced a decrease in fare costs of up to one-third. 
Southwest is just one example of low-cost carriers whose entry into the 
market drove down prices and increased passenger throughput at 
previously dominated airports.
    This is why caps alone are not the best solution for improving 
travel options for passengers and why caps must be combined with some 
mechanism to preserve competitive market forces to benefit aviation 
consumers or the airlines. When we consider economic regulatory issues, 
the Department has a statutory obligation to place maximum reliance on 
competitive market forces and on actual and potential competition. We 
know, however, that caps hinder the ability of air carriers to initiate 
or expand service at capacity constrained airports. Therefore, when 
seeking a solution to the aviation congestion issues that we currently 
face in the New York area, the Department must act to both promote 
competition by permitting access to new entrants, and to recognize the 
long-term investments in airports made by existing carriers.
    Keeping in mind the need to reduce congestion while simultaneously 
promoting competition, we have set forth proposals for the New York 
area airports that we believe would reduce congestion the smartest 
way--by using market incentives to assist in the efficient allocation 
of airspace. Opponents of market incentives have suggested that only 
caps will reduce congestion. We do not agree. We believe market 
incentives will encourage more efficient use of available airspace and 
should result in a greater throughput than under a system using pure 
caps. Consequently, we expect fewer delays per passenger. For example, 
to the extent that airlines choose to absorb costs associated with our 
proposed market incentives by ``up-gauging'' to larger aircraft, 
passenger throughput will increase, effectively reducing congestion for 
a greater percentage of the traveling public.
     Although market-based mechanisms are the most effective way to 
allocate scarce resources--like slots--we have taken a very 
conservative approach to introducing these mechanisms with this 
proposal. The vast majority of hourly operations at the airport, as 
much as 90 percent or more, would be ``grandfathered'' and leased to 
the existing operators for non-monetary consideration. The market-based 
aspect of our proposal involves auctioning off leases for only a 
limited number of the remaining slots and treats domestic and foreign 
carriers equally.
    We are firmly committed to the idea that any long-term solution to 
mitigate congestion in the Nation's airspace must include a market-
based mechanism. Caps alone have proven to be insufficient, and 
perpetuating the kinds of delays we experienced in the Summer of 2007 
is not tolerable.
Conclusion
    Chairman Rockefeller, Senator Hutchison, Members of the 
Subcommittee, this concludes my prepared remarks on behalf of myself 
and Mr. Duvall. We look forward to answering any of your questions.

    Senator Rockefeller. Well, that was--well, I have this note 
in front of me which just counteracts you, Mr. Krakowski. It 
says that Mr. Duvall is not going to give testimony.
    Mr. Krakowski. Question-and-answer is what I said, sir.
    Senator Rockefeller. OK.
    Mr. Krakowski. Yes.
    Senator Rockefeller. Would you like to give testimony?
    Mr. Duvall. I'm happy for the other colleagues to go first.
    Senator Rockefeller. All right.
    In that case, our next person is Susan Fleming, who's a 
Director at the Government Accountability Office.

             STATEMENT OF SUSAN FLEMING, DIRECTOR,

                PHYSICAL INFRASTRUCTURE ISSUES,

             U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Fleming. Good morning, Mr. Chairman, Vice Chairman 
Stevens. Thank you for the opportunity to discuss the Federal 
Government's efforts to reduce aviation congestion and delays 
for this summer.
    Increasingly, the U.S. aviation system is plagued by flight 
delays and cancellations. In 2007, more than one in four 
flights arrived late or were canceled, making it one of the 
worst years for delays.
    Delays and cancellations, as you know, are particularly 
evident in the New York region. To avoid a repeat of last 
summer's problems, DOT and FAA have worked together with 
airlines and airports to develop and implement several 
initiatives to reduce congestion and delay for this summer.
    My testimony today has three parts: trends in the extent of 
delay and its principal sources, status of Federal Government 
actions to reduce delay, and the extent to which these actions 
may reduce delays for the summer.
    First, since 1998 the total number of flight delays and 
cancellations nationwide has increased 62 percent, while the 
number of operations has increased about 38 percent. The 
numbers are even worse for New York. Specifically, since 1998 
the number of delays and cancellations in New York has more 
than doubled, while the number of operations has increased by 
just 57 percent.
    The sources of delay across the system and in New York are 
varied, but, unfortunately, DOT's data does not provide a 
complete picture. For example, in 2007, late-arriving aircraft 
accounted for 38 percent of delays nationwide. However, this 
category indicates little about what caused the aircraft to 
arrive late, such as severe weather or equipment problems.
    I'll now turn to my second topic: status of initiatives and 
policies. Because of the particular problems in the New York 
area, DOT and FAA are implementing several actions intended to 
reduce delays at New York airports for this summer and beyond. 
Some of these are already in effect, such as 11 of the 17 
short-term initiatives designed to improve capacity at the 
airport or system level and the hourly schedule caps on 
operations at the New York area airports. The other actions are 
being developed or have just been issued and therefore are 
unlikely to be in effect this summer. FAA is currently 
soliciting public comments on the proposed rule to establish 
slot auctions at JFK and Newark.
    Moving on to my last point, collectively DOT and FAA's 
capacity-enhancing initiatives and demand management policies 
are likely to have a limited effect on reducing delays this 
summer compared to last year. For example, the benefit of the 
17 initiatives, which range from efforts to reduce excessive 
spacing on final approach before landing to new procedures for 
handling air traffic during severe weather conditions, is 
generally expected to come from the initiatives' combined 
incremental improvements over time and in certain situations. 
The demand management policies, especially the caps, will have 
a more immediate, but limited, effect on delays, since the caps 
were set at a level which were generally designed to avoid 
future delays and not reduce delays from the 2007 levels. More 
uncertain are the Department's proposals to auction slots at 
these airports and to allow congestion pricing at all airports.
    The Department has not demonstrated how these actions will 
reduce delay, and, given the widespread opposition to these 
policies, may distract from necessary efforts to build capacity 
in the region.
    Finally, other interrelated factors, such as the financial 
state of the industry, increasing jet fuel prices, and the 
effect of higher fares on passengers, could lead to fewer 
delays in 2008, but the effect of these factors on aviation 
congestion and delays are uncertain.
    In closing, DOT and FAA are to be commended for working 
with stakeholders to develop initiatives that will enhance 
capacity in the New York region. It is vital that these be 
completed and that DOT and the stakeholders continue to work 
together to identify and implement other initiatives to help 
reduce congestion.
    Mr. Chairman, this concludes my statement. I'd be pleased 
to answer any questions you or Members of the Subcommittee 
might have.
    [The prepared statement of Ms. Fleming follows:]

Prepared Statement of Susan Fleming, Director, Physical Infrastructure 
             Issues, U.S. Government Accountability Office
    Mr. Chairman and Members of the Subcommittee:

    I appreciate the opportunity to testify before you today on the 
Federal Government's efforts to reduce aviation congestion and delays 
for this summer's travel season. In recent years, flight delays and 
cancellations have plagued the U.S. aviation system. According to the 
Department of Transportation (DOT), more than one in four flights 
either arrived late or were canceled in 2007, affecting approximately 
163 million passengers and making it one of the worst years for delays 
in the last decade. A recent report by the Senate Joint Economic 
Committee found that collectively, passengers were delayed 320 million 
hours in 2007 and estimated that domestic flight delays last year cost 
as much as $41 billion to the U.S. economy.\1\ Delays were particularly 
evident at certain airports, especially those in the New York region. 
For the past 10 years, the three principal New York metropolitan 
commercial passenger airports--Newark Liberty International (Newark), 
John F. Kennedy International (JFK), and LaGuardia--have often ranked 
at or near the bottom of DOT's lists of airport on-time arrivals and 
departures. Since one-third of aircraft in the national airspace system 
move through the New York area at some point during a typical day, 
delays in this region can have a disproportionate impact on delays 
experienced throughout the rest of the system.
---------------------------------------------------------------------------
    \1\ Senate Joint Economic Committee, Your Flight Has Been Delayed 
Again: Flight Delays Cost Passengers, Airlines and the U.S. Economy 
Billions. (Washington, D.C.: May 2008).
---------------------------------------------------------------------------
    Consumer complaints and media coverage of airline service problems, 
combined with congressional hearings on these issues, have recently put 
flight delays in the spotlight. Most aviation industry experts believe 
that substantial gains in reducing aviation congestion and delays can 
be achieved in the long term through investment in airport 
infrastructure, Next Generation Air Transportation System (NextGen) 
technologies,\2\ and/or more efficient pricing of the Nation's aviation 
infrastructure. However, to avoid a repeat of last summer's delays, DOT 
and its operating agency, the Federal Aviation Administration (FAA), 
have worked with the aviation industry since the fall of 2007 in an 
effort to develop and implement several near-term actions to reduce 
delays for the summer 2008 travel season.
---------------------------------------------------------------------------
    \2\ NextGen represents a transformation to a new air traffic 
control system that will use satellite-based technologies and new 
procedures to handle the increasing volume of air traffic while further 
improving safety and security.
---------------------------------------------------------------------------
    My testimony today addresses: (1) the trends in the extent and 
principal sources of flight delays and cancellations over the last 10 
years, (2) the status of Federal Government actions to reduce flight 
delays and cancellations by the summer of 2008, and (3) the extent to 
which these actions may reduce delays and cancellations for the summer 
2008 travel season. To determine trends in the extent and sources of 
delays, we analyzed DOT data on airline on-time performance, including 
sources of delays, by airport and for the entire airspace system, for 
1998 to 2007.\3\ To assess the reliability of the data, we interviewed 
agency officials about data quality control procedures, reviewed 
relevant documentation, and electronically tested the data to identify 
obvious problems with completeness or accuracy. We determined that the 
data were sufficiently reliable for the purposes of this report. We 
also reviewed relevant documents and reports and interviewed DOT and 
FAA officials, airport operators in Boston, New York, and Chicago, 
major commercial airlines, and aviation industry experts and 
associations on the status and potential impact of the Federal 
Government's actions to reduce delays. Although its scope covers the 
national airspace system as a whole, our work especially focuses on the 
New York region because of the New York area airports' persistent 
problems with flight delays and cancellations and the Federal 
Government's actions focused on reducing delays in this region. We 
conducted our work from December 2007 to July 2008 in accordance with 
generally accepted government auditing standards. Those standards 
require that we plan and perform the study to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on our study objectives. We believe that the evidence 
obtained provides a reasonable basis for our findings and conclusions 
based on our audit objectives.
---------------------------------------------------------------------------
    \3\ 14 C.F.R.  234.4, ``Reporting on on-time performance,'' 
requires domestic air carriers that account for at least 1 percent of 
domestic scheduled passenger revenues to submit scheduled domestic 
flight performance data to DOT. See 14 C.F.R.  234.2, 234.3. The 
number of reporting carriers has varied from 10 in 1998 to 20 in 2007. 
According to DOT, the data represent about 70 percent of all scheduled 
departures while servicing about 90 percent of all domestic passengers.
---------------------------------------------------------------------------
Summary
    DOT data show that flight delays and cancellations have generally 
increased over the last decade, but the data provide an incomplete 
picture of the full extent and sources of delays. Since 1998, the 
number of airline flight delays and cancellations has increased about 
62 percent nationwide, while the number of scheduled operations has 
increased about 38 percent, according to DOT data.\4\ While flight 
delays occur throughout the entire national airspace system, the flight 
delay trends in New York area are even more pronounced. For example, 
since 1998, the number of flight delays and cancellations in the New 
York region has increased about 111 percent, while the number of 
operations has increased about 57 percent. Although DOT data provide 
information on trends in flight delays and cancellations, they do not 
show the full extent of delays and cancellations. For example, DOT data 
do not reflect passengers' experiences with missed connections 
resulting from delayed or oversold flights, because DOT tracks flight 
delays, not passenger delays. Additionally, DOT data provide some 
information on the source of delays, but they do not provide a complete 
picture. For example, according to DOT data, 38 percent of delays in 
2007 were assigned to the late arriving aircraft category, which means 
that the previous flight using the same aircraft arrived late, and 
caused the subsequent flight to depart late. However, this category 
does not provide the original source of delay for the late arriving 
aircraft, such as a severe weather condition. In the New York region, 
the data for 2007 show that national aviation system delays--a category 
that encompasses a broad set of circumstances, which are all attributed 
to FAA's ability to manage traffic at the airport or airspace level--
accounted for nearly 58 percent of all New York delays, as compared to 
approximately 28 percent systemwide. This disparity reflects the New 
York area's greater level of congestion as compared to the rest of the 
country.
---------------------------------------------------------------------------
    \4\ DOT defines a delay as any flight that departs from or arrives 
at a gate 15 minutes or more after its scheduled gate departure or 
arrival time as shown in the airline's reservation system.
---------------------------------------------------------------------------
    To address delay and cancellation problems beginning in summer 
2008, DOT and FAA are implementing several actions intended to reduce 
delays that we have categorized as capacity-enhancing initiatives and 
demand management policies. Capacity-enhancing initiatives are intended 
to increase the efficiency of existing capacity by reducing delays and 
maximizing the number of takeoffs and landings at an airport, while 
demand management policies influence demand through administrative 
measures or economic incentives. Under capacity-enhancing initiatives, 
FAA has implemented 11 of its 17 short-term initiatives designed to 
better use existing capacity at the airport or system level; begun 
working to improve coordination with the Department of Defense (DOD) 
for the use of military airspace; initiated the first phase of the New 
York, New Jersey, and Philadelphia metropolitan area airspace redesign 
(New York-New Jersey-Philadelphia Airspace Redesign); and appointed a 
New York Airspace ``Czar'' to coordinate regional airspace issues and 
projects. DOT and FAA have also initiated several demand management 
policies--most notably, imposing new hourly schedule caps on operations 
at Newark and JFK, which join already existing caps at LaGuardia. Other 
demand management policies are either still in draft form or have just 
been issued, and therefore, are unlikely to be in effect by this 
summer. These policies include an amendment to the 1996 Policy 
Regarding the Establishment of Airport Rates and Charges (Rates and 
Charges policy)--which, among other things, clarifies the ability of 
airport operators to establish a two-part landing fee structure based 
on operations and aircraft weight--and proposed rules on ``slot 
auctions'' that would lease the majority of New York area airport 
operations (slots) to incumbent airlines and then would help to develop 
a market for those slots by annually auctioning a limited number of 
slot leases.\5\
---------------------------------------------------------------------------
    \5\ A slot equates to one takeoff or landing at the airport.
---------------------------------------------------------------------------
    Collectively, DOT's and FAA's capacity-enhancing initiatives and 
demand management policies will likely have a limited effect on 
reducing delays this summer compared to last year. DOT's and FAA's 
capacity-enhancing initiatives have the potential to reduce delays by 
improving the efficiency of existing capacity, but the effect will 
likely be fairly small. For example, the benefit of the 17 operational 
and procedural initiatives--which range from efforts to reduce 
excessive spacing on final approach before landing to new procedures 
for handling air traffic during severe weather conditions--is generally 
anticipated to come from the initiatives' combined incremental 
improvements over time and in certain situations. DOT and FAA have not 
analyzed the potential near-term delay reduction benefit of the other 
capacity-enhancing initiatives, but airlines, airport operators, and 
aviation associations and experts that we spoke with expect these 
initiatives to have a fairly small impact on reducing delays for this 
summer. DOT's demand management policies--specifically, the hourly 
schedule caps at LaGuardia, JFK, and Newark--may have a more immediate, 
but still a limited, effect on reducing delays because the caps at 
Newark and LaGuardia were set at a level that was generally intended to 
avoid any worsening of delays over 2007 levels and the caps at JFK were 
set to get a 15 percent reduction in average departure delays over 2007 
levels. For example, Newark's cap of 81 hourly operations was set at a 
level to avoid delays beyond those experienced in 2007 but is not 
estimated to reduce delays from 2007 levels. Finally, other 
interrelated factors besides government actions, such as the financial 
state of the aviation industry, increasing jet fuel prices, and the 
downturn in the economy, could lead to fewer delays in 2008, but the 
effects of these factors on aviation congestion and delays are 
uncertain. DOT and FAA provided technical comments on the statement 
which were incorporated as appropriate.
Background
    The national airspace system is a complex, interconnected, and 
interdependent network of systems, procedures, facilities, aircraft, 
and people that must work together to ensure safe and efficient 
operations. DOT, FAA, airlines, and airports all affect the efficiency 
of national airspace system operations. DOT works with FAA to set 
policy and operating standards for all aircrafts and airports. As the 
agency responsible for managing the air traffic control system, FAA has 
the lead role in developing technological and other solutions to 
airspace issues. FAA also provides funding to airports. The funding 
that major airports receive from FAA to make improvements at the 
airports is conditioned on open and nondiscriminatory access to the 
airlines and other users,\6\ and the airlines are free to schedule 
operations at any time throughout the day, except at airports that are 
subject to limits on scheduled operations. The airlines can also affect 
the efficiency of the airspace system by the number and types of 
aircraft that they choose to operate.
---------------------------------------------------------------------------
    \6\ According to 49 U.S.C.  47107, an airport that has received 
Federal funding is required to be available for public use on 
reasonable conditions and without unjust discrimination.
---------------------------------------------------------------------------
    As we have previously reported, measuring the capacity of the 
airspace system and achieving its most efficient use are both difficult 
challenges because they depend on a number of interrelated factors.\7\ 
The capacity of the aviation system is not a simple measurable 
element--in addition to being related to airports' infrastructure, 
capacity is affected at any given time by such factors as weather 
conditions and airline flight schedules. For example, because some 
airports have parallel runways that are too close together for 
simultaneous operations in bad weather, the number of aircraft that can 
take off and land is reduced when weather conditions worsen. Achieving 
the most efficient use of the national airspace system is contingent on 
a number of factors, among them the procedures that FAA uses to manage 
traffic, how well FAA's air traffic control equipment performs, the 
proficiency of the controllers to efficiently use these procedures and 
equipment to manage traffic, and how much users are charged for the use 
of the airspace and airports.
---------------------------------------------------------------------------
    \7\ GAO, Air Traffic Control: Role of FAA's Modernization Program 
in Reducing Delays and Congestion, GAO-01-725T (Washington, D.C.: May 
10, 2001), and National Airspace System: Long-Term Capacity Planning 
Needed Despite Recent Reduction in Flight Delays, GAO-02-185 
(Washington, D.C.: Dec. 14, 2001).
---------------------------------------------------------------------------
    FAA has had a long history of attempting to address congestion by 
managing demand through administrative controls. FAA began establishing 
limits on the number of takeoffs and landings at five airports--Chicago 
O'Hare International, Newark, JFK, LaGuardia, and Washington Reagan 
National--in 1968. The High Density Rule, as it was known, instituted 
limits, or caps, on the number of takeoff and landings of the incumbent 
airlines serving each of the these airports.\8\ DOT lifted the 
restrictions at Newark in 1970, and in 2000, with the passage of the 
Wendell H. Ford Aviation Investment and Reform Act for the 21st Century 
(AIR-21), caps on operations were to be eliminated at Chicago O'Hare by 
July 2002, and at LaGuardia and JFK by January 2007.\9\ AIR-21 also 
immediately exempted certain types of aircraft from the caps, a change 
that resulted in unanticipated increases in demand, especially at 
LaGuardia. In 2000, airlines took advantage of AIR-21's small regional 
jet exemptions and rapidly initiated a large number of new flights to 
and from LaGuardia. FAA chose to impose a moratorium on additional 
flights at LaGuardia in November 2000 to limit delays and reduced 
flights at LaGuardia to a level consistent with the airport's capacity 
under optimal weather conditions. On the basis of this experience and 
FAA's inability to adopt a final congestion management rule for 
LaGuardia,\10\ FAA issued a December 2006 order to maintain the cap of 
75 hourly scheduled operations at LaGuardia until a final rule can be 
adopted. Chicago O'Hare also experienced increased operations after its 
caps were eliminated, prompting FAA to again limit operations at the 
airport beginning in spring 2004 through a series of voluntary 
agreements and ending with a new rule in late summer 2006. These caps 
on Chicago O'Hare's operations are effective through October 2008, 
which coincides with the scheduled opening of the airport's new runway 
in November 2008.
---------------------------------------------------------------------------
    \8\ 33 Fed. Reg. 17896 (Dec. 3, 1968), 14 C.F.R. part 93, subpart 
K.
    \9\ The Wendell H. Ford Aviation Investment and Reform Act for the 
21st Century (AIR-21), Pub. L. No. 106-181, Section 231, 114 Stat. 108, 
Apr. 5, 2000.
    \10\ Since the High Density Rule at LaGuardia was set to expire on 
January 1, 2007, in August 2006, FAA published a notice of proposed 
rulemaking proposing the continuation of the cap on hourly operations 
at the airport as well as a new method for allocating capacity. See 71 
Fed. Reg. 51360 (August 29, 2006). The industry's response to the 
proposed new allocation method was universally negative, and FAA was 
unable to complete its rulemaking in time for the expiration of the 
High Density Rule.
---------------------------------------------------------------------------
    In response to the near-record delays in summer 2007, which 
followed the expiration of the High Density Rule for the New York 
airports and increasing volumes of domestic air traffic, DOT convened a 
special aviation rulemaking committee (New York ARC) in the fall of 
2007 specifically to address delays and other airline service issues in 
the New York metropolitan area. The New York ARC, which consisted of 
stakeholders representing government, airlines, airports, general 
aviation users, and aviation consumers, was tasked with identifying 
available options for changing current policy and assessing the 
potential impacts of those changes on airlines, airports, and the 
traveling public. The New York ARC had three specific objectives: (1) 
to reduce congestion, (2) to allocate efficiently the scarce capacity 
of New York area airports, and (3) to minimize the disruption 
associated with implementing any of the suggested improvements. The New 
York ARC issued its findings and options for reducing congestion to the 
Secretary of Transportation in December 2007.\11\ One of the 
Committee's working groups assessed 77 operational improvement 
initiatives for the New York area and identified key items to focus on 
within the list of 77, such as reducing excess spacing on final 
approach when landing.
---------------------------------------------------------------------------
    \11\ Aviation Rulemaking Committee, ``New York Aviation Committee 
Report,'' December 2007, available at http://www.dot.gov/affairs/
FinalARCReport.pdf.
---------------------------------------------------------------------------
Data Show That Delays and Cancellations Are Increasing, But Provide an 
        Incomplete Picture of the Extent and Sources of Delays
    Nationwide, according to DOT data the annual number of domestic 
airline flight delays and cancellations has increased about 62 percent 
(from 1.2 million to 2.0 million), while the annual number of scheduled 
flights has increased about 38 percent (from 5.4 million to 7.5 
million) since 1998. In the New York area, the trend is even more 
pronounced, as the number of domestic flight delays and cancellations 
at the three main commercial airports has increased about 111 percent, 
while the number of domestic operations has increased about 57 percent 
since 1998.
    DOT statistics indicate that 2007 was the second worst year on 
record for U.S. airlines' on-time performance, and the trends in the 
percentage of flight delays and cancellations appear to be 
worsening.\12\ As shown in figure 1, about 20 percent of flights in the 
system were delayed and nearly 3 percent were canceled in 1998, 
compared to about 24 and 2 percent in 2007, respectively.\13\ The data 
also show that flight delays and cancellations have been steadily 
increasing since 2002, although the percentage of cancellations in 2007 
is still lower than it was from 1998 through 2001. However, 
cancellations have become more problematic in recent years as the 
airline industry is now operating with fewer empty seats on flights. As 
a result, passengers on canceled flights must wait longer to be 
rebooked, and in some cases may be forced to spend the night before 
resuming travel the next day.
---------------------------------------------------------------------------
    \12\ As of December 2007, 18 U.S. airlines with at least 1 percent 
of total domestic scheduled service passenger revenues reported on-time 
performance data each month to DOT's Bureau of Transportation 
Statistics; two additional airlines voluntarily reported this 
information. A flight is counted as on time if it departed or arrived 
within 15 minutes of its scheduled gate departure or arrival times as 
shown in the airlines reservation system. All canceled and diverted 
flights count against the airlines' on-time performance. According to 
DOT, the on-time performance rate of 72.6 percent in 2000 was the worst 
rate for any year since 1995, when DOT began collecting comparable 
data.
    \13\ In addition, a small percentage of domestic flights are 
diverted and land somewhere other than the scheduled destination. 
Diversions accounted for 0.23 percent of all flights in 2007, according 
to DOT data.


---------------------------------------------------------------------------
    Source: DOT.

    Flights delays are also becoming longer. According to DOT data, the 
average length of a flight delay increased from more than 49 minutes in 
1998 to almost 56 minutes in 2007, an increase of nearly 14 percent 
throughout the system. Despite this relatively small increase in 
average flight delay length, far more flights were affected by long 
delays in 2007 than in 1998. For example, the number of flights delayed 
by 180 minutes or more increased from 25,726 flights in 1998 to 64,040 
flights in 2007, or about 150 percent. In addition, DOT's data indicate 
that the number of flights in which an aircraft has departed the gate, 
but remained for an hour or more on the ground awaiting departure, has 
increased over 151 percent since 1998.\14\
---------------------------------------------------------------------------
    \14\ Effective October 1, 2008, DOT will require airlines to report 
additional data elements to provide consumers with a more accurate 
portrayal of arrival and tarmac delays. Currently, airlines report only 
the scheduled departure and arrival times and no actual times for 
canceled flights, which do not provide a complete picture of tarmac 
delays for flights that are canceled, diverted, or experience gate 
returns. Under the new rule, airlines will be required to report actual 
gate departure, total time away from the gate, and the longest single 
period away from the gate to close gaps in DOT's data. See 73 Fed. Reg. 
29426 (May 21, 2008) for the final rule.
---------------------------------------------------------------------------
    Because the entire airspace system is highly interdependent, delays 
at one airport may lead to delays rippling across the system and 
throughout the day. This delay propagation appears to be increasing and 
leading to more delays in the system overall. For example, researchers 
at George Mason University's Center for Air Transportation Systems have 
found that 46 percent of delays in the system in 2007 were caused by 
flight delays occurring earlier in the day. Flight delays in the New 
York metropolitan region also appear to have a disproportionate impact 
on delays experienced throughout the rest of the airspace system. 
During a typical day, approximately one-third of the aircrafts in the 
national airspace system move through the New York airspace. According 
to preliminary research conducted by the MITRE Corporation for FAA, an 
average of 40 percent of the flight delays in the system are from 
delays that originate in the New York metropolitan area.\15\
---------------------------------------------------------------------------
    \15\ According to the MITRE Corporation, the 40 percent figure was 
calculated using DOT data from January and July 2007 and FAA data from 
July 2007.
---------------------------------------------------------------------------
    Compared to the rest of the country, where flight delays and 
cancellations have been steadily increasing, the magnitude and upward 
trend of the problem in the New York region is greater than the rest of 
the airspace system. For example, over a third of all flights in the 
New York metropolitan region in 2007 were delayed or canceled, 
according to DOT statistics.\16\ Figure 2 shows that the percentage of 
late arriving and canceled flights at each of the three major New York 
area airports was considerably higher than the systemwide averages. 
Since 2003, the percentage of late arriving and canceled flights has 
been increasing faster in the New York area than in the rest of the 
system.
---------------------------------------------------------------------------
    \16\ Additionally, flight delays and cancellations have been 
problematic at other major airports, including Chicago O'Hare 
International Airport and Boston Logan International Airport, among 
others. For example, according to DOT data, in 2007, 36 percent of 
flights were either delayed or canceled at Chicago O'Hare, while 31 
percent of flights were either delayed or canceled at Boston Logan.


    Source: GAO analysis of DOT data.
    Note: In this figure, the percentage of delays and cancellations 
has been combined. The system data include the three New York area 
airports.

    Since 1998, the New York area's three major airports have often 
been among the airports with the lowest on-time performance records. In 
2007, DOT reported that LaGuardia, Newark, and JFK had the lowest on-
time performance rates among major domestic airports, followed by 
Chicago O'Hare International Airport, Philadelphia International 
Airport, and Boston Logan International Airport. Table 1 shows the 
ranking of major airports by the lowest on-time arrival performance in 
2007.


----------------------------------------------------------------------------

----------------------------------------------------------------------------
Table 1.--Ranking of Major Airports by Lowest On-Time Arrival Performance (2007)
----------------------------------------------------------------------------------------------------------------
Ranking                    Airport                                                            Percentage on Time
----------------------------------------------------------------------------------------------------------------
1                          LaGuardia                                                                       58.48
----------------------------------------------------------------------------------------------------------------
2                          Newark                                                                          59.45
----------------------------------------------------------------------------------------------------------------
3                          JFK                                                                             62.84
----------------------------------------------------------------------------------------------------------------
4                          Chicago O'Hare International                                                    65.88
----------------------------------------------------------------------------------------------------------------
5                          Philadelphia International                                                      66.54
----------------------------------------------------------------------------------------------------------------
6                          Boston Logan International                                                      69.68
----------------------------------------------------------------------------------------------------------------
7                          San Francisco International                                                     69.75
----------------------------------------------------------------------------------------------------------------
8                          Miami International                                                             70.99
----------------------------------------------------------------------------------------------------------------
9                          Charlotte Douglas International                                                 71.30
----------------------------------------------------------------------------------------------------------------
10                         Seattle-Tacoma International                                                    71.43
----------------------------------------------------------------------------------------------------------------
                           All major airports average                                                      73.03
Source: DOT.
Note: ``Major airports,'' as defined by DOT, consists of the 32 airports serving 1 percent or more of the
  airline industry's domestic scheduled service passengers.

    While DOT data show that the trends in delays and cancellations are 
getting worse, current on-time performance data do not capture the full 
extent of delays and cancellations or the extent to which passengers' 
average travel times have increased in recent years. For example, 
airlines have, in many cases, opted to lengthen scheduled flight times 
to enhance on-time results, particularly along heavily congested and 
frequently delayed routes. DOT data do not account for the increased 
average flight times that are masked by these schedule changes. Also, 
available DOT data may not necessarily reflect passengers' experience 
of delay because DOT tracks flights, not passengers. Passengers can 
experience delays to their trips because of missed connections 
resulting from delayed or oversold flights or lengthy delays due to 
flight cancellations--elements that are not measured in current 
statistics. According to a recent study by George Mason University, 
roughly one in four passengers experienced a passenger trip delay in 
2007 and the average duration of delay experienced by these passengers 
was 1 hour 54 minutes, an increase of 24 minutes over 2006.\17\ In 
addition, the study found that the average delay for passengers on 
canceled flights was 11 hours in 2007. Passenger delays are affected by 
record-level airline load factors (percentage of seats occupied on 
aircraft), which result in fewer available empty seats on subsequent 
flights for those passengers who experience canceled flights. According 
to DOT's Air Consumer Report, flight problems involving cancellations, 
delays, or missed connections were the number one consumer complaint in 
2007.
---------------------------------------------------------------------------
    \17\ George Mason University's passenger trip statistics are 
estimates based on DOT data and other sources, and represent the 
average amount of trip delay expected by passengers on a large sample 
of flights. See Lance Sherry and George Donahue, ``U.S. Passenger Trip 
Delay Report,'' Center for Air Transportation Systems Research, George 
Mason University, April 2008, available at http://catsr.ite.gmu.edu.
---------------------------------------------------------------------------
DOT Data Provide an Incomplete Picture of the Sources of Delays
    The data collected by DOT on the sources of delays provide 
information about where delays occur and what causes them, but the data 
are incomplete. The primary purposes for collecting these causal data 
are to inform the traveling public and categorize delays and 
cancellations so that the parties most capable of addressing the causes 
of delays and cancellations can take corrective action. Since 2003, 
airlines have reported the cause of delay to DOT in one of five broad 
categories: late arriving aircraft, airline, national aviation system, 
extreme weather, and security.

   Late arriving aircraft means a previous flight using the 
        same aircraft arrived late, causing the subsequent flight to 
        depart late. In 2007, approximately 38 percent of delays were 
        assigned to this category.

   Airline delays include any delay or cancellation that was 
        within the control of the airlines, such as aircraft cleaning, 
        baggage loading, crew issues, or maintenance. Roughly 29 
        percent of the delays in 2007 were attributed to airline 
        delays.

   National aviation system delays and cancellations refer to a 
        broad set of circumstances affecting airport operations, heavy 
        traffic volume, and air traffic control. This category also 
        includes any nonextreme weather condition that slows the 
        operation of the system, such as wind or fog, but does not 
        prevent flying. The national aviation system accounted for 
        about 28 percent of delays in 2007.

   Extreme weather includes serious weather conditions that 
        prevent the operation of a flight. Examples of this kind of 
        weather include tornadoes, snow storms, and hurricanes. In 
        2007, nearly 6 percent of delays were assigned to extreme 
        weather.\18\
---------------------------------------------------------------------------
    \18\ Weather delays are captured in several categories, and 
according to DOT, a true picture of total weather-related delays 
requires several steps. First, DOT combines the extreme weather delays 
with weather delays from the aviation system category. Second, DOT 
performs a calculation to determine the weather-related delays included 
in the late arriving aircraft category. Airlines do not report the 
causes of the late arriving aircraft, but DOT makes an allocation using 
the proportion of weather-related delays and total flights in the other 
categories. Adding the weather-related delays to the extreme weather 
and aviation system weather categories results in weather's share of 
all flight delays. DOT estimates that about 44 percent of flights were 
delayed by weather in 2007.

   Security accounted for less than 1 percent of delays in 
        2007. Examples of security delays include evacuation of an 
        airport, reboarding due to a security breach, and long lines at 
---------------------------------------------------------------------------
        the passenger screening areas.

    Since 2003, despite the increasing number of delays, there have 
been no significant changes in the trends of these sources of delay. 
Figure 3 shows the DOT-reported sources of delay in 2007.


    Source: DOT.
    Note: Total may not add up to 100 percent due to rounding.

    The distribution of delay by source is very different in New York 
than for the country as a whole and reflects the New York area's 
greater level of congestion. For example, national aviation system 
delays account for nearly 58 percent of all delays in New York as 
compared to approximately 28 percent for the country as a whole in 2007 
(see fig. 4). As noted earlier, the three major New York area airports 
have experienced more than a 50 percent increase in traffic levels 
since 1998, while runway capacity at these airports has not changed. As 
a result, FAA must resort to a complement of traffic management 
initiatives, such as ground delay or flow control programs, which are 
used to restrict the flow of traffic and, accordingly, lead to 
delays.\19\
---------------------------------------------------------------------------
    \19\ FAA has traditionally used ground delay programs to control 
air traffic volume to airports where the projected traffic demand is 
expected to exceed the airport's capacity for a lengthy period of time. 
Under a ground delay program, FAA decreases the rate of incoming 
flights into an airport by holding a set of flights destined for that 
airport on the ground. According to FAA, the most common reason for the 
implementation of a ground stop or ground delay program is adverse 
weather.


    Source: DOT.
    Note: Total may not add up to 100 percent due to rounding.

    For several reasons, the data provide an incomplete picture of the 
underlying causes of delays. First, the DOT-reported categories are too 
broad to provide meaningful information on the root causes of delays. 
For example, delays attributed to the airlines could consist of causes 
such as a late crew, aircraft maintenance, or baggage loading, but 
these more specific causes are not captured in DOT data,\20\ Second, 
the largest source of systemwide delay--late arriving aircraft, which 
represents 38 percent of the total delay sources (as fig. 3 shows)--
masks the original source of delay. For example, the original source of 
delay for a late arriving aircraft may be the result of other sources--
such as a severe weather condition, the airline, security, or the 
national airspace system--or a combination of one or more of these 
sources. Finally, the data do not capture what many economists believe 
is the fundamental cause of much of the flight delay--a mismatch 
between the demand for and capacity to provide aviation services. While 
the data provide airlines' view of the reason that particular flight 
segments were delayed, DOT does not report data on the extent to which 
flights are simply overscheduled in particular places at particular 
times relative to the capacity of the airports and air traffic control 
system to provide aviation services. The DOT Inspector General analyzed 
airline schedules at 15 airports and found that 6 of the airports had 
flights scheduled either at or over maximum airport capacity at peak 
hours of the day during the summer of 2007.\21\ When this is the case, 
assigning the cause of delay to one of the five DOT categories masks 
that the fundamental cause is this mismatch of demand for and supply of 
these services.
---------------------------------------------------------------------------
    \20\ GAO is currently conducting an analysis of crew scheduling 
problems and the extent to which they may lead to delayed or canceled 
flights.
    \21\ DOT Inspector General. Status Report on Actions Underway to 
Address Flight Delays and Improve Airline Customer Service. CC-2008-
058. (Washington, D.C.: Apr. 9, 2008).
---------------------------------------------------------------------------
DOT and FAA Are Implementing Actions Intended to Reduce Delays
    DOT and FAA are implementing several actions intended to reduce 
flight delays beginning in summer 2008.\22\ Due to the high proportion 
of delays at the three major New York area airports and their effect on 
the rest of the airspace system, many of these actions are specifically 
designed to address congestion in the New York area. For purposes of 
our discussion, we grouped the various actions into one of two 
categories--capacity-enhancing initiatives and demand management 
policies--both of which are intended to reduce flight delays. Capacity-
enhancing initiatives are intended to increase the efficiency of 
existing capacity by reducing delay and maximizing the number of 
takeoffs and landings at an airport. By contrast, demand management 
policies influence demand through administrative measures or economic 
incentives. Some of these capacity-enhancing initiatives and demand 
management policies will be fully or partially implemented by summer 
2008, but others will not be completed or even initiated until later 
this year or beyond.
---------------------------------------------------------------------------
    \22\ Other efforts are currently under way to improve the air 
travel experience for customers. For example, airlines and airport 
operators are working to develop plans to better coordinate procedures 
for responding to extended tarmac delays, and DOT formed a task force 
to explore these issues. Also, a new bumping rule was announced in 
April 2008. See 73 Fed. Reg. 21026 (April 18, 2008). The rule is not 
designed to reduce cancellations or delays, but rather, requires 
airlines to double the maximum compensation to those who are 
involuntarily bumped from their flight.
---------------------------------------------------------------------------
    DOT and FAA have announced multiple capacity-enhancing initiatives 
designed to reduce delays in the New York region for this summer and 
beyond. In general, adding substantial new airspace system capacity is 
costly and time consuming.\23\ Thus, in March 2007, DOT and FAA 
convened a workgroup that identified 17 short-term initiatives that 
better utilize existing capacity at the airport or system level through 
procedural and other changes in airport and airspace operations and 
could be completed by summer 2008. Eleven of the 17 short-term 
initiatives have been completed, and FAA plans to implement the 
remaining initiatives, which require more planning and coordination, by 
September 2008.\24\ See Appendix I for a list of the 17 short-term 
initiatives and their status. The initiatives range from new procedures 
and reroutes for handling air traffic during severe weather conditions 
to efforts to reduce excessive spacing on final approach before 
landing, and to an airspace flow program that allows New York 
departures to move more freely while delays are redistributed to 
airports within the region. In addition to the 17 short-term 
initiatives, other capacity-enhancing initiatives are under way. These 
include improving coordination with DOD for airlines' use of military 
airspace and redesigning the airspace around the New York, New Jersey 
and Philadelphia metropolitan area.\25\ FAA is in the process of 
drafting letters of agreement that would help establish more formal 
processes for communicating with DOD for the release of specific 
portions of military airspace on an as-needed basis. In December 2007, 
FAA initiated the first phase of the planned 5-year implementation of 
the airspace redesign, with new departure headings at Newark and 
Philadelphia airports.\26\ In April 2008, FAA appointed a New York 
Airspace ``Czar''--whose official title is Director for the New York 
Area Program Integration Office--to coordinate regional airspace issues 
and projects. Table 2 lists the capacity-enhancing initiatives and 
their status. More detailed information on the actions--including 
descriptions, geographic focus, and status--can be found in Appendix 
II.
---------------------------------------------------------------------------
    \23\ For example, NextGen improvements to the air traffic control 
system are estimated to cost $25 billion and will not be completed 
until 2025. Adding runway capacity at airports is also expensive and 
time consuming--for example, the third runway at Seattle-Tacoma 
International Airport is estimated to cost $1.1 billion-$1.2 billion 
and is scheduled to take at least 16 years to complete.
    \24\ In addition to the short-term initiatives, FAA is working to 
implement the list of 77 initiatives adopted by the New York ARC. This 
list includes most of the 17 short-term initiatives. FAA reported that 
to date, 17 of the 77 initiatives have been completed, 30 are expected 
to be completed by the end of Fiscal Year 2008, and 40 should be 
completed by the end of Fiscal Year 2009. FAA noted that the remaining 
initiatives are longer term or are being analyzed for feasibility and 
establishing priorities.
    \25\ GAO is currently conducting a review of the New York/New 
Jersey/Philadelphia Metropolitan area airspace redesign and plans to 
issue a report in July 2008. According to FAA, the purpose of the 
airspace redesign is to increase the efficiency and reliability of the 
airspace structure and air traffic control system, thereby 
accommodating growth while enhancing safety and reducing delays in air 
travel. Thus, the airspace redesign is intended to increase the 
efficiency and reliability of the air traffic system, and is included 
as a capacity-enhancing initiative for the purpose of this discussion.
    \26\ FAA will increase the number of departure headings air traffic 
controllers can assign to aircraft during takeoffs, and adjust the 
routes air traffic controllers can assign aircraft during their final 
approach to an airport.


------------------------------------------------------------------------

------------------------------------------------------------------------
Table 2.--Capacity-Enhancing Initiatives and Their Status
------------------------------------------------------------------------
Capacity-enhancing initiatives
------------------------------------------------------------------------
Action                                        Status
------------------------------------------------------------------------
17 short-term initiatives                     11 of 17 initiatives
                                               completed
------------------------------------------------------------------------
Coordination for use of military airspace     In progress
------------------------------------------------------------------------
New York/New Jersey/Philadelphia airspace     Initiated, estimated
 redesign                                      completion 2012
------------------------------------------------------------------------
New York Airspace Czar                        Appointed
Source: GAO analysis of DOT and FAA actions.


    DOT and FAA have also introduced demand management policies--most 
notably, hourly schedule caps on takeoffs and landings at the three 
major New York area airports--to its pool of delay reduction efforts. 
DOT and FAA believe that caps on scheduled operations are necessary at 
some airports where available capacity cannot meet demand. The caps are 
currently in place to limit scheduled operations at all three major New 
York area airports, with hourly scheduled operations capped at 81 at 
both JFK and Newark, and at 75 at LaGuardia. The most recent caps at 
JFK and Newark are scheduled to be in place until October 2009.\27\ At 
LaGuardia, a December 2006 order maintained caps that had been in place 
since November 2000.\28\ The institution of caps, however, does not 
necessarily mean that total operations at each of the three airports 
will decrease. For example, at JFK, the total number of daily scheduled 
operations will increase by 50 flights per day over summer 2007 levels, 
when no caps were in place, but scheduled operations will be spaced 
more evenly throughout the day in an attempt to minimize peak period 
congestion.
---------------------------------------------------------------------------
    \27\ See 73 Fed. Reg. 3510 (January 18, 2008) for the final order 
on the caps at JFK and 73 Fed. Reg. 8737 (February 14, 2008) for an 
amendment correcting technical errors in this order. See 73 Fed. Reg. 
29550 (May 21, 2008) for the final order on the Newark caps.
    \28\ 65 Fed. Reg. 69126 (Nov.15, 2000). This was extended through 
December 31, 2006. 70 Fed. Reg. 36998 (June 27, 2005). 71 Fed. Reg. 248 
(Dec. 27, 2006).
---------------------------------------------------------------------------
    Two other demand management policies under way include an amendment 
to the Rates and Charges policy and proposed rules to establish slot 
auctions at all three New York area airports. The amendment to the 
Rates and Charges policy clarifies that airport operators may establish 
a two-part landing fee structure, consisting of both an operation 
charge and an aircraft weight-based charge, and include rule changes 
that would expand the costs congested airports could recoup through 
airfield charges.\29\ The proposed slot auctions for the three New York 
area airports would lease the majority of operations (takeoffs and 
landings, or slots) to incumbent operators and help develop a market by 
annually auctioning off leases for a limited number of slots during the 
first 5 years of the rule.\30\
---------------------------------------------------------------------------
    \29\ A final amendment to the Rates and Charges policy was issued 
on July 8, 2008, but as of July 11, 2008, it has not been published in 
the Federal Register. The proposed amendment can be found at 73 Fed. 
Reg. 3310 (January 17, 2008). The amendment to the Rates and Charges 
policy adopts a definition for a congested airport that contains two 
categories of congested airports, one relating to existing congestion 
and the other to future congestion. In the amendment, DOT defines a 
congested airport first as an airport that accounted for at least 1 
percent of all delayed aircraft operations in the United States and at 
an airport listed in table 1 of the FAA's Airport Capacity Benchmark 
Report 2004, in accordance with 49 U.S.C.  47175. Second, DOT will 
consider an airport congested in the future if it is forecasted to meet 
a defined threshold level of congestion in the Future Airport Capacity 
Task 2 study, with the exception of those airports congested for the 
first time in 2025. DOT and FAA assert that airports already have the 
authority to adopt a two-part landing fee and the Rates and Charges 
policy clarifies this authority.
    \30\ See 73 Fed. Reg. 20846 (April 17, 2008) for the supplemental 
rulemaking on slot auctions at LaGuardia. See 73 Fed. Reg. 29625 (May 
21, 2008) for the notice for proposed rulemaking on slot auctions at 
JFK and Newark.
---------------------------------------------------------------------------
    These two demand management policies are being developed, but it is 
unlikely that they will be in effect by this summer. DOT and FAA just 
recently announced the final Rates and Charges policy amendment, so it 
is unlikely the policy will have an impact this summer. Furthermore, 
existing use and lease agreements between airlines and airport 
operators could prevent any changes to rates and charges for many 
years, until existing lease agreements expire. DOT and FAA are 
currently reviewing comments for the proposed rule to establish slot 
auctions at LaGuardia and will be collecting comments on the proposed 
rule to establish slot auctions at JFK and Newark until July 21, 2008; 
thus it is unlikely the final rules will be issued during the summer. 
Table 3 lists the demand management policies and their status. More 
detailed information on the actions--including descriptions, geographic 
focus, and status--can be found in Appendix II.


------------------------------------------------------------------------

------------------------------------------------------------------------
Table 3.--Demand Management Policies and Their Status
------------------------------------------------------------------------
Demand management policies
------------------------------------------------------------------------
Action                                        Status
------------------------------------------------------------------------
Order limiting scheduled operations at JFK    Caps in effect since March
                                               30, 2008
------------------------------------------------------------------------
Order limiting scheduled operations at        Caps in effect since June
 Newark                                        20, 2008
------------------------------------------------------------------------
Orders limiting scheduled operations at       Caps in effect since
 LaGuardia                                     December 2006
------------------------------------------------------------------------
Rulemaking on slot auctions--LaGuardia        DOT and FAA are reviewing
                                               comments
------------------------------------------------------------------------
Rulemaking on slot auctions--Newark, JFK      DOT and FAA are seeking
                                               comments
------------------------------------------------------------------------
Amendment to Rates and Charges policy         Final policy issued July
                                               8, 2008
Source: GAO analysis of DOT and FAA actions.

DOT's and FAA's Actions May Help Reduce Delays, but the Extent of Delay 
        Reduction in Summer 2008 Will Likely Be Limited
    DOT's and FAA's capacity-enhancing initiatives have the potential 
to reduce congestion and thereby avoid delays, according to FAA and 
stakeholders we consulted, but the effect will likely be limited for 
the summer 2008 traveling season. DOT's and FAA's demand management 
policies--in particular, caps on scheduled operations at all three New 
York area airports--are expected to have some delay avoidance impact in 
the near term. DOT and FAA set the caps at Newark and LaGuardia at a 
level intended to avoid an increase in delays above that experienced in 
2007 and set the caps at JFK to generate a 15 percent reduction in 
average departure delays over 2007 levels. The projected impact of the 
various actions undertaken by DOT and FAA is also expected to be muted 
because several will not be in place until next year or beyond. 
Finally, other mitigating economic factors could lead to fewer 
operations in 2008, which might also lead to fewer delays.
    Although DOT and FAA have not analyzed the potential near-term 
benefit of the capacity-enhancing initiatives, FAA officials and 
stakeholders that we spoke with anticipate that the capacity-enhancing 
initiatives will generally have a positive, but fairly small, impact on 
reducing delays in the near term. For example, while FAA has not 
analyzed the estimated impact of the 17 short-term initiatives, 
aviation stakeholders, including airport operators, airlines, and 
aviation industry associations, believe that these initiatives will 
have a positive impact in summer of 2008. However, most think the 
initiatives--when taken together--will result only in incremental 
improvements and in certain situations and alone will not provide 
sufficient near-term gains to accommodate the peak hour schedules at 
the New York area airports' current or forecast levels of demand. 
Furthermore, given that the final plan for coordinating the use of 
military airspace is still under development, the potential impact of 
this effort remains unknown. However, airlines agree that increasing 
use of military airspace through advanced coordination holds promise, 
and the release of military airspace over recent holiday weekends has 
been beneficial.\31\ Finally, although the impact of the newly 
appointed aviation czar is also unknown, some airlines and New York 
airport operators have supported the appointment of a czar, but also 
expressed concern that the czar, who is currently lacking a dedicated 
budget or staff, will not have sufficient authority to direct and 
coordinate delay reduction efforts across FAA and DOT offices.
---------------------------------------------------------------------------
    \31\ FAA can currently use sections of military airspace on an as-
needed basis and has had advanced coordination with DOD for use of 
military airspace over the Christmas and Thanksgiving travel season in 
2007 and again over the Memorial Day and Fourth of July weekends in 
2008. The current efforts under way are to further establish processes 
and procedures for advance coordination on a more regular basis.
---------------------------------------------------------------------------
    Of the capacity-enhancing initiatives, FAA has estimated the 
potential future delay reduction benefits of one--the New York/New 
Jersey/Philadelphia Airspace Redesign. FAA estimates that the airspace 
redesign will result in a 20 percent reduction in national airspace 
system delays for the New York/New Jersey/Philadelphia study area 
airports as compared to taking no action. According to FAA, estimated 
delay reduction will vary by airport and will be achieved only once the 
redesign has been fully implemented. The airspace redesign, scheduled 
to be completed in 2012, is highly controversial because residents 
living in affected areas have raised concerns about potential increases 
in aircraft noise and other environmental effects.
    Demand management policies, which do not require long-term 
investments, will likely have a more immediate but similarly limited 
effect on relieving congestion and reducing delays. Because of 
increasing congestion at JFK and Newark, in the fall of 2007, FAA used 
models to analyze the airlines' proposed 2008 summer schedules and 
determine potential future delays at these airports and the effect of 
caps.\32\ The proposed summer schedules submitted by the airlines for 
these airports would have constituted substantial scheduling increases 
over summer 2007. On the basis of these proposed schedules, DOT and FAA 
set the caps at JFK at a level that is projected to decrease average 
departure delays by 15 percent over 2007 levels. However, the caps at 
LaGuardia and Newark are set at a level to avoid an increase in delays 
over 2007 levels. For example, at Newark, FAA estimates about a 23 
percent reduction in the average delay per operation relative to a 
situation with no cap. Newark's caps were designed to ensure that 
delays did not get significantly worse in 2008 based on the airlines' 
proposed summer schedules and the potential for increased operations 
diverted from JFK. Thus, the caps at Newark are not expected to bring a 
delay reduction benefit as compared to delays experienced in 2007. At 
LaGuardia, which already had caps in 2007, FAA estimated that the long-
term implementation of caps would reduce delays by 32 percent as 
compared to no cap.
---------------------------------------------------------------------------
    \32\ FAA worked with the MITRE Corporation to develop models and 
capacity analyses to set capacity limits at each of the three major New 
York area airports. Since the expected delay reduction impact of a cap 
is dependent upon the level at which a cap is set, when setting a cap, 
policymakers face a tradeoff between how much delay they are willing to 
accept and the number of operations the airlines are allowed. For 
example, higher constraint levels allow more operations during good 
weather, but may significantly increase delays during inclement 
weather.
---------------------------------------------------------------------------
    Caps at the New York area airports will help the region avoid 
additional delays in the near term, but there are also policy trade-
offs to consider. In general, FAA, airlines, and aviation experts have 
stated that when available capacity cannot meet demand, managing 
operations at the airport level is necessary to reduce congestion and 
limit delays in the short run. FAA noted that imposing caps is an 
effective, but not efficient, way to reduce delays. Airlines generally 
support caps as a short-term solution for addressing congestion at the 
New York airports because of the worsening delays at these airports. 
FAA stated that some airlines may support caps at airports they already 
serve because caps generally protect incumbent airlines and limit 
competition from airlines that are interested in beginning service at 
these airports (or new entrants). However, some airport operators 
strongly oppose flight caps because they state that caps could 
constrain the economic growth of the surrounding region. In addition, 
some airport operators and aviation experts are concerned that using 
caps as a long-term solution can mask the need for capacity 
enhancements and shift the focus away from important long-term 
solutions that may provide a more lasting solution to the delay 
problem.
    The proposed slot auction rules for the three major New York area 
airports are currently out for comment and will not be implemented by 
this summer, but even if they were in place, they would not directly 
reduce delays. DOT and FAA intend the slot auctions to help create a 
market for slots in the New York area that allows new entrants better 
access to the airports and encourage airlines currently holding slots 
to place a greater value on the use of their slots. By itself, a slot 
auction will not reduce delays. But DOT and FAA believe that by helping 
to reveal the economic value of slots, the policy may help to develop a 
more robust secondary market for slots, which will, in turn, lead to 
greater efficiency in their allocation and use. DOT and FAA believe 
that doing so may increase the size of aircraft used at the airports 
and thereby increase the number of passengers served. The proposed 
rules for the three New York area airports include different slot 
auction options. Only one of the two options for LaGuardia would have a 
direct delay reduction impact. Specifically, this option would require 
approximately 18 slots to be retired over 5 years, and would result in 
an estimated 1 minute of delay reduction for each takeoff and landing 
at the airport.\33\ One slot auction proposal for Newark and JFK would 
reallocate 10 percent of eligible capacity via annual auctions over 5 
years, and FAA would retain the net auction proceeds for use on 
unspecified capacity improvements in the New York area. The second slot 
auction option at JFK would reallocate 20 percent of eligible slots 
over 5 years, and the net auction proceeds would be granted to the 
carrier whose previously held slots were auctioned. Under this option, 
carriers whose slots are returned for auction would not be allowed to 
bid on their own slots. Some airline officials and airport operators 
stated that airlines have made substantial investments at these 
airports that would be diminished if they lose operating rights. 
Airlines and New York airport operators strongly oppose the proposed 
slot auctions because they do not think that FAA has the legal 
authority to implement these auctions.
---------------------------------------------------------------------------
    \33\ The second option for the LaGuardia slot auction does not 
retire any slots. As a result, this option does not result in a direct 
delay improvement.
---------------------------------------------------------------------------
    The potential impact of the Rates and Charges policy--a policy that 
is unlikely to be implemented by this summer because the final notice 
was only announced on July 8, 2008--was not analyzed by DOT and FAA. 
However, DOT and FAA assert that, if implemented, the amendment to the 
Rates and Charges policy may help to reduce congestion, and thus delay, 
by encouraging airlines to use larger aircraft and schedule fewer 
operations during peak usage hours. Some airport operators support this 
policy because it provides them with more flexibility in setting 
landing fees and another option for addressing delays, but the extent 
to which airports can or will implement the policy is unknown. Some 
airlines, airport operators, and aviation experts assert that an 
airport's implementation of a two-part landing fee under the Rates and 
Charges policy may not reduce delays because the policy requires these 
fees to remain revenue neutral.\34\ In other words, for congested 
airports, the policy will not enable the differential between peak and 
off-peak prices to be large enough to change airline behavior while 
adhering to revenue neutrality. Some airlines and airport operators 
opposed the amendment because they think that it could discriminate 
against airlines whose fleets include mostly small aircraft because the 
amendment creates a fee differential for small to medium-sized aircraft 
while having a negligible effect on larger aircraft. Airlines and 
certain airport operators also expressed concern that under such a 
policy, service to small cities would be dropped because carriers would 
favor using larger aircraft to serve larger cities. Several airlines 
stated that the Rates and Charges policy does not address the bigger 
problem of lack of capacity in the airspace system.
---------------------------------------------------------------------------
    \34\ The amendment to the Rates and Charges policy states that the 
revenue generated from the two-part landing fee structure is not to 
exceed the allowable costs of the airfield. In other words, any airport 
that implements the two-part landing fee would be required to structure 
the fees such that the total revenue raised is no more than the level 
of revenue that would have been raised under a simple weight-based 
landing fee. That is, the landing fee structure must be ``revenue 
neutral.''
---------------------------------------------------------------------------
    Finally, other interrelated factors beyond government initiatives, 
such as the financial state of the aviation industry, increasing jet 
fuel prices, and the downturn in the economy, may also result in fewer 
delays during 2008, but their impact is uncertain. The Air Transport 
Association expects a 1 percent reduction in the number of passengers 
for the summer 2008 travel season as compared to the 2007 summer travel 
season, and many airlines are planning more substantial reductions in 
capacity and schedules for the fall and winter 2008 seasons. Economic 
conditions, rising fuel costs, and airline initiated capacity cuts 
could affect demand for air travel or available capacity in the coming 
months. These factors also reduce congestion and, accordingly, delays 
and could make it difficult to determine how much of the delay 
reductions, if any, might be attributed to the capacity-enhancing 
initiatives or demand management policies planned for summer 2008.
    In closing, DOT and FAA should be commended for taking steps to 
reduce mounting flight delays and cancellations for the 2008 summer 
travel season. However, delays and cancellations this summer could 
still be significant given the likely limited impact of DOT's and FAA's 
actions. Capacity-enhancing initiatives can provide some limited 
benefit in the near term, but they do not fundamentally expand 
capacity. Demand management policies, especially those that 
artificially restrict demand--like schedule caps--may limit increases 
in delays, but should not be viewed as a meaningful or enduring 
solution to addressing the fundamental imbalances between the 
underlying demand for and supply of airspace capacity. The growing air 
traffic congestion and delay problem that we face in this country is 
the result of many factors, including airline practices, inadequate 
investment in airport and air traffic control infrastructure, and how 
aviation infrastructure is priced. Addressing this problem involves 
difficult choices, which affect the interests of passengers, airlines, 
airports, and local economies. If not addressed, congestion problems 
will intensify as the growth in demand is expected to increase over the 
next 10 years.
    Mr. Chairman, this concludes my prepared statement. I would be 
pleased to respond to any questions that you or other Members of the 
Subcommittee may have.
Appendix I: New York Short-Term Initiatives



-----------------------------------------------------------------------------



                       17 Short-Term Initiatives to Enhance Capacity in the New York Area
----------------------------------------------------------------------------------------------------------------
                   Action                                    Description                          Status
----------------------------------------------------------------------------------------------------------------
1. John F. Kennedy International Airport     Daily planning teleconferences to provide                 Completed
 (JFK)--Port Authority of New York and New    a common situational awareness for
 Jersey (PANYNJ) Daily Planning               customers--such as airlines, airport
 Teleconferences                              operators, the military, and general
                                              aviation--on the planned daily operations
                                              at JFK.
----------------------------------------------------------------------------------------------------------------
2. Simultaneous Approaches to Runways 31L/R  Simultaneous runway approaches to 31L/R                   Completed
 at JFK                                       will allow approximately 4 to 6 more
                                              aircraft to land on this runway
                                              configuration when weather conditions are
                                              classified as instrument meteorological
                                              conditions (IMC).
----------------------------------------------------------------------------------------------------------------
3. Accessing J134/J149 from Eliot            When thunderstorms affect the west                        Completed
 Intersection (for use during Severe          departure routes, aircraft will be
 Weather Avoidance Programs)                  rerouted using the Eliot departure fix.
                                              Benefits have not been identified, but
                                              are available for use as weather events
                                              dictate.
----------------------------------------------------------------------------------------------------------------
4. Pass Back Departure Restrictions-700      Pass back restrictions were removed on                    Completed
 mile restriction                             October 11, 2007, beyond 700 miles for
                                              traffic destined for the New York
                                              airports. Departure restrictions to
                                              airports often lead to delays as
                                              controllers have to wait to release
                                              aircraft. Eliminating this airport
                                              restriction and allowing en route
                                              controllers to build in the spacing
                                              improves airport efficiency.
----------------------------------------------------------------------------------------------------------------
5. Excessive Spacing on Final Approach       Briefings and trainings at major                        In progress
                                              facilities are planned to speed
                                              implementation of changes associated with
                                              the ``proximity event'' category. Intent
                                              is to help educate controllers that
                                              reducing excessive spacing between
                                              aircraft on final approach can help
                                              reduce delay and should not be considered
                                              an error, because it does not pose a
                                              safety risk.
----------------------------------------------------------------------------------------------------------------
6. Conditional Holding Patterns              Under certain conditions, control of the                In progress
                                              holding pattern airspace will transfer
                                              from the New York Air Route Traffic
                                              Control Center (ZNY) to the New York
                                              TRACON (N90). This allows aircraft to
                                              transition out of the holding pattern
                                              using terminal separation standards (3
                                              miles) as opposed to the en route
                                              separation standards (5 miles).a
----------------------------------------------------------------------------------------------------------------
7. NY Area Severe Weather Avoidance          When affected by thunderstorms,                         In progress
 Procedure Action Team Items--Route           controllers and traffic flow managers
 Availability Planning Tool (RAPT)            will use a weather forecasting technology
                                              to identify the availability of departure
                                              routes, and provide traffic management
                                              specialists with the ability to more
                                              quickly open and close routes and to
                                              reroute aircraft.
----------------------------------------------------------------------------------------------------------------
8. Second J80 Airway                         Creating another westbound departure route                Completed
                                              parallel to J80 has the potential to
                                              mitigate westbound delays from JFK.
----------------------------------------------------------------------------------------------------------------
9. Resectorizing of New York ARTCC (ZNY)     A reallocation of the lower part of sector                Completed
 Sector 73                                    73 at the New York Air Route Traffic
                                              Control Center will allow the remaining
                                              sector to focus on aircraft departing
                                              Philadelphia and New York.
----------------------------------------------------------------------------------------------------------------
10. Moving J79 Boston (Logan Airport [BOS]   Move current BOS arrivals via J79 to the                In progress
 Arrivals to the East)                        east and reduce congestion at the MERIT
                                              departure fix.
----------------------------------------------------------------------------------------------------------------
11. Moving Overflights in ZNY34              Moving crossing traffic, or overflights,                In progress
                                              out of the way of New York departures,
                                              allowing for unrestricted climbs to
                                              requested altitude, and reducing delay by
                                              decreasing miles in trail for New York
                                              departures.
----------------------------------------------------------------------------------------------------------------
12. Airspace Flow Program (AFP) for New      Apply AFP technology to manage departures               In progress
 York Departures                              from the NY airports, such that NY
                                              airport departures would be allowed to
                                              freely flow and delayed flights would be
                                              redistributed to other peripheral
                                              airports.
----------------------------------------------------------------------------------------------------------------
13. Severe Weather Avoidance Procedure       SWAP escape routes in Canadian airspace                   Completed
 (SWAP) Escape Routes                         are used and coordinated daily with
                                              Canada's civil air navigation services
                                              provider (NAV CANADA). Used mostly during
                                              the summer because of thunderstorms and
                                              winds in the United States.
----------------------------------------------------------------------------------------------------------------
14. Deconflict Newark Airport (EWR)          Allows for more efficient arrivals from                   Completed
 Arrivals Over SHAFF Intersection             the north into Newark by moving or
                                              eliminating crossing traffic. No added
                                              capacity benefits are expected. Do expect
                                              to get some added operational efficiency
                                              for aircraft while in the en route
                                              portion of flight.
----------------------------------------------------------------------------------------------------------------
15. Simultaneous Visual Approaches to        A procedure that allows for simultaneous                  Completed
 Runway 4L at EWR                             arrivals on runways 4L and 4R, when
                                              weather permits.
----------------------------------------------------------------------------------------------------------------
16. Caribbean Tactical Reroutes to EWR       Traffic management procedure to allow EWR                 Completed
                                              arrival aircraft to fly at higher
                                              altitudes and in a less circuitous route.
                                              No added capacity benefits are expected.
----------------------------------------------------------------------------------------------------------------
17. EWR Runways 4R/29 Waiver                 Procedures currently allow for these                      Completed
                                              runway configurations to be used in
                                              Visual Meteorological Conditions (VMC).
                                              Waiver has been signed to allow arrivals
                                              to land on Runway 29 while landing on
                                              Runway 4R.
----------------------------------------------------------------------------------------------------------------
a Terminal Radar Approach Control (TRACON) is an FAA air traffic control facility which uses radar and two way
  radio communication to provide separation of air traffic within a specific geographic area in the vicinity of
  one or more large airports.
Source: GAO analysis based on DOT and FAA actions.

Appendix II: Status and Reported Benefits of Capacity-Enhancing 
        Initiatives and Demand Management Policies



------------------------------------------------------------------------



                                         Capacity-Enhancing Initiatives
----------------------------------------------------------------------------------------------------------------
                                                                                        Reported delay reduction
       Action               Description            Focus               Status                   benefit a
----------------------------------------------------------------------------------------------------------------

17 short-term---------The New York Aviation------NY region---Eleven of the 17 short-----Not analyzed but likely-
 initiatives           Rulemaking Committee                   term initiatives are       to be small.
                       (ARC) recommended a                    currently complete. The
                       list of 77 items for                   others are planned for
                       consideration and                      completion by the end of
                       implementation in the                  Fiscal Year 2008.
                       New York area. From
                       these, FAA identified
                       17 short-term
                       initiatives for
                       immediate action.
----------------------------------------------------------------------------------------------------------------
Coordination with     FAA is working with DOD   East Coast   FAA's efforts to           Final plan unknown,
 the Department of     to explore the current                 standardize use of         therefore benefit
 Defense (DOD) for     use of special use                     military airspace with     unknown.
 use of military       airspace, develop                      DOD are ongoing and the
 airspace              proposals for                          outcome is uncertain.
                       increased civil use of
                       military airspace, and
                       evaluate letters of
                       agreement that provide
                       operational direction
                       for the shared uses of
                       special use airspace
----------------------------------------------------------------------------------------------------------------
New York/New Jersey/  The Airspace Redesign      NY region   Implementation began on    When the redesign is
 Philadelphia (NY/NJ/  of the NY/NJ/PHL                       December 19, 2007, with    fully implemented in
 PHL) Airspace         metropolitan area                      the introduction of        2012, FAA estimated a
 Redesign              involves changes to                    additional departure       20 percent reduction in
                       airspace                               headings at Philadelphia   national airspace
                       configurations and air                 International and Newark   system delay in the
                       traffic management                     International airports.    study area as compared
                       procedures. The                        FAA has stated that it     to taking no action.
                       selected alternative                   does not believe there     Estimated arrival and
                       (Integrated Airspace                   will be additional         departure delay
                       Alternative with                       changes implemented        reduction varies
                       Integrated Control                     until fall 2008. Final     between airports.
                       Complex) integrates                    implementation by 2012.
                       the entire airspace
                       with a common
                       automation platform.
                       Air traffic
                       controllers can reduce
                       aircraft separation
                       rules from 5 to 3
                       nautical miles over a
                       larger geographical
                       area than the current
                       airspace structure
                       allows
----------------------------------------------------------------------------------------------------------------
New York Airspace     ARC participants agreed    NY region   Marie Kennington-Gardiner  Unknown.
 Czar                  that appointing a New                  has been appointed
                       York aviation czar to                  Director of the New York
                       coordinate regional                    Integration Office.
                       airspace issues and
                       all projects and
                       initiatives addressing
                       problems of congestion
                       and delays in New York
                       would be beneficial.
                       As a result, the
                       Director of the New
                       York Integration
                       Office position was
                       created
----------------------------------------------------------------------------------------------------------------
Demand Management Policies
----------------------------------------------------------------------------------------------------------------
Order limiting        In January 2008, FAA       NY region   Operations are capped at   FAA estimates that caps
 scheduled             issued an order                        81 per hour.               would reduce average
 operations at John    setting a cap on the                                              departure delays by 5.5
 F. Kennedy            number of hourly                                                  minutes, or 15 percent.
 International         operations at JFK. The                                            The number of departure
 airport               order took effect                                                 delays of 60 minutes or
                       March 30, 2008, and                                               more would decrease 31
                       will expire October                                               percent. Based on
                       24, 2009                                                          proposed summer 2008
                                                                                         schedules, estimated
                                                                                         delays could have
                                                                                         increased by up to 150
                                                                                         percent.
----------------------------------------------------------------------------------------------------------------
Order limiting        In March 2008, FAA         NY region   Scheduled operations       Slight reduction in
 scheduled             proposed an order to                   capped at 81 per hour by   arrival delays offset
 operations at         cap flights at Newark.                 summer 2008.               by slight increase in
 Newark                The final order was                                               departure delays with
 International         issued on May 21,                                                 no estimated net change
 airport               2008, and takes effect                                            in average delay
                       on June 20, 2008, and                                             between 2007 and 2008.
                       expires October 24,                                               The purpose is to keep
                       2009                                                              delays from worsening
                                                                                         at Newark in 2008
                                                                                         because of caps at.
                                                                                         Based on proposed
                                                                                         summer 2008 schedules,
                                                                                         estimated arrival
                                                                                         delays would increase
                                                                                         by as much 50 percent
                                                                                         in 2008 without the
                                                                                         limits.
----------------------------------------------------------------------------------------------------------------
Orders limiting       In December 2006, FAA      NY region   Scheduled operations will  FAA estimates 32 percent
 scheduled             published a temporary                  be capped at 75 per hour   reduction in average
 operations at         order maintaining the                  during summer 2008.        delay as compared to no
 LaGuardia (LGA)       same caps and                                                     cap. As the caps were
                       exemptions in place                                               already in place, no
                       since November 2000.                                              new benefit is expected
                       In April 2008, FAA                                                in summer 2008.
                       also published an
                       order limiting
                       unscheduled operations
                       to 3 per hour
----------------------------------------------------------------------------------------------------------------
Supplemental          In April 2008, FAA         NY region   Comment period ended June  Will depend on the
 rulemaking on slot    issued a supplemental                  16, 2008. DOT is           option selected. Option
 auctions at LGA       rulemaking to lease                    reviewing comments.        1 (slot retirement of
                       the majority of slots                                             1.5 slots per year)
                       at the airport to the                                             estimated to result in
                       incumbent operators                                               1 minute of average
                       and to develop a                                                  delay reduction. Option
                       market by annually                                                2 does not retire
                       auctioning off leases                                             slots. DOT believes the
                       for a limited number                                              proposal will help
                       of slots during the                                               reveal the economic
                       first 5 years of the                                              value of slots, and may
                       rule. Two options to                                              increase the size of
                       annually auction these                                            aircraft used at the
                       slots were proposed                                               airports, and thereby
                                                                                         increase the number of
                                                                                         passengers served.
----------------------------------------------------------------------------------------------------------------
Proposed rulemaking   In May 2008, FAA issued    NY region   In comment period until    FAA states that the
 on slot auctions at   a notice of proposed                   July 21, 2008.             immediate impact will
 JFK and Newark        rulemaking to assign                                              be to prevent a return
                       to existing operators                                             to, or worsening of,
                       the majority of slots                                             the conditions and
                       at Newark and JFK, and                                            delay experienced
                       create a market by                                                during summer 2007. By
                       annually auctioning                                               itself, a slot auction
                       off a limited number                                              will not reduce delays.
                       of slots in each of                                               However, DOT believes
                       the first 5 years                                                 the proposal will help
                                                                                         reveal the economic
                                                                                         value of slots, and may
                                                                                         increase the size of
                                                                                         aircraft used at the
                                                                                         airports, and thereby
                                                                                         increase the number of
                                                                                         passengers served.
----------------------------------------------------------------------------------------------------------------
Amendment to the      Announced in July 2008,         U.S.   Final policy issued July   Not assessed, it is
 Airport Rates and     the policy clarifies                   8, 2008.                   unknown to what extent
 Charges policy        the ability of airport                                            airports can or will
                       operators to establish                                            implement this policy
                       a two-part landing fee                                            or the airlines'
                       structure consisting                                              response if it is
                       of both an operation                                              implemented.
                       charge and a weight-
                       based charge, giving
                       airports the
                       flexibility to vary
                       charges based on the
                       time of day and the
                       volume of traffic. It
                       also permits the
                       operator of a
                       congested airport to
                       charge users a portion
                       of the cost of
                       airfield projects
                       under construction and
                       expands the authority
                       of an operator of a
                       congested airport to
                       include in the
                       airfield fees of
                       congested airports a
                       portion of the
                       airfield fees of other
                       underutilized airports
                       owned and operated by
                       the same proprietor
Source: GAO analysis based on DOT and FAA actions.
a For some actions, DOT has stated additional benefits unrelated to delay reduction.


    Senator Rockefeller. Thank you, Ms. Fleming.
    And now, Mr. Meenan.

          STATEMENT OF JOHN M. MEENAN, EXECUTIVE VICE 
        PRESIDENT AND COO, AIR TRANSPORT ASSOCIATION OF 
                         AMERICA, INC.

    Mr. Meenan. Mr. Chairman, thank you very much.
    To briefly summarize my written statement, I wanted to make 
just a few quick points about the state of aviation and the 
delay/congestion situation we're dealing with. And I have to 
tell you, it's not very good news.
    The airline industry, as you know, is literally being 
decimated by the current fuel price situation. We are looking 
at a loss in the range of $10 billion this year. We've already 
lost 31,000 jobs in the industry. We're parking hundreds of 
airplanes every day. We're facing air service cuts across the 
country that are going to undermine local economies and the 
Nation's economy at the same time.
    We anticipate that we are likely to lose the equivalent of 
one of our largest airlines in the United States because of 
reductions in service. And with the fuel bill up $20 billion 
just since last year, we're now pushing a $62-billion figure 
for our annual fuel bill.
    It's easy to understand why we're so focused on improving 
air traffic management. Every minute, every second saved in 
transit is fuel savings that amount to huge potential returns 
to the bottom line.
    Redesign of our badly outdated airspace system combined 
with improved operations will significantly improve system 
agility. Smarter, more efficient aircraft departures, routings, 
and landing sequences will all help us to eliminate and reduce 
fuel burn.
    When it comes to dealing with delays, the East Coast 
airspace, centered in New York, is a critical place to focus. 
Although New York has only 12 percent of operations, 
systemwide, it has 45 percent of the flight delays. There's no 
question that the ripple effect from New York will be 
significant throughout the country, and, handled correctly, 
relief in the New York airspace will help unglue the rest of 
the system.
    So, you might ask yourself what the Department of 
Transportation is doing with the ever-increasing congestion to 
make sure that passengers, shippers, and airlines can get where 
they want to go on time. The answer is: not much. Instead of 
moving forward with capacity enhancements and airspace redesign 
with every available resource and with all deliberate speed, 
the DOT is, incredibly, pushing congestion pricing and slot 
auctions, completely unproven textbook experiments that some 
graduate student might love to pursue, but not one that anyone 
in the aviation world believes in.
    In the next few months, DOT seems intent on leaving a 
legacy of failed, but extremely costly, experiments that do 
nothing to reduce congestion and flight delays in New York or 
anywhere else. Auctions and congestion pricing rob the airlines 
of years of strategic investment and planning. And, as we make 
clear in our written statement, congestion pricing and slot 
auctions are unlawful, unfair, and incredibly costly to 
passengers and airlines at a critical time in the industry's 
meltdown--current meltdown.
    We believe that these proposals have been tried and they 
will fail. Our prescription, however, is simple. We need to 
stop talking about ideology and experiments, and start leaving 
a legacy that will help, not hurt, the country. We need to 
devote the resources necessary, right now, to implement New 
York airspace redesign and related initiatives. We need to work 
with the Port Authority and the air traffic controllers to 
implement the near-term capacity enhancements identified last 
year by the New York ARC. We need to work with the Department 
of Defense and Congress, if necessary, to open up new airways. 
We need to accelerate the development and implementation of 
technologies that bring NextGen Air Transportation System 
online, and we need to deploy the worldwide scheduling 
guidelines, where necessary.
    More broadly, with regard to fuel prices, we must move 
aggressively, in our view, to address both supply and demand 
issues, and, as this Committee has heard previously, to address 
the unhealthy level of speculation currently going on in the 
fuel market.
    That concludes my statement. I'd be happy to respond to 
questions.
    [The prepared statement of Mr. Meenan follows:]

Prepared Statement of John M. Meenan, Executive Vice President and COO, 
               Air Transport Association of America, Inc.
Introduction
    We are well into the summer travel season now and it is apparent 
that many of the conditions that led to record delays in 2007, 
particularly in the New York region, are present today and at times 
cause material delays in the National Airspace System. For this reason, 
the Air Transport Association (ATA) continues to urge the Federal 
Aviation Administration (FAA) to focus its resources on accelerating 
deployment of the technologies and measures that will bring meaningful 
improvement to airspace capacity and efficiency, especially in New 
York.
    The real solution to congestion lies in FAA pushing ahead with the 
tools it does have. Instead of trying to manipulate airline scheduling 
through artificial means, FAA (and DOT) should manage the airspace and 
the air traffic control system more effectively and efficiently: 
implement airspace redesign and related initiatives; work with the 
Department of Defense and Congress, as necessary, to open up new 
airways on a permanent basis; accelerate development and implementation 
of the technologies that will bring us NextGen; and work with the Port 
Authority of New York and New Jersey, Philadelphia International 
Airport and the airlines to implement the numerous near-term capacity 
enhancement measures that were identified by the New York Aviation 
Rulemaking Committee last year. Where operations have been capped, DOT 
should adopt fully the Worldwide Scheduling Guidelines, which contain a 
well-established and accepted slot allocation process, and establish a 
vibrant and transparent secondary slot market.
    ATA member airlines, which carry more than 90 percent of domestic 
passenger and cargo traffic, reflect the changing and diverse nature of 
commercial aviation today. Our membership includes the leading network 
passenger and low-cost carriers, and both large and small cargo 
carriers.\1\ The significance of this point is that our membership is 
unified in its opposition to the Department of Transportation (DOT) \2\ 
proposed congestion management proposals.
---------------------------------------------------------------------------
    \1\ ATA is the principal trade and service organization of the U.S. 
scheduled airline industry. The members of the association are: ABX 
Air, Inc.; AirTran Airways; Alaska Airlines, Inc.; American Airlines, 
Inc.; ASTAR Air Cargo, Inc.; Atlas Air, Inc.; Continental Airlines, 
Inc.; Delta Air Lines, Inc.; Evergreen International Airlines, Inc.; 
Federal Express Corporation; Hawaiian Airlines; JetBlue Airways Corp.; 
Midwest Airlines; Northwest Airlines, Inc.; Southwest Airlines Co.; 
United Airlines, Inc.; UPS Airlines; and U.S. Airways, Inc. Associate 
members are: Air Canada; Air Jamaica; and Mexicana.
    \2\ References to DOT include the Federal Aviation Administration 
(FAA).
---------------------------------------------------------------------------
    ATA also is aligned with the airport community, including the Port 
Authority of New York and New Jersey, in opposing the DOT auction 
proposal. Perhaps an even rarer state of affairs.
    DOT proposals to ``manage'' congestion in New York airspace--slot 
auctions and congestion pricing--reflect a manifestly poor policy 
judgment about how to address delays in the New York area. It is a poor 
policy choice because these proposals conceal the root problem 
underlying delays.
    Congestion and delays in New York result from several factors, but 
the primary, driving factor is DOT failure to supply the airspace and 
air traffic management infrastructure this country needs. The commerce 
of the United States--indeed of the world--drives airline scheduling 
and by seeking to curb artificially the demand for airspace and air 
traffic services, DOT proposals harm U.S. commerce and the national 
economy, the local economy of New York City, and the competitiveness of 
U.S. airlines in the global aviation marketplace. Simply put, these 
proposals are a confession of failure.
    Equally important, DOT lacks statutory authority for its congestion 
management proposals. The fees associated with the proposed auctions 
are new user fees that Congress has prohibited.\3\ Furthermore, when 
Congress wants to grant an agency authority to conduct auctions, it 
knows how to do so. It has not done so here. Indeed, DOT has 
acknowledged on more than one occasion that it does not have authority 
to mandate congestion management measures.\4\ This leads inexorably to 
the question of why does DOT continue to waste valuable taxpayer 
dollars pursing unlawful measures that will not work?
---------------------------------------------------------------------------
    \3\ ``[N]one of the funds in this Act shall be available for the 
Federal Aviation Administration to finalize or implement any regulation 
that would promulgate new aviation user fees not specifically 
authorized by law after the date of the enactment of this Act . . .'' 
2008 DOT Appropriations Act, Pub. L. 110-161, 121 Stat. 2379, and prior 
annual appropriations acts.
    \4\ For example: ``In the [2006 LGA] NPRM, the FAA stated that it 
did not have the authority to reallocate Operating Authorizations via a 
market-based mechanism. . . . The FAA continues to believe that it 
cannot rely on a market-based allocation method under a purely 
regulatory approach, which is why it explicitly sought legislation on 
this matter.'' Supplemental Notice of Proposed Rulemaking, 73 Fed. Reg. 
20852 (April 17, 2008). See Section III, for further discussion of this 
point.
---------------------------------------------------------------------------
    Finally, DOT has lost sight of the ancient maxim, primum non 
nocere, ``first, do no harm.'' The U.S. airline industry is reeling 
from oil shock like no other U.S. industry and faces an uncertain 
future. We project that U.S. airlines will spend roughly $61 billion on 
jet fuel in 2008, $20 billion more than in 2007. Consequently, U.S. 
airlines will lose $7-$13 billion in 2008. Already, eight U.S. airlines 
have ceased operating since the end of 2007 and two other airlines are 
operating under Chapter 11 protection. Instead of experimenting with 
illegal and ill-conceived plans to suppress demand for air 
transportation services, the Department should assess what it can do to 
relieve the industry of unnecessary costs and regulatory burdens.
    Congress can help, too, by addressing some of the pressures driving 
oil prices to ever-increasing new highs. We believe legislation that 
brings transparency to the oil futures markets and restores reasonable 
regulatory measures to prevent excessive speculation by purely 
financial interests, as opposed to those who use petroleum products, 
will have an immediate beneficial impact. In addition, we strongly 
support efforts to increase our domestic supply of crude oil and 
refined products. ATA supports domestic exploration and environmentally 
sound expansion of energy production here at home. In the long run, 
energy supply must be enhanced. That is why we also support expanding 
other sources of domestic energy supplies, including nuclear, wind, 
solar, coal, biofuels and other sources. Both problems--excessive, 
unregulated speculation and energy supply--must be fixed.
DOT Congestion Management Proposals Ignore Reality
DOT Congestion Management Proposals
    DOT has proposed two measures to ``manage'' congestion in the New 
York region. The first proposal would modify the joint FAA/DOT formal 
policy on airport rates and charges to permit--indeed encourage--
airports to increase the costs they charge to airlines for operating 
during congested time periods. Because airport charges must, as a 
matter of law, be cost-based, DOT has proposed measures that would 
allow airports to artificially increase the costs that can be passed on 
to airlines.
    The second proposal is an experiment to auction slots at each of 
the three primary New York City airports. Each year for the next 5 
years, FAA will confiscate slots from carriers and then auction them 
off to the highest bidder.\5\ In 10 years, all slots would 
automatically terminate and revert back to the FAA, leaving carriers 
without any idea of their ability to operate their schedules. This 
feature is absolutely inconsistent with encouraging carriers to invest 
in the operations, facilities, aircraft and employees necessary to 
compete at these airports.
---------------------------------------------------------------------------
    \5\ DOT proposes two options for how the proceeds will used. Under 
Option 1, DOT claims the proceeds will be used to mitigate congestion 
in the New York region; under Option 2, the proceeds would be paid to 
the air carriers from whom the slots were taken. But under Option 2, 
more slots would be confiscated--20 percent instead of 10 percent.
---------------------------------------------------------------------------
    As discussed in the DOT Auction and Congestion Pricing Proposals 
Are Unlawful section that follows, both of these proposals are legally 
deficient and, for that reason, cannot be implemented. However, they 
are also the outcome of poor policy judgments because they ignore 
operational reality.
Weather, Not Air Carrier Schedules, Causes Delay
    In the FAA's own words:

        Bad weather causes 70 percent of all delays. The situation is 
        worse during the summer: unlike winter storms, which take time 
        to develop and move slowly, summer storms can form quickly, 
        stretch for hundreds of miles and travel rapidly over large 
        portions of the country, grounding flights and sending chain-
        reaction delays throughout the Nation's airspace system. FAA 
        Fact Sheet, May 22, 2008.\6\
---------------------------------------------------------------------------
    \6\ http://www.faa.gov/news/fact_sheets/
news_story.cfm?newsId=10227.

    Little can or need be added to this revealing statement. When it 
comes to airline delays, the chief culprit is weather. It is obvious, 
of course, that the impact of bad weather is greatest where air traffic 
is heaviest, such as in the New York region. But that is not 
justification for DOT experimental proposals, especially when other 
contributing factors--discussed below--are considered.
New York Airspace Has Significant Non-Air Carrier Jet Traffic That 
        Contributes to Congestion
    We have testified on several occasions that business jet operations 
are a significant contributor to congestion and delays in the New York 
region. We pointed out last September, for example, that air carrier 
and air taxi (primarily regional airline) operations combined accounted 
for just 53 percent of the New York City activity based on July 2007 
data.\7\ In the future, this number is likely to decrease further given 
the schedule reductions airlines have announced.\8\
---------------------------------------------------------------------------
    \7\ The multiple factors affecting congestion and delays are 
addressed at length in our written statement before the House Aviation 
Subcommittee on the subject of Airline Delays and Consumer Issues, 
September 26, 2007, available at http://www.airlines.org/government/
testimony/ATA+Testimony+-+Airline+Delays+and+Consumer+Issues.htm.
    \8\ See pp. [44-45] below.
    
    
    Source: Federal Aviation Administration (FAA) OPSNET    *Air 
---------------------------------------------------------------------------
Carrier + Air Taxi.

    Remarkably, this fundamental fact is ignored by DOT demand 
management proposals. In light of recent findings by the DOT Inspector 
General, this oversight is puzzling and should be a serious concern to 
this Committee.
    In March 2008, the DOT Inspector General released a report on use 
of the National Airspace System (NAS).\9\ In his report, the Inspector 
General found that ``business jets' NAS usage is considerable,'' with 
``[n]on-air carrier jets accounting for 12 percent of tower and 13 
percent of terminal area control services in 2005.'' \10\ The Inspector 
General added: ``To put this in perspective, . . . business jets' tower 
and terminal area control services in FY 2005 was about one-third of 
air carrier jets.'' \11\
---------------------------------------------------------------------------
    \9\ Report No. CR-2008-28, March 3, 2008.
    \10\ Id. at 10, 11.
    \11\ Id. at 12.
---------------------------------------------------------------------------
    Regarding the New York City region, the Inspector General noted:

        The New York TRACON facility handles three large primary 
        airports, [footnote omitted] primarily serving air carriers, 
        and 12 outlying towered airports, primarily serving non-air 
        carriers. Non-air carriers accounted for 20 percent to 30 
        percent of the peak level of instrument approach operations at 
        the New York TRACON. (emphasis added).

        [B]oth air carriers and non-air carriers were competing for 
        terminal area control services during the same busy, congested 
        time periods. For example, at the New York TRACON, non-air 
        carriers exhibited the same time of day peaking in demand for 
        terminal services as did air carriers (see figure 5).\12\
---------------------------------------------------------------------------
    \12\ Id. at 13-14.
    
    
---------------------------------------------------------------------------
    Source: OIG Analysis of FAA Data.

    Likewise, the Inspector General found that non-air carrier use of 
the New York Terminal Control Area peaks during the afternoon hours and 
contributes to congestion.\13\
---------------------------------------------------------------------------
    \13\ Id. at 13.
---------------------------------------------------------------------------
    These findings by the Inspector General further highlight a 
significant policy deficiency of DOT congestion management proposals: 
DOT has ignored the very serious and significant contribution to delays 
and congestion in New York airspace from business jet and high-
performance general aviation operations. DOT auction and congestion 
pricing proposals cannot succeed if they ignore these operations.
    The obvious related point, of course, is that by ignoring non-air 
carrier jet operations in New York airspace, the proposals--
particularly the auction proposals--shift the entire cost of reducing 
congestion and delays (financial and operational) onto air carriers and 
their passengers and shipping customers. Rather than seeking a fair and 
balanced solution, DOT's proposals amount to yet another subsidy for 
business jet owners and other non-air carrier jet operators. Such a 
burden on commercial air carriers and their customers is patently 
unfair.
DOT Aucton and Congestion Pricing Proposals Are Unlawful
    The FAA's own clear and unqualified words in 2006 condemn its 
current auction and congestion pricing proposals:

        [A] legislative proposal to Congress . . . will seek authority 
        to utilize market-based mechanisms at LaGuardia in the future. 
        Such legislation would be necessary to employ market-based 
        approaches such as auctions or congestion pricing at LaGuardia 
        because the FAA currently does not have the statutory authority 
        to assess market-clearing charges for a landing or departure 
        authorization. If Congress approves the use of market-based 
        mechanisms as we plan to propose, a new rulemaking would be 
        necessary to implement such measures at LaGuardia. FAA Notice 
        of Proposed Rulemaking--Congestion Management Rule for 
        LaGuardia Airport, 71 Fed. Reg. 51360, 51362 (Aug. 29, 2006).

    FAA could not have been more direct: We do not have the authority 
to impose so-called ``market-based approaches,'' so we will ask 
Congress to give us that authority. True to its word, the 
administration's FAA reauthorization bill included provisions to give 
FAA authority to implement market mechanisms to allocate slots. But, as 
we all know, that bill has not passed yet. Consequently, by its own 
admission, FAA lacks statutory authority for the auction and congestion 
pricing rulemakings.
    That should be the end of the story, but it is not. FAA now 
attempts to qualify its 2006 admission by stating that it analyzed the 
issue of statutory authority too narrowly. While still acknowledging 
that it lacks regulatory authority to impose market-based mechanisms 
because of the annual appropriations prohibition against promulgating 
or collecting new user fees,\14\ it claims it has now determined, 
conveniently, that it can work around that limitation by exercising 
procurement and transaction authority \15\ to auction slots at the 
three primary New York area airports. That view of the law is incorrect 
for several reasons, which are discussed at length in ATA comments in 
response to the FAA supplemental notice of proposed rulemaking (the 
``SNPRM'').\16\
---------------------------------------------------------------------------
    \14\ See, for example, Pub. L. 109-115 and Pub. L. 110-161.
    \15\ ``[T]he FAA's authority is not limited to regulatory action. 
The agency has independent authority to dispose of property (footnote 
omitted), and regulatory action is not required prior to the lease of 
property.'' 73 Fed. Reg. 20852.
    \16\ See Comments of Air Transport Association of America, Inc., 
June 16, 2008, Docket No. FAA-2006-25709.
---------------------------------------------------------------------------
    Briefly, the FAA does not have authority to auction slots using its 
procurement and transaction authority because:

   It cannot do indirectly what it is prohibited from doing 
        directly. The ``transaction authority'' that the FAA argues is 
        independent of its regulatory authority (which it cites as the 
        basis for auctioning and leasing slots) is, in fact, linked to 
        its regulatory authority because the FAA may engage in 
        transactions only if they are ``necessary to carry out the 
        functions of the Administrator and the Administration.'' Thus, 
        in this instance, the ``function of the Administrator'' being 
        exercised is the function of managing the navigable airspace, 
        which is a regulatory function required by 49 U.S.C.  40103(b) 
        (``The Administrator shall . . . assign by regulation or order 
        the use of the airspace . . .''). But, as even the FAA 
        acknowledges, the appropriations prohibition on new user fees 
        discussed previously prevents it from using its regulatory 
        authority for market mechanisms. Therefore, FAA cannot use its 
        transaction authority to implement a prohibited regulatory 
        action.

   49 U.S.C.  40103(b), on which FAA relies to promulgate the 
        auction rules, provides specific but limited authority for the 
        FAA to regulate the airspace to ensure the safety of aircraft 
        and the efficient use of airspace and to prescribe air traffic 
        regulations on the flight of aircraft. This language does not 
        remotely suggest that the FAA is authorized to auction off the 
        right to conduct operations in navigable airspace. When 
        Congress wants an agency to conduct such an auction, it is 
        explicit. Congress knows how to authorize auctions when it 
        chooses to do so, as it did in great detail and at great length 
        when it authorized the Federal Communications Commission to 
        conduct spectrum auctions. 47 U.S.C.  309(j). It has not done 
        so here.

   Auctioning slots effectively amounts to the imposition of a 
        tax designed to discourage airlines from using the navigable 
        airspace at congested airports during peak periods. Since only 
        Congress can levy taxes, the FAA cannot impose charges that 
        amount to a tax unless Congress has clearly expressed its 
        intention to delegate such authority to the agency and 
        articulated intelligible guidelines for making the assessments. 
        49 U.S.C.  40103(b) cannot be read as constituting such a 
        delegation.

   The slots that FAA would create under the SNPRM, which FAA 
        describes as ``reservations of airspace,'' are not ``property'' 
        in the hands of the FAA that the agency can dispose of using 
        its property-management authority under 49 U.S.C.  106(l)(6) 
        and 106(n) and 49 U.S.C.  40110(a). Those provisions apply to 
        the acquisition and disposition of the FAA's real and personal 
        property. A slot--in essence a license or permission to use 
        navigable airspace--is the product of regulatory action by FAA 
        in capping hourly operations at an airport. The resulting 
        permission to use what has become constrained navigable 
        airspace is not real or personal ``property'' of the FAA--just 
        as other licenses or permits issued by governmental authorities 
        are not ``property'' of the issuing agency.\17\ The awkwardness 
        of the FAA proposed lease form for slots underscores the 
        fiction of characterizing slots as property of the FAA that it 
        can dispose of by lease.
---------------------------------------------------------------------------
    \17\ In contrast to the FAA, which creates the slots by regulatory 
action but has no property interest in them, airlines to which slots 
are issued do have a property interest in slots. That property interest 
is recognized by third parties (including lenders to whom slots may be 
pledged as collateral) and by the FAA itself (which allows slots to be 
bought and sold in a secondary market).

   Because the auction price for slots would not be cost-based, 
        it would violate the requirements of the Independent Offices 
        Appropriations Act (the ``IOAA''), 31 U.S.C.  9701, which 
        allows agencies to charge recipients of special governmental 
        services for the cost to the agency of providing those 
        services. Here, the cost to the FAA would be its actual costs 
        incurred to allocate slots by auction. The slot auction prices 
        that are contemplated under the SNPRM, however, would not be 
        related to those costs as they would result from a bidding 
---------------------------------------------------------------------------
        process.

   The FAA has no authority to determine how auction proceeds 
        would be used. Nothing in the Transportation Code or the IOAA 
        authorizes the FAA to retain the auction proceeds and expend 
        them on ``congestion management in the New York City area,'' as 
        the agency proposes to do under SNPRM Option 1. Instead, the 
        auction proceeds under that option (assuming a market-based 
        auction were otherwise lawful) would have to be deposited into 
        the general fund of the U.S. Treasury pursuant to the 
        Miscellaneous Receipts Statute, 31 U.S.C.  3302(b). The FAA's 
        expenditure of auction proceeds without a congressional 
        appropriation also could violate the Anti-Deficiency Act, 31 
        U.S.C.  1341(a)(1).

   Likewise, SNPRM Option 2 (where the original slot holder 
        would be allowed to keep the proceeds net of the FAA's auction-
        related expenses) is not authorized. Option 2 amounts to the 
        forced sale of slots by unwilling sellers, rather than a 
        transfer from the FAA to a carrier. There is no transfer from 
        the FAA to a carrier, required by the FAA transaction authority 
        construct under 49 U.S.C.  106(l)(6) and 106(n). Nor could 
        the FAA rely on the IOAA as authority for Option 2 because the 
        auction proceeds, which are being retained by the original slot 
        holder, do not constitute a charge made to recoup the cost of 
        special services being provided by the agency.

    Likewise, the proposed rates and charges policy change is illegal. 
Airports are bound by the principle of ``revenue neutrality,'' which 
means that the total fees and charges collected from airlines must 
approximate an airport's cost of providing facilities and services. To 
the extent the policy change purports to allow airports to violate this 
principle, it is illegal. Moreover, each of the three individual policy 
changes DOT proposes is legally deficient. Taken as a whole, the 
congestion pricing proposal, if adopted, is unlawful and will only 
inject uncertainty for both airlines and airports regarding airport 
charges, thereby causing controversy and disputes. Such controversies 
undermine the DOT policy promoting negotiated agreements between 
airlines and airports because airports will be able to unilaterally 
impose conditions that otherwise would be subject to negotiation. 
Airport proprietary powers are limited, and it is our view that 
airports are preempted by Federal law from seeking to affect airline 
routes and services by means of unilaterally imposed pricing 
schemes.\18\
---------------------------------------------------------------------------
    \18\ ``a State . . . or political authority of at least 2 states 
may not enact or enforce a law, regulation, or other provision having 
the force and effect of a law related to a price, route, or service of 
an air carrier.'' 49 U.S.C.  41713(b)(1).
---------------------------------------------------------------------------
Auctions and Congestion Pricing Will Not Reduce Congestion or Delays 
        and Are Fraught with Problems
    At the most fundamental level, auctions and congestion pricing have 
nothing to do with reducing congestion or delays. They are simply a 
means of allocating limited airport access. Capping operations, as the 
FAA has done at the three New York area airports, is the mechanism that 
reduces delays by limiting the number of operations. This fundamental 
point cannot be overstated. The DOT proposals do not address, and will 
not impact, congestion or delays.
Auctions
    No airport or government agency auctions access to airports. DOT 
seeks to break new ground by its auction proposal. But auctioning 
airport access is fraught with technical and operational problems and 
will not work.
    The DOT auction proposal requires DOT to design, implement and 
maintain a slot auction mechanism that accommodates the complexities 
and interdependencies of airline schedules. Airline schedules at one 
airport are highly interdependent with schedules and operations at 
other airports across an airline's system and across the entire day, 
and limitations imposed by slot holdings at other airports, as well as 
operating limitations (voluntary curfews, connecting schedules), add 
layers of complexity. The ability to submit and accept package bids 
(bids conditioned on winning matched pairs of slots at different 
airports or sets of slots at the same airport) likely will be a 
critical factor in an auction system. There is little experience in any 
context, and none in the airline system context, to serve as a model 
for developing and operating an efficient auction mechanism that deals 
with these levels of complexities. It is not clear at all that DOT is 
capable of developing such a complex auction system on its own or with 
outside assistance.
    Notwithstanding these complexities, DOT anticipates that it will be 
able to issue a request for proposals, select an auction design vendor, 
resolve numerous outstanding questions about the auction process and 
determine the auction design, rules and procedures, obtain and test the 
auction software, train FAA and carrier personnel, and then implement 
an auction by December 2008--in less than 6 months. DOT aspirations are 
wholly unrealistic and should be cause for concern.
Congestion Pricing
    Congestion pricing has proven to be an utter failure wherever it 
has been tried. A 2005 survey of the literature addressing congestion 
pricing along with an analysis of peak pricing schemes in Boston, New 
York and London concluded that institutional barriers prevent peak 
pricing from being used effectively in the airport context.\19\ At 
several airports, including Toronto and London Stansted, congestion 
pricing programs (perhaps better described as peak-hour charges) simply 
have been ineffective in reducing demand for airport access. Congestion 
during peak hours remains a problem and there is a waiting list for 
access and/or more slots.
---------------------------------------------------------------------------
    \19\ Joshua L. Schank, ``Solving airside airport congestion: Why 
peak runway pricing is not working,'' Journal of Air Transport 
Management 11 (2005) 417-425.
---------------------------------------------------------------------------
    At other locations, including the Cayman Islands and Haiti, so-
called congestion charges are merely excess charges to raise revenue. 
Although characterized as congestion charges, demand at these airports 
does not exceed capacity and there is no congestion problem.
    From a policy perspective, congestion pricing will not work in the 
airline context because, unlike toll roads where commuters have a 
choice of routes (secondary surface roads, primary surface arteries or 
interstate highways), typically no choice exists for airlines and their 
customers. Passengers will continue to demand flights at particular 
times and in particular markets, and airlines will respond with 
schedules to meet that demand.
    Also, unlike the roadway and variably priced electricity examples, 
where the driver or electricity customer pay the fee directly, 
congestion fees would be imposed on airlines and not the consumer who 
drives airline scheduling. This means the ultimate consumer is 
shielded, either partially or completely, from the congestion fee, 
thereby making it ineffectual at changing consumer behavior.
    Finally, congestion fees ignore the investment by airlines in 
routes, equipment, facilities and personnel. Those investments, in most 
cases, have been substantial and, for this reason, airlines will be 
unwilling and/or unable to alter their service patterns in response to 
congestion fees. Airlines will be forced to try to pass them on to 
consumers, which will be difficult in the industry's highly competitive 
environment, or to simply absorb them, an alternative that cannot be 
sustained in today's cost environment.
FAA Has the Tools: Airspace Redesign, NextGen and the ARC Capacity 
        Enhancing Measures
    As we have said before, the solution to delays lies not in 
suppressing demand, but in expanding capacity to satisfy that demand, 
thereby fostering the health of not just the airline industry, but the 
entire U.S. economy. All stakeholders, but especially FAA, must be 
relentless in their efforts to enhance capacity. It is well documented 
that delays in New York impact the entire National Airspace System. 
Accordingly, FAA should devote whatever resources are necessary to 
enhance capacity and operational efficiency in the New York area.


    * Share of OEP 35 total.
    Source: ATA analysis of FAA OPSNET.

    One measure that we recommended last September, and that we 
continue to press, is accelerating implementation of the New York/New 
Jersey/Philadelphia airspace redesign project. This project will 
enhance both capacity and the efficiency of operations in the 
Northeast, while reducing the overall number of people exposed to 
aircraft noise. It is a win-win. Although FAA is moving forward on this 
project, more can be done to accelerate its implementation, and this 
committee can assist that effort by keeping the FAA focused on 
achieving results.
    Another measure that we recommended was the appointment of a single 
person to be responsible for managing and implementing all of the 
capacity enhancement measures in the New York region--a ``New York 
Czar.'' Marie Kennington-Gardiner was appointed recently as Director of 
the New York Program Integration Office. Although this position was not 
given the authority and reporting seniority we had anticipated, we look 
forward to working closely with her to affect positive change in New 
York. This committee can assist this process by holding the FAA 
accountable for establishing clear objectives and metrics to measure 
performance to those objectives, and by requiring regular reports.
    Getting to NextGen, the FAA Next Generation Air Traffic Management 
System, is of critical importance. It is a massive undertaking with 
many moving parts, and FAA must avoid the failures of past large-scale 
development and acquisition projects. All of the agencies that have a 
role in this effort, but particularly the FAA as lead agency, must stay 
focused and devote the resources necessary to get it done as quickly as 
possible. Again, oversight by this committee will assist this effort.
    Last fall, ATA participated on the DOT New York Aviation Rulemaking 
Committee, and was instrumental in helping to develop a list of 77 
delay reduction initiatives for the New York area airports. As of this 
date, FAA lists 17 measures as having been completed and 14 more in 
process. We and our members will work with the FAA to assist these 
efforts and push for their early completion, and we look forward to 
working with this committee to assure the success of these efforts.
    In addition to the critical measures noted above, ATA has urged the 
FAA to move forward as quickly as possible on the following 
recommendations:

   Ensure real-time access to military airspace.

   Repair its relationship with the controller workforce.

   Increase the controller workforce at any/all New York area 
        facilities in order to achieve maximum operational efficiency.

   Take advantage of new RNP routes in the West Atlantic and 
        leverage new automation tools that reroute flights around 
        weather.

   Use Airspace Flow Programs to filter business jets out of 
        congested chokepoints during peak periods--especially afternoon 
        peaks.

   Utilize multiple runways, including converging runway 
        operations where appropriate.

   Assign scheduled operations a higher priority than other 
        system users.

   Improve surface management systems (traffic flows between 
        runways and gates)--in particular continue accelerated 
        deployment of ASDE-X.

   Eliminate miles-in-trail departure restrictions to airports 
        greater than 500 miles away.

   Expand use of low-altitude arrival and departure routes 
        (``capping'' and ``tunneling'').

   Realign/relocate arrival, departure and overflight routes to 
        avoid conflicts that drive inefficient routings.
Now, More than Ever, Do No Harm
    Last September, we were optimistic that the industry finally had 
turned the corner from the deep, post-9/11 downturn. We stated then:

        It is safe to say that the U.S. airline industry is in a 
        recovery period from the extreme downturn experienced between 
        2001 and 2005, when the industry sustained over $35 billion in 
        net losses. In 2006 the industry earned $3 billion net profit, 
        and we project a $5 billion net profit for 2007. Airline 
        employment is on the rise, as is capital spending, which is 
        good news for airlines and their shareholders, employees and 
        the many local economies that depend on a healthy airline 
        industry to drive commercial activity, jobs and tourism.\20\
---------------------------------------------------------------------------
    \20\ See: http://www.airlines.org/government/testimony/
ATA+Testimony+-+Airline+Delays+and
+Consumer+Issues.htm.

    Unfortunately, our optimism for a continued recovery has been 
crushed under the weight of skyrocketing fuel prices that could not 
have been predicted. Today, just 9 months later, the U.S. airline 
industry faces losses that will rival, if not exceed, the losses from 
the 2001-2005 period. The meteoric rise in jet fuel prices--to prices 
never imagined in anyone's worst nightmare business case--is driving 
---------------------------------------------------------------------------
the industry to the brink of imploding. The numbers tell the story:

   Crude oil hit an all-time high of $145.66 per barrel on 
        Friday, July 11, 2008--a 97 percent increase over 1 year ago.

   Several analysts predict that oil will hit $150 per barrel 
        in July, and some are predicting even higher prices by year-
        end.

   From January 1, 2008 through July 8, 2008:

     Crude oil spot prices averaged $112.29 per barrel, 
            compared to $61.94 during the same period in 2007.

     Jet fuel prices averaged $139.52 per barrel, versus 
            $81.94 during the same period in 2007.

     Jet fuel prices averaged $27.23 per barrel more than 
            crude oil and $17.70 per barrel more than gasoline.

   Year-over-year, jet fuel prices have risen 70 percent; in 
        contrast, air fares have increased just 7 percent.

   The portion of an airline ticket needed to pay for fuel is 
        now more than 40 percent, up from 15 percent in 2000.

   U.S. airlines effectively pay 57 percent more for fuel than 
        European airlines because of the relative weakness of the U.S. 
        dollar and because fuel transactions are denominated in U.S. 
        dollars.

    As a result of this situation:

   Scheduled air service has been, or will be, eliminated from 
        96 communities nationwide.

   Mainline domestic capacity is being slashed. Some examples:

     Continental will reduce domestic mainline capacity by 
            11 percent in the fourth quarter.

     U.S. Airways will reduce domestic mainline capacity by 
            6 to 8 percent in the fourth quarter 2008, followed by an 
            additional 7 to 9 percent in 2009.

     United will reduce domestic mainline capacity by 14 
            percent in the fourth quarter 2008, with additional 
            reductions planned for 2009, and just announced plans to 
            furlough more than 900 pilots.

     American will reduce domestic mainline capacity by 11 
            to 12 percent in the fourth quarter of 2008.

     AirTran has gone from a 20 percent growth plan for 
            2008 to announcing that it will reduce capacity later this 
            year.

     Northwest will reduce domestic mainline capacity by 7 
            to 8 percent in the fourth quarter of 2008 and eliminate 
            more than 40 aircraft from its fleet by year-end.

   The industry is rapidly approaching 30,000 job cuts and 
        early-out offers.

   Eight U.S. airlines have gone out of business since the end 
        of 2007 and two more are operating in bankruptcy Chapter 11.

   U.S. airlines are projected to spend $61 billion on fuel 
        this year, $20 billion more than in 2007--an increase 
        equivalent to the compensation and benefits of 267,000 airline 
        workers or the acquisition of 286 new jets.

   ATA forecasts a full-year industry loss of $7 to $13 billion 
        for 2008, and absent a dramatic drop in the price of fuel, a 
        multi-billion dollar loss again in 2009. JP Morgan projects an 
        operating loss of $7.2 billion in 2008 and an even higher 
        operating loss in 2009.

    Under these circumstances, the government's first reaction should 
be ``do no harm''--avoid adding unnecessary costs and regulatory 
burdens. Simply put, the industry needs the government to apply a 
degree of critical analysis to its own actions to determine what needs 
to be done to ensure public safety and security, what needs to be done 
to improve operations and efficiency, and then take only those actions 
that are necessary at this time. Experimenting with demand management 
in New York is not needed now, regardless of ones views on its merits. 
Now is not the time to conduct an experiment that will add out-of-
pocket expense for airlines and create greater uncertainty about 
schedules and aircraft utilization.
    Furthermore, in light of dramatic schedule changes and service 
reductions that airlines have announced and which become effective 
later this year, it is likely that the New York region will see a 
noticeable improvement in delays. Although the schedule changes will 
not impact the level of delays this summer, it is likely that delays 
will be positively impacted next summer. This is another reason DOT 
should not advance its proposals now.
Conclusion
    Instead of advancing illegal and ill-conceived notions intended to 
suppress demand at a time when airlines are attempting to survive 
previously unheard of fuel prices--coupled with consumer demand that is 
falling because of a weak U.S. economy--DOT and the FAA should be 
focusing on fixing the underlying problem: insufficient airspace 
capacity in the New York region and an aged and inadequate air traffic 
control system. Stifling demand will have serious adverse consequences 
for airlines, consumers and New York area residents who rely on 
passenger and cargo air transportation services and a vibrant tourism 
industry. We urge Congress to put a stop to DOT's misguided efforts.
    We also urge Congress to move quickly in a bipartisan manner to 
address the oil price crisis that is quickly overtaking our industry. 
Congress can rein in excessive, unregulated speculation in the oil 
futures markets and adopt measures to expand, in an environmentally 
sound way, our domestic energy supply, both carbon-based and from 
alternative sources. We urge Congress to act now.

    Senator Rockefeller. Thank you very much. I'd just--in 
comment to that, I don't know anybody who thinks that that's 
going to happen very quickly, this abundance--increased 
abundance of fuel--jet fuel or otherwise. And that's what we're 
wrestling with in Congress now, in probably the most important 
thing we will do this year in--over the next 2 years. I mean, 
this is one, if we don't solve it, we'll just decline as a 
Nation.
    Mr. Krakowski, I want to go right back to you. Pretend that 
you never gave your statement, and talk about, again, this 
interaction of how you do it.
    O'Hare has added a new runway. We had an all-day hearing 
out there, and we--it was agreed that those original eight 
runways that were put in place in 1962, when there was only 
about a couple of thousand people using the place--that they 
all had to be reconfigured. And if that were to happen, it 
could do as much as reduce 30 percent of the congestion in the 
air--in the skies, 36,000 planes at any given moment. And just 
so this new runway which has been put in does not disturb that 
reconfiguration process, which still has to take place, at a 
very large cost.
    Mr. Krakowski. Yes, sir, I'd like to point out that I just 
spent 33 years of my life flying in and out of that airport, so 
I'm keenly familiar with it.
    If you look at airports like Denver and Dallas-Fort Worth, 
Atlanta, they, too, are impacted by weather. But, their ability 
to handle the weather, and, more importantly, their ability to 
get back on their feet after the weather clears, is 
dramatically improved because of the runway configuration. 
That's what we're trying to do at O'Hare. If you look at the 
end game, where you have six parallel runways as primary 
runways for arrival and departure there, you're going to have 
very similar cadence of operation as Atlanta, Dallas, Denver 
do, which all operate much better than O'Hare does. The 
crossing runways not only create inefficiencies in the system, 
but they also challenge safety.
    Senator Rockefeller. Answer my question, which wasn't my 
original question----
    Mr. Krakowski. OK.
    Senator Rockefeller.--and that is, will the additional 
runway interfere with the reconfiguration of the remaining 
eight that have to work, you know, efficiently, in order to 
have that airport do its part to clear up inefficiencies?
    Mr. Krakowski. Right. So, that new runway, which will be 
commissioned in November, will be the first of three additional 
runways which will----
    Senator Rockefeller. So, it's----
    Mr. Krakowski.--be built.
    Senator Rockefeller.--part of the total plan.
    Mr. Krakowski. That's correct, sir, yes. And I believe the 
total plan goes out to 2016 before all the runways are 
configured. So----
    Senator Rockefeller. Right.
    Mr. Krakowski.--this airport's going to be in the----
    Senator Rockefeller. Now could you take me back through 
what I originally asked you, and that is, how these things 
depend upon--how they ripple to each other, the various centers 
of congestion, and what is to be done about that? Part of that, 
obviously, is what you're doing in New York, and this 2,000-to-
1,000 system of being able to land, which is a very, very big 
help. But, explain to me how the--the interaction.
    People don't understand that if they're in Atlanta or if 
they're in New York and they're being delayed, the fault may 
not be there, it may be in Chicago or some other place. Help me 
to understand that.
    Mr. Krakowski. Yes, sir. It's always been vexing to the 
passenger, even, at times, as an airline pilot, like myself, 
but if you were to look at the live traffic, which you can pull 
up on the Internet or see on some of the screens, you'll notice 
that the traffic flows kind of in highways or on streams to the 
major destinations. No different, really, than a major highway 
going into a city center. One major delay--thunderstorms or, in 
the case of a highway, a road accident, construction--begins to 
put constraints on that stream. So, you either have to slow the 
stream down to allow traffic to merge in from other lanes, or 
work traffic around on side streets. All of that creates a 
slowing of the system, very much like a metropolitan traffic 
area, as well, for automobiles.
    So, quite frankly, it's almost that simple. When you start 
to restrict the airspace, you have to meter it in, you have to 
slow traffic down or make gaps in traffic. If you've got a 
flight coming from San Francisco to New York, and New York's 
constrained, yet you have to get an airplane off of O'Hare to 
get up into that stream, you have to create a gap so that 
airplane can climb into it. All of that interrelates, so a 
delay or some weather problems in New York has a ripple effect, 
sometimes all the way back as far as Denver or even the West 
Coast, just from those effects, sir.
    Senator Rockefeller. If you had a digitalized GPS air 
traffic control system, what would be the effect of that on 
diminishing air congestion, even assuming the enormous growth 
in traffic, passengers, and airlines over the next 10 years?
    Mr. Krakowski. The promise of GPS and NextGen and what 
we're proposing under that proposal is to be able to actually 
fly aircraft closer together, so you basically create----
    Senator Rockefeller. And land them closer----
    Mr. Krakowski. And land them closer together, and 
deconflict them, and that's really important. So, where you 
have airports really close together, like Midway and O'Hare in 
Chicago or the three big airports in New York or Dallas-Love 
and Dallas, that new technology will better isolate the 
interaction of traffic between the airports, and that creates a 
much better flow, much more fluidity of the traffic. And we're 
actually going to be experimenting with that with some of the 
carriers down between Houston and Dallas next year, as well. 
So, we're working on it.
    Senator Rockefeller. Thank you. My time is up.
    Senator Stevens?
    Senator Stevens. I understand this next generation will 
have narrower space between landing aircraft. Now, what happens 
when you have a weekend like we just had, with all these 
thunderstorms? You have more planes in the same area, and it 
increases the problem, doesn't it?
    Mr. Krakowski. Well, where you have the weather affecting 
it, you can't do much about the immediate area, because no 
pilot will fly in certain weather. I certainly would not have. 
But, where I think the real benefit comes from is, once the 
weather clears or you do have pathways, NextGen will create the 
ability to flow more traffic through the available airspace, so 
you should be able to move the traffic faster with the same 
degree of safety than the current system allows.
    Senator Stevens. Well, I just went home this past weekend 
and spent about an hour and a half circling around trying to 
get into Chicago in order to make a connection to go further 
west. Now, that meant we were at least 2 hours late, and they 
delayed the plane that we were going to get on. But, by the 
time we got through, we arrived in Seattle about 3 to 4 hours 
late. Now, the whole concept of weather, to me, as a pilot, 
too, is contrary to the concept of closer spacing between 
planes, in terms of inclement weather. Will you adjust that? 
Will you adjust for the weather?
    Mr. Krakowski. Where I'm coming from is, if you're landing 
in bad weather conditions at the airport, you do have to 
maintain IFR spacing, which I'm sure you're familiar with. 
Where you really get the benefit is the ability to create more 
usable airspace under NextGen to work more traffic faster when 
the weather clears, and hopefully avoid holding delays like you 
experienced, or minimize the holding delays.
    Senator Stevens. All right. Well, let me come to Ms. 
Fleming. I've raised this before, but one of the interesting 
things about being a transcontinental flyer, as I am--probably 
fly more than any other Senator in history, I think, really, 
we're so far away. I travel more in my state after I get home 
than most Senators fly to get home. Now, when you look at this 
concept, the major delay is not weather, it's available pilots 
and crew to fly the airplanes. Too often, if we arrive an hour 
late, we have a problem of finding pilots and finding crew. 
Have you looked into the question of how the crews and pilots 
are dispersed throughout the country?
    Ms. Fleming. Yes, sir. In fact, we have some ongoing but 
preliminary work for you that will be issued, probably at the 
end of September.
    The first point I'd like to raise is that DOT's data, 
unfortunately, only provide information on the responsible 
party, so they do provide the original source of delay. To get 
the information that you're interested in, how often late-
arriving crews impacts delays, we had to talk to academics and 
experts on airlines. We also interviewed 12 airlines. What we 
found from these folks is that maintenance problems and getting 
passengers on and off planes is a bigger source of delay than 
late arriving crews.
    One of the best practices that the airlines have for trying 
to get crews out there is using reserve crews. If there's a 
problem because of weather, they'll have reserves come in to 
assume that duty post, or they will actually get the crew to a 
certain position a day early--again, anticipating bad weather. 
So, there are some best practices that are out there. But, the 
more important point is, DOT's data does not provide that 
information, so we've had to go out to some of the airlines to 
get it.
    Senator Stevens. Mr. Meenan, I've flown on some planes 
lately that have less than 50 percent of the seats filled. And 
I think that's, to a great extent, caused by the problems of 
the increased cost of flying and also the scheduling of some of 
these aircraft. Is the industry trying to consolidate flights 
in order to maximize the seat passenger miles?
    Mr. Meenan. Senator, the industry is trying to sell every 
seat it possibly can. The load factors we're seeing, in 
general, are up. They're up in the high 70s, low 80s. So, a 
flight that's only 50 percent full is a fairly rare 
occurrence----
    Senator Stevens. Are they consolidating to bring that 
about? That's what I'm asking.
    Mr. Meenan. Yes. As I mentioned, we are in the process of 
putting hundreds of airplanes on the ground. That's going to 
mean fewer seats in the air, in general, which means that 
customers will be buying, in effect, a smaller number of seats, 
which should lead to an increase in load factors.
    Senator Stevens. How is the customer going to know that in 
advance? How am I going to know, when I'm scheduled to leave at 
8, that I'm really not going to leave until 11:30?
    Mr. Meenan. We have a number of different processes in 
place to advise customers, in a real-time way, when flights 
are, unfortunately, delayed. There are Internet contacts, there 
are contacts by telephone. Obviously, you're encouraged to 
check online, as well. But, the fact is that we do have a 
number of processes to get the word out to people when flights 
are delayed.
    Senator Stevens. You're implying that the airlines are not 
intentionally trying to consolidate flights by a delay of one 
flight into a next one. Is that not going on?
    Mr. Meenan. That--if we--are you talking about what has 
been referred to as ``economic cancellations,'' where you 
have----
    Senator Stevens. Yes.
    Mr. Meenan. That, to our knowledge, is not going on. What 
is happening are intentional alterations to a schedule, 
advising people in advance that we're simply not going to 
operate--we used to have five flights a day to Chicago, we're 
not going to operate five flights in the future, we're only 
going to sell three. And, as a result, there would be fewer 
flights, but people will know what those three flights are. We 
hopefully will see a rise in the level of both fares, which the 
industry needs, and in the consumption of seats, in the load 
factors on those airplanes.
    Senator Stevens. To what extent has the current crisis 
decreased the number of people flying?
    Mr. Meenan. This summer, it has not had much of an impact. 
As we go into the fall, obviously we're going to be pulling 
down more aircraft, more airplanes are going to be leaving 
service, cities are going to face the reductions, and, in some 
cases, the elimination, of air service. And we think we're 
probably going to see fewer people flying, perhaps, than we 
would have in the past, because of the state the economy is in. 
But fares are going to go up, because there are going to be 
fewer seats--our costs are going to go down to an extent, by 
reducing crew, reducing aircraft, reducing fuel, but we're 
going to be able to, hopefully, sell the service that is out 
there at a slightly higher fare, which should help the bottom 
line of the entire industry.
    Senator Stevens. I've exceeded my time. I'd like to ask 
just one more question, if I might.
    Senator Rockefeller. Please.
    Senator Stevens. We discussed, several of us, this morning, 
the problem of speculation and the letter that's come to all of 
us from the airline industry. Has your association taken a 
position of what will be necessary to end that speculation?
    Mr. Meenan. Yes, we have, Senator. We have been very clear 
that we think that more transparency in the market, more 
disclosure of what trading is going on, limits on some of the 
loopholes that exist in the current trading system, and just a 
general message from Congress and the Government that, ``We're 
watching, we're looking at what's going on in these market--
this speculative oil market.'' There is a proper role for 
speculation, but we think that the evidence is clear that there 
is an unhealthy level of speculation going on right now, and 
that's what we're very eager to work with Congress, 
particularly with both the Chairman and Vice Chairman, to 
address those issues, going forward.
    Senator Stevens. Well, I think you should get tougher. I 
think it should be criminal for the institutional fund managers 
to conspire to raise the prices. And the sooner we make it a 
crime, the sooner they will stop it.
    Thank you very much.
    Senator Rockefeller. I agree with that.
    Senator Klobuchar?

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

    Senator Klobuchar. Thank you. Thank you very much, Mr. 
Chairman. And thank you, to our witnesses.
    As you know, I'm from Minnesota, which is the home of--
right now, of Northwest Airlines, and also the many--I think 
we're ninth in the country for Fortune 500 countries, so we 
have a lot of airline travel with our hub. And I'd say, just 
briefly, that, one, we need to get the FAA reauthorization 
done, and I appreciated the Chairman's work on this, and also 
share his frustration that we haven't been able to get that 
done. We need to do it immediately. When you hear about some of 
the technologies that are used in other places that we don't 
have in place yet, it's just wrong.
    Second, that we need to ensure that the FAA has hired and 
retained a sufficient number of air traffic controllers as we 
look at some of these safety incidents.
    And then, third, which Senator Stevens just raised, is this 
issue of the jet fuel and the effect that it's having on the 
entire system, and the need to take prompt action.
    And I was listening as you--Senator Stevens talked to you, 
Mr. Meenan, about this issue, and I was thinking, as you have 
less planes, having had a similar experience this weekend 
because of a storm, being diverted to Sioux Falls, South 
Dakota, and then going to Minneapolis and having a lot of the 
passengers who were connecting through Minneapolis lose their 
flights--as that--as you have less people flying, because of 
the expense, you have less flights. And I've noticed that you 
have increased the load factor, that the--a lot of the flights 
have been very full. Then, when the flights get delayed because 
of weather or other reasons, it's harder for people to catch 
up. Is this correct? Because you have less flights. So, you see 
an individual passenger being even more delayed. And I'm not 
faulting anyone. This--it's just a fact, because you have less 
flights going. Would that be right?
    Mr. Meenan. Senator, that is, in fact, correct. And the 
bottom line for us is, we believe that an economically vibrant 
airline system is absolutely essential to the United States' 
best interests, best interests of consumers, best interests of 
everybody involved. The problem we've got right now, as I said 
in my statement, is, the industry has been absolutely 
decimated. It is beyond belief what is going on today. We've 
got to address that problem. We've got to get at the 
speculation, we've got to get at oil supply and demand, other 
energy issues, to try to increase other energy sources. We need 
to address these things very seriously and boost this industry, 
because it drives so much more of the economy, and we are very 
concerned with where things are headed right now.
    Senator Klobuchar. Well, and back to the speculation issue, 
we need your help. I appreciate that you've been raising this 
and have been willing to come forward on this. We need to push 
some people to act in the Congress. And I know--I think 
Northwest is sending e-mails or notices to their passengers. 
Are a lot of the other airlines doing this, as well, to try to 
get people--frustrated airline passengers, on a grassroots 
basis? Sounds like a good idea to me.
    Mr. Meenan. Senator, the letter you referred to has gone 
out, and is going out to virtually every frequent flier in the 
country. We have, I believe, seen well over a million messages 
sent to Congress already, and that program is going to 
continue.
    Senator Klobuchar. Well, I appreciate that. And you talked 
about some of the things that you support on the speculation 
issue. Do you want to be a little more specific about the--you 
know, how far you go on the margin requirements or on the--
closing some of these loopholes that allow for the offshore 
trading, and things like that?
    Mr. Meenan. We know that many of those issues are quite 
controversial, and we know that there's a lot of discussion 
going on right now. We have made some broad points about 
closing the Enron loophole, closing the swaps loophole, 
increasing margin requirements, increasing scrutiny on the 
market. We think that the details of that are best worked out 
in conversations with the experts up here and experts in the 
industry, and we're looking forward to continuing those 
discussions.
    Senator Klobuchar. But, your point is that you don't want 
to wait, that you want some action----
    Mr. Meenan. It has----
    Senator Klobuchar.--now.
    Mr. Meenan. It can't happen soon enough. I mean, we are 
literally seeing the industry melting down in front of our 
eyes.
    Senator Klobuchar. And I remember the--Doug Steenland, the 
CEO of Northwest Airlines, telling me that--how much--that the 
year before, when oil was less expensive, how it--the effect 
that it had on their profits. But, this year, with the way it 
is now, it basically eats into the profits of every airline in 
the country. Is that right? Like, it eliminates them from----
    Mr. Meenan. Our fuel bill is going to be up about $20 
billion more than it was last year. No business can sustain the 
kind of fluctuation in prices that we are dealing with, without 
totally revamping itself. And that's what we're in the process 
of seeing.
    Senator Klobuchar. OK, thank you.
    Some specific questions--and I, again, appreciate it. I 
think people need to know this, they need to start working on 
the grassroots level to push this speculation issue, because 
it's one thing, in addition to the Strategic Petroleum Reserve, 
that we've done there, that we could do immediately, in 
addition to long-term plans that we've been talking about in 
Congress--the specific questions that I had here about the air 
traffic controllers and what's going on there, Mr. Krakowski, 
is--you know, the--earlier this year, our Committee evaluated 
the revelations about Southwest's decision to continue flying 
aircraft despite safety lapses. At that time, we learned that 
some FAA inspectors felt that their concerns regarding safety 
were regularly dismissed by their direct supervisors. Is it the 
same kind of culture there with the air traffic controllers? Do 
you think we need to look at that, if they have concerns about 
safety?
    It sounds as though, you know, Ms. Fleming, with the 
numbers, we don't quite have a sense of how many near-misses 
that we have, but we know there are some. Do you think that 
there are things that can be done to review the safety culture 
among the air traffic controllers, just as you have been doing 
with the FAA inspectors?
    Mr. Krakowski. Senator, thank you for that question. Just 
to remind the Committee, I was Chief Safety Officer for one of 
the largest airlines for almost 5 years, so it's in my DNA to 
take care in these areas.
    I just hired a new vice president of safety for the Air 
Traffic Organization, a brigadier general in the Air Force, and 
also a former airline pilot. He is currently reforming the 
safety effort within the ATO. We just hired him, about a month 
ago, to look at issues like the ones that occurred down in 
Dallas, which were part of the concerns on the whistleblower 
issue down there, to make sure we don't have any systemic 
issues. At this point, it looks like it was isolated to the 
Dallas area with this type of an event, but we actually are 
moving forward and treating it as a systemic issue, to make 
sure that we don't have it elsewhere. So, he's focused, like a 
laser beam on that.
    The other thing that we're starting, literally within the 
next 2 weeks, is--the airlines have had a Safety Action 
Program, where the employees can report safety issues 
voluntarily without any fear of retribution from the agency. 
And there are a lot of protections for the employees around 
that program. At my airline, I considered that the premier 
safety program for the company, and I think it really had real, 
significant benefits for us. We're starting that in Chicago for 
the controllers. We hope to have that, nationwide, after we get 
it up and running, within the next 12 to 18 months. I think 
that's going to be very, very helpful.
    Senator Klobuchar. OK.
    Mr. Krakowski. And NATCA's deeply involved in that, by the 
way. The controllers are partners on that with us.
    Senator Klobuchar. And are you doing work to improve the 
morale and retention? I know there's been some issues there.
    Mr. Krakowski. I'm doing everything I can. You know, what 
we're trying to do is incentivize controllers, experienced 
controllers, to move to those locations where I really need 
them. And there are some places, like St. Louis, others, where 
I actually have an overstaff. So, it's a good business process 
to try to move, where you have excesses, into the areas that 
need them. It's just good business.
    Senator Klobuchar. Thank you very much.
    Senator Rockefeller. All right.
    The--Senator Stevens mentioned, in his opening question, 
the fact of the dispersion across this country of adequate 
pilots and technicians and others, flight attendants, et 
cetera, to be able to make up for some of the problems. Now, 
that goes against the grain of common sense at the present 
time, and that is that the--particularly, the legacy airlines 
are losing enormous amounts of money. I think all of our views 
about what their situation could be in these next few weeks--
next few years--I noticed that Sturgell--acting FAA 
Administrator Sturgell, is quoted--said that there will be a 
``reprieve of 2 years'' on--because of cutbacks, in reaction to 
high fuel costs--that'll give the FAA a reprieve of 2 years on 
congestion. I don't understand that at all.
    But, if you--if the airlines are losing money, and if fewer 
people are flying right now because of that, and you've seen 
this 30-percent dropoff over the holidays, that means that the 
money, in order to put those people out there in some of these 
rural airlines, isn't going to be there. It's just not going to 
be there.
    All of the delays that I've had--and there have been many--
have been due to mechanical problems--not explained, but, 
nevertheless, mechanics aren't there to fix them. And you have 
to have a reasonably robust airline situation in order to be 
able to take care of those problems. And I don't see that 
happening under the present circumstance. In fact, my worries 
are quite the contrary, and that is that places like West 
Virginia and even large urban coastal states, like Arkansas, 
will suffer, because we are always at the end of the food 
chain. And if you're at the end of the food chain, there really 
isn't much you can do about it if people can't afford to have 
technicians and others on the ground or to have pilots and 
flight attendants to talk about what Senator Stevens was 
talking about, and that is, to make up for delays because there 
are people there.
    So, I really don't understand the economics of your 
argument that this will be a possible thing to do, and that 
you're trying your best to disperse people to make up for this 
situation at the same time as you're paying 40 percent of all 
of your costs for fuel. I want to go on this bill with Senator 
Stevens on speculators, because I think people who 
inconvenience the American people like that deserve criminal 
prosecution, at the very least. Nevertheless, that's not going 
to solve the problem. It's going to solve part of the problem, 
but it's not going to solve the availability of jet fuel and 
gasoline to drivers, and diesel for truckers. It's not going to 
solve it, because those problems are going to take a number of 
years, because of our lack of refineries and the time to do all 
this drilling, to set that all up.
    So, how does this work out, that you can solve Senator 
Stevens's problem when you're in such economic stress?
    Mr. Meenan. Senator, we are not suggesting that the 
airlines can solve all of these problems. What we are 
suggesting is that there is a complex array of problems facing 
the United States. One of them, we believe, is the unhealthy 
level of speculation in the oil market, which we believe can be 
addressed by some of the ideas----
    Senator Rockefeller. And we agree----
    Mr. Meenan.--that have been put forward.
    Senator Rockefeller.--but that's not my question.
    Mr. Meenan. At the same time, the airlines, individually, 
are doing whatever they can do within their own corporate 
worlds to adjust both their costs and the service they provide, 
to try to match up with what we see in the market at this 
point. So, by taking airplanes out of service, particularly 
older, high-fuel-consuming aircraft, we're saving money on that 
side of things. We, unfortunately, are also having to let go of 
a number of employees in the process, also essential to save 
costs----
    Senator Rockefeller. Adding on to the problem that----
    Mr. Meenan.--and----
    Senator Rockefeller.--I'm discussing.
    Mr. Meenan. In some sense, adding to the problem, but, the 
net effect will be fewer seats in the market, which, over time, 
should help raise the price of those seats. Because one of the 
problems we're suffering from in the United States is that we 
have conditioned the public to expect that air service will be 
very cheap. We don't necessarily think that--unfortunately, we 
have focused so much on price that we have really undermined 
the industry. We don't have an economically viable airline 
industry in the United States at this point. And what we're 
trying to do is re-establish a robust, viable industry that 
will be able to provide service to large communities, to small 
communities, to states, as you say, that don't have the level 
of service that they'd like to see. But, in order to do that, 
we need to have economically strong airlines. And we don't.
    And it's a whole complex of issues that have affected us 
over decades, at this point, and it's going to take a long time 
to dig out of the situation that we're in. But, we think the 
place to start, from our perspective, is at least to try to get 
at this fuel speculation problem, sooner rather than later, to 
send the message to the markets, as well, that more supply can 
be developed, will be developed, and that other energy sources 
are being pursued. All of that should help to tamp down the 
unhealthy level of speculation in the market, because, frankly, 
we don't see demand having changed dramatically in the last 
year to year and a half in the United States, and yet, price 
has gone up tremendously.
    So, there's a disconnect between supply-and-demand and the 
price of the product at this point, and we think speculation is 
part of that problem.
    Senator Rockefeller. And I agree with that. I agree with 
that. I haven't heard your passion about it, the new air 
traffic control system, digitalized. I'd like to hear it.
    Mr. Meenan. We have a great passion for that, Senator. As 
you know, ATA has been in the forefront of efforts to push that 
agenda along. We very much appreciate working with both you and 
Senator Stevens on it. We are absolutely there. It's essential 
to fuel savings in the future. It's essential to the traffic we 
see coming in the next several years. There's no question we 
want to get that done. But, I will say that, in the current 
environment, we are distracted. Survival is the first instinct, 
I think, that we're seeing the airlines focus on at this point, 
but we are--we are right there on the need for air traffic 
modernization, and we will not let up on that until it gets 
done.
    Senator Rockefeller. I thank you.
    And, Senator Stevens?
    Senator Stevens. I really don't have any further questions.
    Senator Rockefeller. Well, think one up, because you're 
good at it.
    Senator Stevens. No, I'm interested in the future 
generation, too, but I think we need money before we can do 
that, and I don't think we can get the money to fight this 
current fuel crisis and modernization at the same time. So, it 
has to be something that's put off. I do think that we ought to 
find some way right now to reassure the public that the 
increasing numbers of planes is not going--is not going to 
strain and stress this current system. I think the current 
system can handle it for a few years. But, the main thing to do 
is find some way to deal with this fuel price. That's my 
comment.
    Senator Rockefeller. OK, so be it.
    Senator Stevens. Senator Pryor is here.
    Senator Rockefeller. Senator Pryor?

                 STATEMENT OF HON. MARK PRYOR, 
                   U.S. SENATOR FROM ARKANSAS

    Senator Pryor. Thank you, Mr. Chairman. And thank you for 
doing this. And thank both of you for your leadership on this.
    Mr. Krakowski, let me ask you, if I may, and that is--a 
little bit of a follow-up on Senator Rockefeller's questions a 
few moments ago, where he talked about--the perception is--by 
the flying public, is that a lot of these delays are caused by 
mechanical issues and crew issues with the airlines. How good 
are we about keeping up with those statistics, where we can 
actually pinpoint why we're seeing so many delays today?
    Mr. Krakowski. Yes, the Air Traffic Organization 
concentrates mostly on the air traffic-related delays due to 
weather or airport capacity issues, things like that. We 
typically don't track crew, flight attendant, mechanical issues 
for the airlines.
    Senator Pryor. And so, as an example, you know, there's 
been some announcements--and, again, some of this is based on 
just general perception--that the airlines have gone through 
staffing cuts in order to become lean and trim down their 
workforce. And, I think, when you go to that lean-type system, 
you're just one employee away from not--from having to cancel a 
flight or having to delay a flight substantially. But, you all 
do not track that all?
    Mr. Krakowski. No, sir.
    Senator Pryor. Does anyone track that, as far as we know?
    Mr. Duvall. Yes, Senator, the--obviously, the Bureau of 
Transportation Statistics at the Department collects data on 
delays in this area. As was noted by GAO, there are some data 
gaps associated with that, that we're working to fill now. But, 
I think we've got more granularity today than we've ever had, 
but GAO's comments are well taken, that we need to keep 
improving the tracking of the source of the delays.
    Senator Pryor. Do you know--do you have those stats handy? 
I mean, do you have a sense of--in terms of percentages, of 
what has caused this?
    Mr. Duvall. We can get you that. And they're putting out, 
basically, monthly data on this that--we can get you the most 
up-to-date on that. I do not have that handy----
    Senator Pryor. OK. I would like, if you could, to follow up 
with the Committee on that.
    [The information referred to follows:]

U.S. Department of Transportation/Research and Innovative Technology 
        Administration--Bureau of Transportation Statistics
        
        
        Source: Bureau of Transportation Statistics, Airline Service 
        Quality Performance 234.

        A flight is considered delayed when it arrived 15 or more 
        minutes later than the schedule. Delayed minutes are calculated 
        for delayed flights only. When multiple causes are assigned to 
        one delayed flight, each cause is prorated based on delayed 
        minutes it is responsible for. The displayed numbers are 
        rounded and may not add up to the total.

        Air Carrier Delay: The cause of the cancellation or delay was 
        due to circumstances within the airline's control (e.g., 
        maintenance or crew problems, aircraft cleaning, baggage 
        loading, fueling. etc.).

        Aircraft Arriving Late: A previous flight with same aircraft 
        arrived late. causing the present flight to depart late.

        Security Delay: Delays or cancellations caused by evacuation of 
        a terminal or concourse, re-boarding of aircraft because of 
        security breach, inoperative screening equipment and/or long 
        lines in excess of 29 minutes at screening areas.

        National Aviation System (NAS) Delay: Delays and cancellations 
        attributable to the national aviation system that refer to a 
        broad set of conditions, such as non-extreme weather 
        conditions, airport operations, heavy traffic volume, and air 
        traffic control.

        Extreme Weather: Significant meteorological conditions (actual 
        or forecasted) that, in the judgment of the carrier, delays or 
        prevents the operation of a flight such as tornado, blizzard or 
        hurricane.

    Senator Pryor. And, Mr. Reynolds, let me ask about 
Essential Air Service. This is something that I've heard 
Senator Stevens talk about many times--and others on this 
Committee talk about Essential Air Service and how important it 
is to rural communities. And what's happened in our state is, 
basically, we have one Essential Air Service carrier who's 
announced that they're going to discontinue all their service 
to our EAS airports. I guess I would like to hear your thoughts 
on how we can improve the Essential Air Service program and how 
we can make sure it's viable into the future, especially given 
this fuel environment we're in right now.
    Mr. Duvall. Thanks, Senator. Mr. Reynolds is out sick 
today, so I'm his substitute.
    There's no question the EAS program is undergoing serious 
strain right now and there are a lot of communities that have 
been impacted. I think our view has been--prior to talking 
about additional funding, which is always, kind of, where the 
conversation goes, we need to talk about the structure of the 
program and really identify what it is that we're trying to 
achieve. And I think--first and foremost, I think it's access 
for the most remote communities. And we need to be clear about 
which of the--you know, who those communities are. Obviously, 
there are some communities, in our view, that are closer to 
major airports than others, and, frankly, have better access 
than others. And I think, given the scarcity of resources under 
any dollar amount, we need to be clear, kind of, about which 
communities we want to serve.
    I think the other thing is, we need some flexibility in the 
program to alter aircraft types. The type of aircraft that's 
been used in the EAS program to date is an increasingly scarce 
kind of aircraft, 19-seaters. There are more that--those are 
not frequently made anymore. There's a lot of international 
competition for those planes. And so, I think the program 
structure needs to be a little more accommodating to allow, I'd 
say, more flexible types of services. Obviously, all--on all 
air service, but obviously smaller planes may be cheaper to 
acquire. We don't want to be flying planes, you know, with two 
and three people on, you know, 20-seaters if we could 
accommodate it with smaller, more effective planes.
    I guess the basic view is that there are some fundamental 
changes about the policy of the program that we'd like to talk 
to you about. We recognize that there are continued funding 
pressures, and there's no doubt that the fuel prices are a 
major source of changing economics in the industry.
    Senator Pryor. First of all----
    Ms. Fleming. Senator, may I----
    Senator Pryor. Yes, go ahead, please.
    Ms. Fleming. I just wanted to let you know that we have a 
study underway for the House Transportation and Infrastructure 
Committee that is looking at the Essential Air Service program, 
but, more broadly, looking for options to make sure that the 
small and medium communities are connected to the larger 
transportation network.
    Senator Pryor. OK.
    Ms. Fleming. So, we'd be happy to brief you, if you're 
interested in that----
    Senator Pryor. Do you know when that study will be----
    Ms. Fleming.--we just got it underway, and are in the very 
early stages, but, we'd be happy to come up and talk to you 
about our objectives and time frames.
    Senator Pryor. Yes, we would like for you to do that when 
it's convenient for you, when it's the appropriate time for it.
    Mr. Duvall, one of the things in your answer that concerns 
me a little bit is, you talk about restructuring, which I 
understand you need to evaluate and look at everything, but you 
talked about how some communities are more rural and more 
remote than others. And it sounds to me like what you're saying 
is that the Administration is working on a policy, maybe, where 
there's a certain number of miles that, if you're away from a 
larger airport, you just shouldn't qualify for EAS. Is that 
right?
    Mr. Duvall. Yes, I mean, our budget proposal this year was 
basically beyond 70 miles the number we put in our budget.
    Senator Pryor. Well, we'll--I think it's very important 
that we keep EAS viable. And, again, I know it's important to 
Members of the Committee.
    Ms. Fleming, let me ask you, if I may, If fuel prices 
remain high, which nobody's telling us that they're going down 
anytime soon, and the number of flights decrease along with 
the, you know, increased cost of flying, what impact will that 
have on the airport improvement program and on the passenger 
facility charges?
    Ms. Fleming. We haven't looked at that in great detail. 
That's something we could look at for you, but it's not 
something we've looked at right now.
    Senator Pryor. Well, I mean, it seems to me that if you 
have fewer passengers and flying fewer miles, you're--it's 
going to impact those programs. I mean, it's kind of like the 
Highway Fund----
    Ms. Fleming. Right.
    Senator Pryor.--you know, if people drive less, there's not 
going to be the revenue----
    Ms. Fleming. You would think so.
    Senator Pryor.--going into the fund. I would like you to 
keep an eye on that.
    And also, I know--again, with highways, you've seen the 
cost of construction, just, go up a lot in the last few years. 
I mean, they've gone way beyond what normal inflation would be. 
Is that also true with the airport construction?
    Ms. Fleming. You're asking me?
    Senator Pryor. Yes.
    Ms. Fleming. Oh.
    Senator Pryor. You----
    Ms. Fleming. I don't know. I don't know the----
    Senator Pryor. Mr. Duvall, do you----
    Mr. Duvall. Yes. The answer is absolutely yes. I mean, the 
airports are facing financial strains that they have not faced 
historically, both with construction costs and credit costs. 
Obviously, credit markets disrupt municipal financing, just 
like they impact everything else. And so, there's no question 
that the airports are under serious strain right now.
    Senator Pryor. And, Mr. Duvall, it seems to me that, again, 
with this high fuel cycle that we're in right now, my guess is, 
the hub cities and hub airports, by and large, will see a 
little less traffic, but, you know, roughly the same amount of 
traffic, but my guess is, you'll see fewer planes flying 
through the spokes, so to speak. And so, the smaller airports, 
like the Little Rock Airport or the XNA airport, which is up in 
northwest Arkansas, they will probably have fewer flights going 
into the hubs. Is that your prediction?
    Mr. Duvall. You know, I think it's going to be a market-to-
market analysis by the carriers. There'll be some growth 
markets in which it would make economic sense for them to 
expand service; and obviously the overall demand pressures, 
though, you know, the price pressures in the industry are such 
that there will be some network reorientation, as was discussed 
already. So, obviously the pressures are going to be felt, as 
was noted, in the smaller and mid-sized communities, but there 
will be some growth areas of the country in which carriers see 
great business opportunities and will continue to maintain 
service there.
    Senator Pryor. That's all I have, Mr. Chairman. Thank you.
    Senator Rockefeller. Thank you, Senator Pryor.
    A question, to Ms. Fleming and Mr. Krakowski, on LaGuardia, 
on that general situation. I think, at LaGuardia, that one out 
of every four flights is delayed at least 1 hour. And so, 
that's a problem, as everything is up there. American, for 
reasons which are not entirely clear to me, pulled out and 
opened up, what, 84 slots? That should help. But, it certainly 
won't help if others come in and take up those slots, by 
auction or otherwise. And so, I have two questions to ask you. 
Is it your plan to keep those 84 slots unfilled, so the 
efficiency is greater, but then, on the other hand, if American 
changes its mind and decides to come back in, will they be able 
to?
    Mr. Krakowski. Actually, on those slot questions, I think 
Mr. Duvall will----
    Mr. Duvall. Yes. I mean, I----
    Mr. Krakowski.--answer.
    Mr. Duvall.--obviously, American's press release--you know, 
remains to be seen exactly, kind of, how they're going to 
implement what they propose, so I think we're in kind of a 
wait-and-observe period here with the existing slots at 
LaGuardia. We have--the proposed rulemaking's comment period 
closed. We received comments from virtually everybody in the 
industry, and others, on that proposal. The proposal included a 
mechanism to bring down some capacity--basically, a 2-percent 
reduction in overall slots. So, there's no question, in our 
view, that there are continual chronic delay problems at that 
airport that need to be addressed, and I think, as we go 
through the finalization of that rulemaking process, we're 
going to try to address that issue. So----
    Senator Rockefeller. Which doesn't answer my question, does 
it?
    Mr. Duvall. Well, I think the question is--well, I assume 
the question was, do you think we need to reduce the caps at 
LaGuardia? Is that----
    Senator Rockefeller. Well, American has done that for you.
    Mr. Duvall. Well, American's announcement for later in the 
year obviously has not yet been fulfilled. It's unclear exactly 
how they're going to fly. They're not, obviously, obligated, by 
their press release, to fly. They currently have rights at the 
airport that we have not proposed to take away.
    Senator Rockefeller. No, I understand that. But, if they 
follow through in what they say they're going to do, are you 
going to hold those, not to be returned to others or auctioned 
to others?
    Mr. Duvall. Yes, Senator, I think our--we're going to have 
to assess, kind of, exactly what they do when they do it. And 
there's no question, as you've said, that we have a chronic 
delay problem at that airport, so we'll need to assess the 
availability of those slots with the overall desire by the 
Administration and, I think, sound economic policy to allow 
competition and entry into that marketplace. We've obviously 
got a balance of policy interests there, and we'll try to 
achieve both.
    Senator Rockefeller. I sense a substantial difference 
between you and Mr. Krakowski, on auctioning of slots, and the 
other two witnesses at the table. I sense it's a rather strong 
disagreement.
    Mr. Duvall. I don't sense it with Hank, but I don't know 
about the other two.
    Mr. Krakowski. I just try to operate it, sir.
    Senator Rockefeller. OK. All right.
    Could you address their obvious hostility to this?
    Mr. Duvall. Yes. I mean, there's--obviously the proposal to 
take a very small amount of capacity at the three New York area 
airports was obviously driven by a desire to balance the 
historical investments that have been made by the carriers at 
these--at the various facilities with the desire to not pursue 
a policy of simply capping an airport, and leaving it capped, 
and prohibiting the ability of new entrants and competition at 
those airports. Cap--simply capping an airport, without 
allowing access, will ultimately drive up prices, diminish 
throughput, and create economic inefficiencies. We proposed, in 
our rulemaking, basically a balance to recognize, for the first 
time, basically, a property right in this--in all three 
facilities, for the incumbent carriers, that they do not have 
today, in exchange for, as we said, a very small sliver of 
capacity to be allowed to--to either the carriers, themselves, 
who had the least interest--who wanted to bid on that, or 
others who wanted to enter the airport. As an economics matter, 
locking down the New York area entirely, through government-
imposed caps, is a really bad long-run policy, both for New 
York City and for the Nation's airspace. And so, we tried to 
balance the interests, as we said, of the incumbent investments 
and the desire to allow competition, and it's a--we think we 
struck a good balance; but we're reviewing the comments, and 
the comments were quite strong, as you can imagine.
    Senator Rockefeller. Do you regard the right of a 737 
privately-owned general aviation jet to land at a crowded 
airport anywhere to be on an exact par with a legacy airline's 
right to do so?
    Mr. Duvall. Yes. I think our view is that--as we expressed, 
I think, in the reauthorization proposal, that obviously you 
were a strong leader on, is that the--ultimately, the question 
of--it should be driven by the costs that these planes are 
imposing, not necessarily, you know, who's onboard. The 
ultimate objective is to increase throughput, given available 
capacity today, and to have charges reflect the true costs of 
using these facilities.
    So, as you point out, flying into a heavily congested 
airport at peak times is one of the most expensive things to 
the entire air traffic control system, to our management of 
aviation in the United States. And currently, charges do not 
reflect those costs. So, as with any commodity that's 
underpriced, you're going to get too much of it, relative to 
existing supply.
    Mr. Meenan referred to the textbook. It is a textbook 
result, when you have a supply-and-demand imbalance, that, 
basically, if you do not price that supply-and-demand 
imbalance, the imbalance will persist, absent some other 
allocation mechanism.
    Senator Rockefeller. So, you think that paying for our 
current analog air traffic control system, where the legacy 
airlines pay for approximately 92 percent of the cost and 
general aviation pays for 8 percent, is--would you call that 
out of balance?
    Mr. Duvall. Yes. As our proposal reflected, we think the 
costs--the charges need to reflect the true costs, and that the 
current mechanism is out of balance, yes.
    Senator Rockefeller. Your question was accurate, it was 
lacking in passion, however.
    Mr. Duvall. I'm very passionate about----
    Senator Rockefeller. Thank you. My----
    [Laughter.]
    Ms. Fleming. Mr.----
    Senator Rockefeller.--final question is----
    Ms. Fleming. Mr. Chairman, may I respond----
    Senator Rockefeller. Please.
    Ms. Fleming.--to your comment? I don't want to GAO to be on 
record that we're hostile to the slot auctions. We feel that 
DOT hasn't fully demonstrated how the auctions will reduce 
congestion and delays. But, there are more pragmatic questions 
as to how the auctions will be structured and DOT's legal 
authority for implementing the auctions.
    I'd also like to point out that, as you know, developing an 
auction system is very, very complex, and it's an iterative 
process, as we saw with FCC's spectrum auctions.
    So, I just wanted to clarify, that we're not necessarily 
hostile, but we think some things need to be further outlined 
before DOT proceeds in this manner.
    Senator Rockefeller. I appreciate that. I appreciate that.
    Final question from me. You had a conference with O'Hare 
carriers and JFK carriers. Is that correct? You got them all 
together to discuss, you know, soliciting more schedule 
reductions in order to improve reliability in the airport. You 
had--you met with them.
    Mr. Krakowski. We've had conferences, yes.
    Senator Rockefeller. You have not had one regarding 
LaGuardia Airport. Am I overreacting to that, or is that 
something that you plan to do?
    Mr. Duvall. You--are you referring to the ARC--the 
rulemaking committee that we have formed?
    Senator Rockefeller. Yes.
    Mr. Duvall. Yes. I mean, LaGuardia obviously was discussed 
at that. The primary focus was JFK and Newark, but LaGuardia 
clearly came up. And we have had a Notice of Proposed--
Supplemental Notice of Proposed Rulemaking on the street for, 
now, over 3 years. LaGuardia has been a chronic problem, 
obviously. There have been discussions about LaGuardia, with 
the airline industry, going on, you know, 25 years now, and 
those conversations are pretty regular.
    Senator Rockefeller. Response, Mr. Meenan?
    Mr. Meenan. Just to be clear, we are very disappointed in 
the direction the Department has taken. We think there are far 
better means at its disposal to address the delay situation in 
New York. As I said in my prepared statement, as well in my 
oral statement, we think that, particularly at this time, to be 
experimenting with all of these new concepts at a time when the 
industry is an absolute nosedive, is just the wrong direction 
to go. And we intend to do everything we can to vindicate our 
position in that. We think there are better ways to address it. 
We have offered those, for well over a year, up in New York. 
We've been engaged in this debate with the FAA, not for 25 
years, but for 40 years, with slots at LaGuardia.
    Senator Rockefeller. All right. We have a vote at 11:15. It 
has not started yet, but it's obviously about to start.
    Senator Stevens, do you have--I believe you do have more 
questions.
    Senator Stevens. Well, I have, just, a general question for 
all of you. Do you see any provision of existing law that's an 
impediment to you doing what must be done now to meet this 
crisis, the energy crisis and the crisis of, really, congestion 
on airports?
    Mr. Duvall. In terms of--I mean, clearly, as we proposed in 
the reauthorization, we think a massive modernization of the 
air traffic control system is----
    Senator Rockefeller. Well, that's modernization.
    Mr. Duvall. Yes.
    Senator Rockefeller. What--is there any impediment in 
existing law that says you can't do what you'd like to do right 
now?
    Mr. Duvall. I think--obviously, our view is that airports 
generally--and we just announced a rates and charges policy 
change--need to be considering different charging approaches 
and expansion approaches, and we think that we have regulatory 
authority for airlines to pursue that. So, I think, the short 
answer is: not huge impediments. There are some tweaks and 
changes, I think, to existing statutes that would be helpful.
    One area, I think, that is significant, that has not 
received enough attention is the time it takes to deliver major 
capacity projects. And I think, obviously, the Committee bill 
talked a little bit about environmental processes, but I think 
we have a fundamental problem, that we cannot deliver, even if 
we had a massive increase in spending, the types of capacity 
projects, under the current legal construct, to deliver these 
projects.
    So, I would encourage the Committee to continue looking for 
ways to give authority to the agency to--and I wouldn't say 
``streamline,'' because I think these projects actually deliver 
substantial environmental benefits. And I think the nexus of 
new capacity and environmental benefits is one we need to make 
a lot more clear. But, to deliver projects--if it takes 10 to 
15 years to deliver a major runway capacity project, which is 
what we're looking at today, you will see substantial impacts, 
obviously, on the economy, felt by that. And I think our view 
is, we can mitigate these impacts much more effectively today 
than we could 10 years ago, but it does require some legal 
changes to those processes.
    Senator Stevens. Well, it would seem to me the system ought 
to be reviewed right now to find out whether there are 
excessive charges imposed upon those providing air 
transportation. The costs of fuel are rising. I certainly don't 
see any reason to have an auction that would require people to 
pay more than they're paying now for the slots they need. But, 
I'm--I would be interested in finding out what fees and charges 
are involved in this system, that are collected by local 
governments, by states, and by the Federal Government, that 
could be suspended right now to give these people some chance 
to succeed.
    The system is just overburdened by the cost of getting 
permission from the various entities to use the airways. And we 
want to suspend the gas tax, we want to suspend various other 
things. Why shouldn't we suspend some of these costs right now 
and give the airlines a chance to survive? I'd hate to walk 
from here to Seattle.
    [Laughter.]
    Mr. Duvall. We'd be happy to look at all the existing fees. 
Obviously, we--the fees are being used to generate revenues for 
capital investments, and those capital investments are critical 
to sustaining the existing system. So, as we indicated in our 
proposal, we think a complete overhaul of that fee structure is 
needed, and perhaps, in considering that overhaul, we could 
look at some fees----
    Senator Stevens. An overhaul is one thing. Suspension of 
them during a crisis is an entirely different thing. I--somehow 
or other, I have the feeling--and we've talked about it here--
legacy airlines are going to be a thing of the past unless they 
get some relief. That's my judgment. I hope you have the same 
attitude and will find some way to give them some relief.
    Mr. Duvall. I mean, I--Senator, the impact on fuel prices 
is obviously difficult to overstate, and it's--the dramatic 
impact is being felt, obviously, across all sectors, and the 
aviation sector is being hit as hard as any.
    I do think oil supply is fundamental to this, and, you 
know, in--in response to some of the comments about 
speculation, it--obviously, in our view, it's not clear that 
that's the fundamental cause. You look at the exchange-traded 
commodities, versus the commodities that are not exchange-
traded; you've seen substantial rises in both sides. We've seen 
a commodities boom that's worldwide.
    Senator Stevens. Well, you tell me how one institutional 
investor ends up with the same piece of paper on oil futures, 
and tell me that's not collusion.
    Mr. Duvall. I--I mean, I'm not going to comment on that. 
All I'm going to say is that----
    Senator Stevens. That's speculation. No, I think----
    Mr. Duvall.--we need more oil--we need more energy----
    Senator Stevens.--the Administration's got its head in the 
sand on speculation. We must find some way to control that 
speculation.
    Thank you.
    Senator Rockefeller. And on that note----
    [Laughter.]
    Senator Rockefeller.--I thank all of you very much for your 
courtesy. I'm somewhat embarrassed that there was not a greater 
turnout, but that, in and of itself, Mr. Meenan, is one of the 
problems that the aviation industry faces.
    Mr. Meenan. Yes.
    Senator Rockefeller. There is not enough understanding of 
the intricacies and the perils involved with aviation in this 
Congress.
    Mr. Meenan. Yes.
    Senator Rockefeller. And this morning, in spite of Senator 
Stevens being here, and two others, it's a symbolism of absence 
that disturbs me.
    Mr. Meenan. Senator, thank you.
    Senator Rockefeller. I thank you.
    And this hearing is adjourned.
    [Whereupon, at 11:25 a.m., the hearing was adjourned.]
                            A P P E N D I X

 Prepared Statement of Hon. Barbara Boxer, U.S. Senator from California
    As the summer 2008 travel season approaches, American consumers 
face many frustrations when it comes to this year's annual family 
vacation.
    I am sympathetic to the challenges faced by the airline industry as 
it struggles to deal with record oil prices topping $147 per barrel. I 
am also deeply troubled by the many workers who are losing their jobs 
and the cities facing service reductions in the wake of rising fuel 
prices.
    However, rising fuel prices have also made the cost of flying 
prohibitively expensive for many families, as airlines have instituted 
new charges for everything from beverages served in flight, to fees for 
checked luggage, to increased prices for seat selection.
    In addition to increased charges, many Americans did not have 
pleasant flying experiences in 2007. Last year was the second worst 
year on record for airline delays. Domestic flights were delayed 26 
percent of the time, and in some instances, consumers spent several 
hours stranded in airplanes on the tarmac.
    As Americans prepare for another season of packed airports and 
delayed flights, objections from our friends on the other side of the 
aisle have prevented the passage of legislation that could alleviate 
many of these headaches.
    The FAA Reauthorization bill includes several key provisions aimed 
at improving the quality of air travel. This important legislation 
includes additional funding to modernize the air traffic system, 
several measures to increase safety and incentives to hire and retain 
more of our valuable air traffic controllers.
    The bill also includes a provision I authored along with Senator 
Snowe requiring airlines to provide adequate, food, water, and medical 
care to passengers trapped on grounded aircraft. Our Passenger Bill of 
Rights would also allow passengers to deplane after 3 hours in the 
absence of a DOT approved airline contingency plan.
    In March 2007, a Federal appeals court ruling struck down New York 
State's Passenger Bill of Rights law, stating it is up to the Congress 
to set a national Federal standard.
    Airline passengers deserve access to food, water, and medical 
attention when stranded on an aircraft tarmac due to delays. Congress 
has the ability now to ensure consumers' fundamental rights are 
protected by enacting the Passenger Bill of Rights.
    As we head into another busy travel season, we have a golden 
opportunity to provide consumers and the airline industry with one less 
headache this summer by enacting the FAA Reauthorization and the 
Passenger Bill of Rights.
    Thank you, Mr. Chairman.
                                 ______
                                 
  Prepared Statement of Hon. Gordon H. Smith, U.S. Senator from Oregon
    I wish to thank Chairman Rockefeller and Ranking Member Hutchinson 
for scheduling this important hearing. We are in the midst of our 
summer travel season, and travelers are once again paying for the 
depressed state of our aviation industry. Similar to last year, flight 
delays are at all-time highs. Record high fuel prices are also having a 
devastating impact on the Nation's airlines. Fares have risen, flights 
have been eliminated and extra charges are being added for everything 
from baggage to bottled water. Worst of all, several small and mid-
sized communities are losing service because of the airlines' desire to 
cut costs by reducing capacity.
    Of course, when an airline decides to reduce capacity, those routes 
that are eliminated first tend to serve smaller airports in the less 
populated areas of our country. These service reductions negatively 
impact these communities, many of which are dependent on air service to 
lure businesses, visitors and tourists.
    Recently, Horizon Airlines announced cutbacks in service to several 
communities in Oregon. This October, the North Bend and Klamath Falls 
airports will lose their Horizon service, leaving residents with fewer 
options and higher fares. These cuts will also cost jobs in regions of 
my state that can not easily absorb these impacts. Both airports have 
some additional commercial service, but with a slowing economy, those 
who lose their jobs may struggle to find new employment.
    Horizon Airlines also tried to change the Essential Air Service 
Agreement in place to provide service to Pendleton, Oregon. 
Fortunately, the Department of Transportation rejected Horizon's 
attempt to alter the agreement and is requiring the carrier to continue 
to provide service for now. When we have airlines attempting to change 
their year-old service contracts in a way that does not benefit the 
local community, we have a significant problem on our hands.
    Over this past weekend, Delta Air Lines announced it was going to 
discontinue service to Salem, Oregon in October. This is despite the 
City of Salem assembling an impressive consortium of community and 
business groups' support and investing millions of dollars in the 
airport to help lure commercial service. That service will be 
discontinued a year after it began, and Oregon's Capitol will no longer 
have commercial air service.
    I look forward to working with members of this Committee, the full 
Senate and the Administration to do more to protect essential air 
services for our smaller communities. While all travelers are feeling 
the negative effects of the financial woes facing the airlines, the 
residents of smaller communities will feel the loss of air service more 
acutely. The complete elimination of commercial air service is a severe 
blow to any community's economy and future, and I will work with my 
colleagues to prevent this from occurring in the future.
                                 ______
                                 
  Response to Written Question Submitted by Hon. Daniel K. Inouye to 
                          Hon. Tyler D. Duvall
    Question. The Administration has proposed auctioning off slots at 
New York City airports (LaGuardia, John F. Kennedy, and Newark Liberty 
airports) as part of the Federal Aviation Administration's (FAA) larger 
effort to reduce congestion and delay at those airports. Can you please 
explain how slot auctions will help reduce congestion and delay at the 
New York City airports when caps have already been placed on the total 
number of slots available at those airports?
    Answer. In addition to addressing congestion, the Department also 
has been tasked with encouraging competition and ensuring the efficient 
utilization of the national airspace. We issued a rule, that for the 
first time ever, gives the airlines currently operating at the airports 
the right to the vast majority of their current operations, but to 
introduce competition and allow for new entrants, we are proposing to 
allocate a small number of slots via auction. Auctions allow for new 
entrants to gain an entry into a capped airport, increasing 
competition, which has proven to lower fares and give consumers 
options.
    We believe that the introduction of a modest auction mechanism at 
these capacity-constrained airports will have a positive effect on 
improving efficiency. For one thing, to the extent that access to the 
airport is perceived to be a more valuable commodity, carriers may 
start to serve the market more efficiently by using larger aircraft.
    In fact, analysis done by the FAA to support the proposed 
rulemakings shows it will lead to more efficient allocation of 
aircraft, including upping the size of the aircraft on some flights 
(up-gauging), to maximize the value of slots leased through auctions. 
That can increase passenger ``throughput'' significantly, especially 
during weekday peak periods when demand is greatest.
    Under the current system, airlines choose to differentially price 
tickets during the day. They may consider continuing this practice for 
auctioned slots, to absorb auction costs during peak periods, 
effectively dispersing some passenger traffic to the less congested 
periods during mid-day. Another beneficial consequence of the auction 
mechanism would be to encourage more efficient utilization of the 
existing airport infrastructure by creating a vibrant secondary market 
for trading slots among carriers.
                                 ______
                                 
    Response to Written Question Submitted by Hon. Barbara Boxer to 
                          Hon. Tyler D. Duvall
    Question. DOT opened up military airspace during Thanksgiving 2007 
to accommodate the increased air travel, which was deemed a success by 
your Agency. Will DOT consider opening up military airspace during the 
summer 2008 travel season?
    Answer. The Department has coordinated with the Department of 
Defense (DOD) for the availability of military airspace on several 
occasions in the past, including during the Thanksgiving and Christmas 
holidays of 2007 and Memorial Day Weekend this past spring. The 
Department will continue to consider the need for, and the availability 
of this option.
    The Department's Federal Aviation Administration (FAA) is also 
expanding a program to help airlines avoid delays by adjusting air 
traffic routes to respond to weather developments. This program allows 
us to work around weather conditions and keep traffic moving.

                                  
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