[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
  THE ECONOMIC VIABILITY OF THE CIVIL RESERVE AIR FLEET (CRAF) PROGRAM

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

                                (111-30)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                                AVIATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 13, 2009

                               __________


                       Printed for the use of the
             Committee on Transportation and Infrastructure

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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia,   JOHN L. MICA, Florida
Vice Chair                           DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
Columbia                             VERNON J. EHLERS, Michigan
JERROLD NADLER, New York             FRANK A. LoBIONDO, New Jersey
CORRINE BROWN, Florida               JERRY MORAN, Kansas
BOB FILNER, California               GARY G. MILLER, California
EDDIE BERNICE JOHNSON, Texas         HENRY E. BROWN, Jr., South 
GENE TAYLOR, Mississippi             Carolina
ELIJAH E. CUMMINGS, Maryland         TIMOTHY V. JOHNSON, Illinois
LEONARD L. BOSWELL, Iowa             TODD RUSSELL PLATTS, Pennsylvania
TIM HOLDEN, Pennsylvania             SAM GRAVES, Missouri
BRIAN BAIRD, Washington              BILL SHUSTER, Pennsylvania
RICK LARSEN, Washington              JOHN BOOZMAN, Arkansas
MICHAEL E. CAPUANO, Massachusetts    SHELLEY MOORE CAPITO, West 
TIMOTHY H. BISHOP, New York          Virginia
MICHAEL H. MICHAUD, Maine            JIM GERLACH, Pennsylvania
RUSS CARNAHAN, Missouri              MARIO DIAZ-BALART, Florida
GRACE F. NAPOLITANO, California      CHARLES W. DENT, Pennsylvania
DANIEL LIPINSKI, Illinois            CONNIE MACK, Florida
MAZIE K. HIRONO, Hawaii              LYNN A WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania          JEAN SCHMIDT, Ohio
TIMOTHY J. WALZ, Minnesota           CANDICE S. MILLER, Michigan
HEATH SHULER, North Carolina         MARY FALLIN, Oklahoma
MICHAEL A. ARCURI, New York          VERN BUCHANAN, Florida
HARRY E. MITCHELL, Arizona           ROBERT E. LATTA, Ohio
CHRISTOPHER P. CARNEY, Pennsylvania  BRETT GUTHRIE, Kentucky
JOHN J. HALL, New York               ANH ``JOSEPH'' CAO, Louisiana
STEVE KAGEN, Wisconsin               AARON SCHOCK, Illinois
STEVE COHEN, Tennessee               PETE OLSON, Texas
LAURA A. RICHARDSON, California
ALBIO SIRES, New Jersey
DONNA F. EDWARDS, Maryland
SOLOMON P. ORTIZ, Texas
PHIL HARE, Illinois
JOHN A. BOCCIERI, Ohio
MARK H. SCHAUER, Michigan
BETSY MARKEY, Colorado
PARKER GRIFFITH, Alabama
MICHAEL E. McMAHON, New York
THOMAS S. P. PERRIELLO, Virginia
DINA TITUS, Nevada
HARRY TEAGUE, New Mexico
VACANCY

                                  (ii)

  
?

                        Subcommittee on Aviation

                 JERRY F. COSTELLO, Illinois, Chairman

RUSS CARNAHAN, Missouri              THOMAS E. PETRI, Wisconsin
PARKER GRIFFITH, Alabama             HOWARD COBLE, North Carolina
MICHAEL E. McMAHON, New York         JOHN J. DUNCAN, Jr., Tennessee
PETER A. DeFAZIO, Oregon             VERNON J. EHLERS, Michigan
ELEANOR HOLMES NORTON, District of   FRANK A. LoBIONDO, New Jersey
Columbia                             JERRY MORAN, Kansas
BOB FILNER, California               SAM GRAVES, Missouri
EDDIE BERNICE JOHNSON, Texas         JOHN BOOZMAN, Arkansas
LEONARD L. BOSWELL, Iowa             SHELLEY MOORE CAPITO, West 
TIM HOLDEN, Pennsylvania             Virginia
MICHAEL E. CAPUANO, Massachusetts    JIM GERLACH, Pennsylvania
DANIEL LIPINSKI, Illinois            CHARLES W. DENT, Pennsylvania
MAZIE K. HIRONO, Hawaii              CONNIE MACK, Florida
HARRY E. MITCHELL, Arizona           LYNN A. WESTMORELAND, Georgia
JOHN J. HALL, New York               JEAN SCHMIDT, Ohio
STEVE COHEN, Tennessee               MARY FALLIN, Oklahoma
LAURA A. RICHARDSON, California      VERN BUCHANAN, Florida
JOHN A. BOCCIERI, Ohio               BRETT GUTHRIE, Kentucky
NICK J. RAHALL, II, West Virginia
CORRINE BROWN, Florida
ELIJAH E. CUMMINGS, Maryland
JASON ALTMIRE, Pennsylvania
SOLOMON P. ORTIZ, Texas
MARK H. SCHAUER, Michigan
VACANCY
JAMES L. OBERSTAR, Minnesota
  (Ex Officio)

                                 (iii)

                                CONTENTS

                                                                   Page

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

                               TESTIMONY

Bauer, Brian, President, Evergreen International Airlines, Inc...    18
Coretz, Robert K., Chairman, Omni Air International..............    18
Flynn, William J., President and Chief Executive Officer, Atlas 
  Air Worldwide Holdings, Inc....................................    18
Graham, David R., Strategy Forces and Resources Division, 
  Institute for Defense Analyses.................................    18
Mcnabb, General Duncan J., USAF, Commander, United States 
  Transportation Command, Scott Air Force Base...................     4
Smith, Frederick W., Chairman and CEO, Fedex Corporation.........    18
Zoeller, Thomas E., President and CEO, National Air Carrier 
  Association....................................................    18

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Costello, Hon. Jerry F., of Illinois.............................    37
Mica, Hon. John L., of Florida...................................    42
Mitchell, Hon. Harry E., of Arizona..............................    44
Oberstar, Hon. James L., of Minnesota............................    45

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Bauer, Brian.....................................................    49
Coretz, Robert K.................................................    54
Flynn, William J.................................................    69
Graham, David R..................................................    79
McNabb, General Duncan J.........................................    86
Smith, Frederick W...............................................    93
Zoeller, Thomas E................................................   105

                       SUBMISSIONS FOR THE RECORD

Airline Pilots Association, International, written statement.....   128
McNabb, General Duncan J., USAF, Commander, United States 
  Transportation Command, Scott Air Force Base, response to 
  question for the Record........................................   133

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   HEARING ON THE ECONOMIC VIABILITY OF THE CIVIL RESERVE AIR FLEET 
                                PROGRAM

                              ----------                              


                        Wednesday, May 13, 2009

                  House of Representatives,
                          Subcommittee on Aviation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2167, Rayburn House Office Building, the Honorable Jerry 
F. Costello [chairman of the Subcommittee] presiding.
    Mr. Costello. The Subcommittee will come to order. We 
apparently have the sound system and everything in order, we 
hope.
    That is a first, General, I have to tell you, since we have 
remodeled the room and have a new sound system.
    The Chair will ask all Members, staff, and everyone to turn 
electronic devices off or on vibrate.
    The Subcommittee is meeting today to hear testimony on the 
economic viability of the Civil Reserve Air Fleet program.
    First, I will give a brief opening statement; call on the 
Ranking Member, Mr. Petri, for any statement that he would like 
to make or brief comments; then we, of course, will go to our 
first witness, General McNabb.
    I welcome everyone to the Aviation Subcommittee hearing on 
the economic viability of the Civil Reserve Air Fleet, or CRAF.
    President Truman established the CRAF program in 1951 to 
augment the Department of Defense's airlift capability when 
there is a high demand for airlift. Under CRAF, U.S. carriers 
voluntarily pledge aircraft and crews to support the 
mobilization of troops and equipment for predetermined rates. 
In return, DOD offers several incentives, including exclusive 
access to charter cargo and passenger airlift business, often 
called peacetime business, when CRAF is not formally activated.
    Currently, 34 U.S. air carriers have committed almost 1100 
aircraft to the program. During a major war, CRAF carriers are 
expected to meet approximately 93 percent of DOD's passenger 
and approximately 37 percent of DOD's cargo requirements. It is 
important that everyone is aware of the vital role that the air 
transportation industry plays in our national security.
    I would like to welcome General Duncan McNabb, the 
Commander of the U.S. Transportation Command, headquartered at 
Scott Air Force Base in the congressional district that I am 
privileged to represent, who is responsible for managing the 
CRAF program.
    For over 50 years, the CRAF program has been an extremely 
successful government and industry partnership. The CRAF 
program meets the military's mobilization requirements while 
saving taxpayers billions of dollars by foregoing the cost of 
procuring a government fleet to meet those requirements.
    USTRANSCOM, citing a 1994 RAND study, estimates the 
cumulative cost of volumes associated with the program as high 
as $128 billion in 2009 dollars.
    General McNabb, I think you will find bipartisan support 
for the CRAF program here in this Subcommittee, the Full 
Committee, and in the Congress.
    In 2007, Chairman Oberstar and Ranking Member Mica, Mr. 
Petri, and I sent a letter to Chairman Skelton, the Ranking 
Member, and to the Ranking Member, Mr. Duncan Hunter, of the 
House Armed Services Committee, in support of the USTRANSCOM 
assured business proposal. This proposal would authorize DOD to 
guarantee a higher minimum level of peacetime business for CRAF 
participants.
    In fiscal year 2009, we were successful in getting this 
assured business authority provision included in the annual 
Defense Authorization Act, and it will be an effective 
incentive for air carriers to commit aircraft to the CRAF 
program.
    Last August, the Institute for Defense Analyses published a 
report on the CRAF program in response to a fiscal year 2008 
National Defense Authorization Act. While IDA concluded that 
CRAF is a vigorous program capable of meeting DOD requirements, 
it also expressed some concerns that, as the operations in the 
Middle East begin to decrease, it could adversely impact CRAF 
carriers. Passenger charter carriers, which have experienced a 
shrinking civil commercial market, would be particularly 
vulnerable. I look forward to hearing from our witnesses what 
additional steps can be taken to strengthen this program.
    Chairman Oberstar, Ranking Member Mica, Ranking Member Mr. 
Petri, and I are well aware of the importance of a well 
equipped CRAF program. It is essential to supporting our 
national security interest and helping our aviation industry 
remain competitive globally. I am committed to working to 
improve and strengthen this successful partnership to ensure 
its future viability.
    Before I recognize Mr. Petri for his opening statement, I 
would ask unanimous consent to allow two weeks for all Members 
to revise and extend their remarks, and to permit the 
submission of additional statements and materials by Members 
and witnesses. Without objection, so ordered.
    At this time, the Chair now recognizes the Ranking Member 
of the Subcommittee, Mr. Petri.
    Mr. Petri. Thank you very much, Mr. Chairman. I am pleased 
to join with you in welcoming our witnesses here today as we 
consider the viability of the Civil Reserve Air Fleet program.
    The Civil Reserve Air Fleet program is a voluntary 
contractual arrangement between the Department of Defense and 
privately owned and operated U.S. airlines. In order to support 
the mobilization of troops and equipment during times of need, 
U.S. airlines voluntarily provide standby commitments of 
aircraft and crews. In return, the Defense Department provides 
incentives through the Civil Reserve Air Fleet program 
peacetime business. The idea is simple and the program is and 
has been very successful.
    The Civil Reserve Air Fleet program was created by 
President Harry Truman back in 1951, and in 1987 President 
Reagan affirmed its importance. The Civil Reserve Air Fleet 
program has been activated only twice since its inception. 
However, since 9/11, the Department of Defense has become 
increasingly reliant on the peacetime provisions of airlift by 
the Civil Reserve Air Fleet program's air carriers.
    As we all know, the aviation industry is constantly 
changing; the market changes and the industry reacts. Volatile 
fuel prices, shrinking credit markets, growing debt and pension 
obligations, and the impact of the current global recession on 
air travel have impacted the airline industry in numerous ways.
    The U.S. passenger airline industry lost $4.3 billion in 
the first three quarters of last year. Demand for commercial 
passenger charter flights has dwindled. At the same time, U.S. 
airlines have reduced domestic capacity by 9 percent from 2007 
to 2008, and airlines have also reduced active fleet aircraft 
by some 18 percent.
    The question is, how have these changes in the airline 
industry impacted the Civil Reserve Air Fleet program? I am 
interested in the status of the program in light of the 
dramatic changes in the marketplace. As General McNabb states 
in his written testimony, a robust commercial air industry is 
vital for our national defense. I am also interested in 
learning from today's witnesses what changes or improvements 
they believe will help the continued viability of the Civil 
Reserve Air Fleet program.
    The Civil Reserve Air Fleet program is a great example of a 
public-private partnership. It has seen us through 58 years and 
numerous crises. Its success should be applauded and learned 
from, and if we can improve this already successful program, 
then we need to know what can be done.
    So I thank all of our witnesses for appearing before the 
Subcommittee today to share your points of view and look 
forward to your testimony.
    Mr. Costello. The Chair thanks the Ranking Member and now 
recognizes for brief remarks or an opening statement the 
gentleman from New York, Mr. McMahon.
    Mr. McMahon. Thank you, Chairman Costello and Ranking 
Member Petri.
    And thank you, General McNabb and to all our witnesses, for 
coming to testify today.
    Since its creation in 1951, the Civil Reserve Air Fleet 
program has proven to be a tremendous success. This program 
ensures that, in times of national emergency, we have the 
aviation capability to fully mobilize our Nation. The unique 
partnership of commercial airlines with the Department of 
Defense guarantees that our country will always be ready to 
provide vital airlifts in times of crisis.
    This cooperation between commercial airliners and the DOD 
is a win-win for U.S. taxpayers and the commercial aviation 
industry. The $2.5 billion allocated by DOD each year for this 
peacetime charter airlift program is clearly money well spent, 
especially when we consider that OMB estimates that it would 
have cost the country perhaps as much as $128 billion in 
inflation-adjusted dollars for the DOD to maintain the same 
capacity over the life of this program.
    In these difficult economic times, the airline industry is 
struggling to remain affordable, yet competitive. For example, 
ATA Airlines once provided approximately 10 percent of the 
DOD's passenger airlift, but was forced to declare bankruptcy 
and ceased operations, causing service delays within the CRAF.
    Air travel is critical to support not only businesses, but 
it is a critical part of our military transportation network. 
Therefore, it is imperative for us to make sure that carriers 
stay in business so we can continue to count on them.
    It is estimated that over the next several years the DOD 
may rely more heavily on the CRAF activations, which may have 
an adverse effect on scheduled airlines. We should consider 
whether to improve CRAF incentives to strengthen DOD's 
partnership with the commercial airline industry.
    Throughout the times of peace and times of crisis, we 
should be grateful that we can count on the commercial airline 
industry to deliver outstanding results every time our country 
calls on them. But we need to make the necessary investments to 
continue this important partnership, and that is why I think 
this hearing is so important, and we are grateful to you for 
convening it, Mr. Chairman. Thank you.
    Mr. Costello. The Chair thanks the gentleman from New York 
and now recognizes our witness from our first panel, General 
Duncan J. McNabb, who is the Commander of the United States 
Transportation Command at Scott Air Force Base.
    General, welcome. It is a pleasure to have you before us 
today. As I think some of the staff know, we go way back in 
other capacities, when you were over Air Mobility and a 
different position with TRANSCOM before you became the 
commander. So we welcome you here today, we look forward to 
your testimony, and I want to assure you that we have enjoyed a 
close working relationship not only on the CRAF program, but 
look forward to working with you on other matters as well.
    General, your entire statement will be inserted and appear 
in the record. If you would like to summarize, take as much 
time as you would like. General McNabb.

TESTIMONY OF GENERAL DUNCAN J. MCNABB, USAF, COMMANDER, UNITED 
      STATES TRANSPORTATION COMMAND, SCOTT AIR FORCE BASE

    General McNabb. Chairman Costello, Congressman Petri, and 
distinguished Members of the Committee, it is indeed my 
privilege to be with you today representing the men and women 
of U.S. Transportation Command, more than 136,000 of the 
world's finest logistics professionals.
    USTRANSCOM leads a committed total force team of active 
duty, guard, reserve, civilian, contractors, and commercial 
partners. This team provides the capacity to deliver logistics 
and distribution capability to support power projection in both 
peace and war.
    Today we focus on one of the earliest, most unique and 
extremely successful partnerships between the Department of 
Defense and the commercial airline industry, the Civil Reserve 
Air Fleet, or CRAF.
    How timely it is to hold this hearing on this capability 
that airlift brings. Just yesterday we celebrated the 60th 
anniversary of the Berlin airlift. On May 12th, 1949, the 
Soviet Union capitulated to the Allied Airlift Offensive into 
Berlin and lifted their blockade. Air power, employed with the 
will and determination of some truly great aviation heroes, 
helped save a nation.
    With the success of the Berlin airlift as his backdrop, 
President Truman instituted the CRAF program in 1951. He was 
confident that this military-commercial partnership would 
provide capabilities to the United States and to the world like 
those witnessed in Berlin, the ability to save lives, and even 
nations, when the need and opportunity arose.
    Our commercial CRAF partners have certainly answered the 
call, standing beside us for more than five decades. In 
exchange for DOD peacetime airlift business, the carriers 
promise to be there when needed for contingencies and 
emergencies.
    Since the program's inception, our partners have kept that 
promise by participating in every military contingency 
involving the United States. They have flown missions 
voluntarily in peacetime and, during the two wartime CRAF 
activations, first in 1991 during Operations Desert Shield and 
Desert Storm, and again in 2003 during Operation Iraqi Freedom.
    Currently, 34 separate CRAF carriers participate in the 
program. Their commitment of 1100 aircraft, along with our 
military organic fleet, represents a tremendous value to the 
Nation. We simply could not accomplish our mission without the 
unique capabilities our commercial industry partners provide. 
It is this championship team, working together, that gives our 
Nation unrivaled global reach, committed to serving our 
Nation's war fighters by delivering the right stuff to the 
right place at the right time. USTRANSCOM is diligently working 
to ensure the program remains strong, viable, and able to 
withstand changes in the global environment.
    We are also mindful of potential threats we face as our 
adversaries try to sever or slow the logistics lifeline to our 
war fighters, and we will continue to keep the safety of our 
CRAF carriers at the forefront of how we carry out our mission. 
We are absolutely dedicated to preserving this key partnership 
for our Nation's defense.
    Chairman Costello and Congressman Petri, I am grateful to 
you and the Committee for all you have done in support of U.S. 
Transportation Command and the CRAF program. It has certainly 
paid huge dividends for our Nation. I respectfully request my 
written testimony be submitted for the record, and I look 
forward to your questions.
    Thank you, Mr. Chairman.
    Mr. Costello. General, thank you.
    General, I just have a few questions. One is, with the 
economy as it is and we are facing several challenges in an 
economy that is probably the worst that we have seen since the 
Great Depression, we saw ATA Airlines go into bankruptcy last 
year. Is CRAF properly structured to maintain adequate airlift 
capacity and absorb any future losses? In other words, if other 
carriers file bankruptcy, what will that do to your capacity?
    General McNabb. Chairman Costello, one of the things that 
was really good about visiting all the carriers as we look to 
what we would have to do to CRAF and what are the smart things 
that we would do following the CLR and the IDA studies was 
that, when we went to each of the carriers, we said, hey, what 
are your thoughts. So I would tell you that all of the 
discussion with the carriers focused along that line of not 
only what is happening economically, but also, as you mentioned 
earlier, as we slow down, maybe, operations in the Middle East, 
what will that impact be.
    Your support of assured business was one of the first steps 
that we asked for to help us do that, so that we could give 
them kind of a projection that they could count on, that they 
knew it would be there; and that was a big step that our 
carriers had asked us to look at and then propose to you all, 
and you certainly have done that.
    We are also examining the military readiness and commercial 
balance as you think to how we manage our overall fleet. Part 
of it is the readiness of that active duty, guard and reserve 
fleet, the military fleet, to make sure that it is ready to go. 
As you know, the pilots and load masters that we trained in 
that often times go on to either the guard and reserve and 
fulfill their obligations there, and many of those same people 
are in the Civil Reserve Air Fleet as part of that team.
    So that readiness is absolutely essential but, again, how 
we do that commercial mix is something that we can do, and 
there is new technology, like simulators and others, that we 
can take a very good look, make sure that we have got that 
right.
    One other, one that we are specifically looking at, again, 
after talking to the carriers, is look at our Patriot Express 
missions, which is those charter missions. We had looked hard 
at that before. Basically, we were losing about $39 million a 
year. DOD and OSD told us to go back and take a look at that 
and try to make every--you know, look at all of the routes.
    We have made quite a few changes that saved a lot of money 
for the government. But now we have gone back, based on the 
world we face, and say, hey, are there some of the places that 
we might be able to reinstitute Patriot Express that is both 
good for the war fighters, for the combatant commanders that 
are out there, also good for their families, and then, 
obviously, it is very good for the CRAF and our CRAF partners. 
So we are taking a look at that as well.
    It is the one that I worry about the most on the CRAF, is 
how do you have a soft landing as we come back down. Obviously, 
this impact of the current economic crisis impacts that even 
more. What I do feel very good about is all of us are talking 
about it and looking for ways that we can make sure that we can 
help wherever we can.
    Mr. Costello. Thank you. The assured business authority 
that you made mention of, that you requested and received, when 
you received that, it increased the minimum amount of business 
that you can offer to participating carriers. Can you elaborate 
a little bit as to why you needed that authority and why it was 
important for you to receive it?
    General McNabb. Yes, Chairman. Prior to 9/11, we did an 
average of about $600 million a year with the Civil Reserve Air 
Fleet. After 9/11, that obviously grew tremendously, and we are 
in excess of $3 billion now. But at some point that will come 
back down, and that assured business really does help the 
carriers on looking at what do we do for the future to make 
sure that we put this together, if you will, so that they can 
make plans on leasing or buying of aircraft, what they are 
going to do with their crews and what they are going to do for 
the long-term.
    We have not had to institute the assured business. You said 
that there were a couple of things that we had to do, like make 
sure that we can look out and project better. We are doing 
that. And I think that, in working with industry, we will know 
when we need to do that, but right now, obviously, business is 
up. We haven't had to use that. We don't plan to use it in 
2010.
    And as we look at the movement of forces into Afghanistan, 
it looks like that will be extended out a little bit further. 
So we will watch that very carefully, but that assured 
business, make sure that they can look even further to know 
that we have a certain amount that they can plan on all the way 
out into the future.
    Mr. Costello. Thank you.
    The Chair, at this time, recognizes the Ranking Member, Mr. 
Petri.
    Mr. Petri. Thank you. I probably should know a lot more 
about this than I do, but I will just ask a basic question or 
two. You do the regular logistics for the entire military as 
well, don't you? I mean, people fly back and forth. You charter 
planes or sometimes buy them tickets, people moving from one 
base to another? It is a huge travel agency operation that you 
have, I think. Is that correct?
    General McNabb. Sir, it is the transportation requirement; 
we do that with our commercial partners, so we work very 
closely with them. As the TRANSCOM Commander, I also have 
responsibility given to me as the distribution process owner, 
which is really that end-to-end movement and distribution 
system that I don't own all of that, but I help oversee that 
and work with both the theater commanders and also the folks in 
the States like the services and the agencies to make sure that 
we put that all together. So I get to touch most of that, sir, 
and, again, the commercial partners are key to that as we work 
through the best way to do that for both the war fighter, but 
also for the taxpayer.
    Mr. Petri. And you move both soldiers and from time to time 
you must do equipment or like package operations or whatever.
    General McNabb. Yes, sir.
    Mr. Petri. Air freight.
    General McNabb. Yes, sir. We do about 25,000 passengers a 
week would give you an idea of the magnitude that our Civil 
Reserve Air Fleet partners do that, and they also move about 
6,000 short tons of equipment every week. So they are taking a 
lot. We plan on them doing about 93 percent of our passengers 
and about 37 percent of our cargo lift. They take care of the 
palletized cargo, kind of the bulk cargo that is moved, and 
then we use our military side to move, when there is a higher 
threat, we will use that if we were moving passengers in, and 
then on the cargo side we will use it primarily to move the 
military equipment, the rolling stock and stuff like that. So 
we mix and match as we need to based on what the combatant 
commanders need.
    Mr. Petri. But how does this program really then--I mean, 
it has been used only twice, in Desert Shield and Desert Storm, 
and you are already leasing and purchasing all kinds of 
activity. Is this actually necessary? How does this fit in? You 
could commandeer, if you had to. I suppose it is a sort of 
graduated deal. Could you describe why it is really necessary 
or what it brings to the table and how much it is costing?
    General McNabb. Yes, sir. Absolutely. It is very cost-
effective. We have three stages: basically regional conflict, 
stage 1, we have a certain number of aircraft that are 
committed to that by the carriers; stage 2 is a theater war, 
much larger; and then stage 3 is full activation, and you might 
call that we have activated the whole country in time of 
threat.
    On committing their airplanes to this program, what we 
offer them is peacetime business to make sure that that--it not 
only brings money to them, but also standardization, the 
training, how they fly within our system. So today, for 
instance, we have basically 135 sorties that are being done by 
our commercial carriers. You hear us sometimes talk about 900 
sorties a day done by the Air Mobility Command, my air 
component, but 135 of those are these commercial partners that 
are right within our system, and they are moving passengers and 
cargo, and it is seamless.
    We change and we mix and match whether it is more cost-
effective to do it commercially or, because of the threat, we 
will do it militarily. That relationship obviously changes 
depending on what is happening out there and what we are being 
asked to do. In all cases, if I can do it commercially, that is 
the cheapest way I can do that.
    So this partnership, over the last 50 years, they have been 
doing that kind of movement all the way through those years, 
and we have, as you mentioned, only had to call them up twice. 
But we have asked them to volunteer many times, and they have 
said, yes, we have some airplanes that are available; how many 
do you need.
    I have had a number of instances, even over Christmas, when 
you know that they are very busy, we had to move some forces. 
We put a call out to the carriers and said this is what we 
need; they said if you can move three days later, we have you 
covered. And that is what they do. That goes on day in and day 
out, and if I can move it commercially, it is in the interest; 
and the President's national airlift policy basically said, 
hey, if they can do it on the commercial side, that saves 
money.
    Overall, as was mentioned, when you think about how much 
this has saved, rather than us own this militarily, because 
what I have this fleet for is that full-up wartime surge.
    Mr. Petri. Just one quick final question. There was a 
little bit of a brouhaha a couple years ago when some soldiers 
were coming back, I think, on a charter flight from the Middle 
East to Los Angeles Airport, and evidently the airport hadn't 
been notified or there was some confusion. I think it was in 
Oakland, actually. There was a feeling that the soldiers were 
not treated appropriately and were kept out on the grass or 
something for a long period of time. Has that recurred or have 
you worked out procedures to deal with that? There was some 
kind of a breakdown in communication, as I recall.
    General McNabb. No. I sometimes mention on the 900 sorties 
a day, it only takes one that will make CNN. So every day is 
another day where we are trying to make sure our processes 
stand up to that, so we work very carefully with the carriers 
and say, hey, here are the standards and here are the kinds of 
things that we need, the same as on our military cargo 
aircraft.
    When we have gone back and done our surveys, not only have 
the carriers been 92 percent-plus on their departure 
reliability and on-time reliability, but the customer surveys 
have come back and, from the service standpoint, 98.9 percent 
satisfaction. So that is something that when I look and, of 
course, I say, well, where is that other 1 percent, you know, 
let's get at that, because you never can stand on that, you 
always want to improve it and get much more because you know 
the folks are depending on that.
    That doesn't mean we don't have incidents and it doesn't 
mean there are not going to be times when, because of weather 
or others, we are going to have to come in and help, and that 
actually, you know, hopefully we have the processes in place to 
do that. Certainly, we are committed to always fixing whatever 
problems come up, and it is a continual improvement all of the 
time.
    Mr. Costello. The Chair thanks the Ranking Member and now 
recognizes the gentleman from New York, Mr. McMahon.
    Mr. McMahon. Thank you, Mr. Chairman.
    General, the DOD currently has a policy that states that no 
more than 40 percent of the CRAF carriers' revenue come from 
the government. I guess that is called the 60/40 rule.
    General McNabb. Right.
    Mr. McMahon. I understand that the block hours, the amount 
of time between the moment the aircraft begins moving from the 
point of origin and the moment it stops moving at the 
destination, instead of using revenue, it could be considered 
to calculate to 60/40 rule. Where does the USTRANSCOM stand, as 
of today, when it comes to using block hours instead of revenue 
for calculating these figures?
    General McNabb. Congressman, great question. For FY10, we 
decided we would stay with the revenue, but then we are going 
to change it to block hours. We think block hours is a better 
apples to apples because commercial, the way you account for 
that is a little different than what we do in the military. 
Something the carriers brought up said block hours would 
probably be a better way to do that, so we are going to do 
that.
    Mr. McMahon. Thank you, Mr. Chairman.
    Mr. Costello. The Chair thanks the gentleman and now 
recognizes the gentleman from Ohio, Mr. Boccieri.
    Mr. Boccieri. Thank you, Mr. Chairman.
    General, thank you for your testimony. As a C-130 pilot, we 
appreciate this program. Obviously, we can't carry all the 
troops to the Middle East on times of national mobilization. A 
couple questions for you, General. Do you envision the need to 
equip some of the CRAF aircraft with defensive systems to ward 
off MANPADs, especially if we are flying them into a forward-
operating base or having mass mobilizations?
    General McNabb. Sure, Congressman. One, as the C-130, as 
you know what a workhorse that is, I actually, when I was the 
Air Mobility Command commander, I looked very closely at this 
issue and I worked with the National Defense Transportation 
Association, their airlift Subcommittee, and said, hey, let's 
get everybody's thoughts on that, and, quite frankly, we had 
some carriers that said we would be willing to do that; most 
said that they would probably defer.
    And the way I finally came down on that is you know that it 
is a lot more than defensive systems that allows us to operate 
in those areas; it is the tactics, techniques, and procedures, 
it is being able to do random approaches, it is the defensive 
systems, but it is also using night vision goggles, and landing 
on the runway, it is all of the kinds of things that we are 
able to do that we have 130s and C-17s and C-5 crews that we 
spend a lot of time training so that they can do that safely.
    If you ended up having CRAF have defensive systems on and 
we took them into the same locations, they would have to spend 
an awful lot more on training those crews, which, again, that 
kind of takes away from their business base. So that training 
cost would be very large. And, in the end, I came out of that 
thinking that the better way to do this is have the military 
side really focus on the ability to go into that threat, make 
sure that our threat working group looked at all of the places 
we go into, and if there are places that we can safely operate 
the Civil Reserve Air Fleet into with all parts of the tiered 
security, then we would allow them to operate into that.
    We have worked with the FAA on that as well, and that is 
why we actually do allow cargo operations into Bagram, we do 
allow cargo and pax operations into Al Asad.
    Mr. McMahon. Is there a significant threat still to those 
commercial aircraft flying in?
    General McNabb. No. I think that what we do is we watch 
that every day to make sure that we watch that in a multitude 
of ways to include patrols to make sure that they are not in 
threat. If I ever even sense that there is a threat to them, 
then I just say, okay, we will stop short, transload to 
military airplanes and we will bring them in that way.
    Mr. McMahon. And do you make that call or does the theater 
commander make that call?
    General McNabb. The threat working group, that comes to me 
and that is done at TRANSCOM. But, obviously, we are talking to 
the theater commanders all the time and comparing notes. One of 
the big parts is, if you end up having an airplane that is just 
about to land and you find that out, we work very closely on 
the command and control to make sure that we can very quickly 
get hold of those crews and say go into holding or divert, make 
sure that that is done safely.
    Mr. McMahon. Okay. General question about the National 
Defense Authorization Act. Fiscal year 2009 required the 
Secretary of Defense to incentivize the CRAF carriers to use 
newer, more efficient aircraft and to improve the 
predictability of the DOD charter requirements. In addition to 
maintaining their certification under FAA Part 121 as air 
carriers, the CRAF participants must also undergo a 
comprehensive on-site technical evaluation that assesses an air 
carrier's ability to meet all the DOD quality and safety 
requirements as outlined in 32 C.F.R.
    I am looking over the carrier teams and I see that there 
are international carriers like Ryan, and I am not familiar 
with Calida Air, but, number one, how do you maintain the 
training and quality assurance for international carriers and 
also those domestic carriers? We see what happened with Flight 
3407 that perhaps even our own domestic carriers perhaps didn't 
receive the adequate training that our own military is required 
to undergo, so how do you assure those quality assurance 
procedures?
    General McNabb. Well, first and foremost is the FAA 
certifies those carriers and they make sure that all the 
standards that go into being certified by the FAA are taken and 
those carriers pass that. The second part is they are approved 
by our CARB, and the CARB is that oversight board that we have 
that looks into not only the operations, but does the periodic 
inspections.
    Also, if there is any problem with safety, that comes back 
and the CARB can suspend the carriers from doing that. So all 
of our CRAF carriers are both certified by FAA and approved by 
the CARB, so we have got an extra layer in there to make sure 
that they are ready to go and they can do this safely.
    Mr. McMahon. Okay. Thank you, Chairman.
    Mr. Costello. The Chair thanks the gentleman and now 
recognizes the distinguished Chairman of the Full Committee, 
Chairman Oberstar.
    Mr. Oberstar. Thank you, Mr. Chairman, for holding this 
hearing. Mr. Petri, I appreciate your participation.
    General McNabb, you come highly recommended. Chairman 
Costello says he has known you a very long time.
    General McNabb. Sir, he has been superb in not only this 
Committee, your Committee, but Chairman Costello, in the way he 
has taken care of TRANSCOM and Scott Air Force Base has been 
something that you can see what has happened as far as our 
ability to do the defense transportation mission. So thank you 
again.
    Mr. Oberstar. It has been a while since I have been out to 
Scott Air Force Base, but it was at a time when there was joint 
use being considered. Is that working out now?
    General McNabb. Sir, it is working out superbly. They built 
a Mid-America Airport, they gave us another runway, and because 
of that we basically now have three wings. That allowed us to 
bring the tankers down from Chicago, so you have got a tanker 
wing there that is a guard wing; you have got a reserve wing 
that has C-9s and C-40s, and you have an active duty wing that 
has C-21s and also helps man those C-40s and C-9s, and then you 
have four major headquarters.
    So I would say that we would love to have you come visit 
Scott, because it has been growing and we have been 
consolidating, so business is good at Scott. The corn is 
growing, so it is a very nice time to come. But I would say 
that Mid-America Airport was absolutely key to that, Chairman, 
and the reason was if we hadn't had that second runway, we 
would not have been able to bring in those other airplanes. 
That dual runway allows us to do the training and make sure 
that we can--you know, it opens that up to other missions, 
which, again, allowed the growth to happen. So it has worked 
out great.
    Mr. Oberstar. I appreciate your assessment, because there 
are other opportunities for joint use throughout our military 
and civilian system, and it would be useful to have a further 
perhaps not in the context of a Committee hearing, but a 
roundtable discussion about creating additional capacity 
through joint use operations, which is what Mr. Costello was 
away ahead of the curve about 12, 14 years ago, 16 years ago 
that we made that tour. San Diego comes to mind; there are 
others out in the West Coast that could DOD commissioning of 
military facilities in the base closure commission and of those 
that are active.
    And the President just recently--this is way far afield 
from Civil Reserve Air Fleet, but it is important to our 
overall aviation capacity and domestic airspace--President Bush 
opened up airspace that had previously been reserved to 
military use, and that allows for straighter routes. As we work 
through the restructuring of the air traffic control system and 
revising the end route facilities, 21 end route centers now 
that ought to be reduced, consolidated, combined and create 
straighter routing, which today actually follows the route of 
bonfires in the 1920s and lighthouses first and then beacons in 
the 1930s, we have to, and can do, better than that today.
    General McNabb. Yes, sir.
    Mr. Oberstar. And doing this would be very important to 
integrate the work and the thinking of the airlift command in 
this process.
    General McNabb. Chairman, I would be glad to help however I 
could. We have a couple of examples. When I think about Scott, 
that was one. Charleston Air Force Base shares a runway with a 
commercial and it really does work well, because one that helps 
us is that our airplanes tend to be kind of doing the same 
things, so we tend to fly larger airplanes that are flying in 
commercial airfields anyway, and it ends up being pretty easy 
to use those for operations. So it works great.
    Mr. Oberstar. Seventeen years ago this Subcommittee held a 
hearing on the Civil Reserve Air Fleet and war risk insurance 
at which Mr. Klinger, the ranking Republican at the time, 
observed the civil commercial air fleet has proven absolutely 
critical to the success of the Nation's defense mission. 
Operation Desert Shield/Desert Storm demonstrated that fact 
abundantly. We would not have enjoyed the success we did 
without the considerable airlift capacity provided by U.S. flag 
carriers.
    In that operation, the Civil Reserve Air Fleet carried out 
5500 missions, carried enormous numbers of personnel and 
enormous amounts of cargo into the zone, but they were flying 
back empty. While they were somewhat compensated, our passenger 
airlines that had committed certain numbers to their fleet, the 
DC-10s, the 747, 100s, 200s, were disadvantaged compared to 
their European competitors who were flying revenue flights out 
of the theater to Europe and on to the United States. At the 
time, there was a concern that--so that was one issue that we 
were trying to address.
    Another is that then, as Mr. Klinger observed, military 
owned and operated heavy lift aircraft continued to dwindle in 
number, and of the transports still operating, many find 
themselves load limited as a result of aging airframes. I think 
you can say that for the civil fleet as well. After September 
11, the commercial airline carriers downsized their fleet, took 
about 20 percent of the fleet out, older airframes, older 
engines, parked them in the desert, and we have fewer 747s, 
very fewer DC-10s, probably no 1011s except in a cargo capacity 
operated principally--most of those flying are operated 
overseas by other airlines, not subject to CRAF.
    What concerns do you have about, if any, in your 
assessment, of the state of the art? When CRAF was activated in 
Desert Shield, in Desert Storm, initially, 38 aircraft were 
called up in the stage 1--and you described the three stages of 
call-up. Stage 2, there were an additional 140 long-range 
aircraft called up and there were some problems of mismatches 
between airlift demands and aircraft available, and the 
planning was not as efficient, according to the hearing that we 
had, as it might have been with closer coordination. There were 
coordination problems between DOD and the Transportation 
Department; it was the Research and Special Projects 
Administration, RSPA, of DOT, which is now RITA, the Research 
Information Technology Agency.
    The purpose of our hearing was to try to untangle these 
complexities, improve the coordination between DOD and DOT, and 
do a better job of scheduling through that kind of 
coordination, so, 17 years later, it occurs to me that you 
might give us a report on the status of coordination, 
integration of scheduling and relationship between DOD and DOT.
    General McNabb. Yes, sir. Well, one I would say is my 
compliments, because you think about where we are. You have to 
start somewhere, where somebody comes in and says, hey, we have 
got to get our arms around this. But now that we have been 
really at a surge operation for the last seven years and you 
think about where we are today, as I mentioned, 135 sorties 
going today that are being done with our commercial partners, 
we have basically had a constant surge in which we have really 
been able to work through a lot of the issues that you 
identified through lessons learned.
    A lot of the fixes were already in place, but some of the 
things like forecasting and looking to can we give you a stable 
system, I commanded the TACC in the late 1990s, and I would 
tell you it was something we always were hoping to be able to 
do, is to say here is the good forecast, and we know that what 
we want to do is kind of give a sustained level of effort is 
the best thing that we can give the commercial world so they 
can plan against it, and basically fill in the valleys, smooth 
out the peaks, and if we can do that, they can really do a lot 
for us.
    That is what we do now. We look out the next four or five 
months and we constantly adjust to that. If we have a pop-up 
requirement--and I would use a disaster relief as an example--
we may end up asking commercial carriers to pick up some of the 
military legs so that we can have the military aircraft now 
freed up to go do the disaster. All of that takes place in what 
I think is a very superb manner. We can always do better.
    One of the things that we would like to do is forecast and 
really try to look to the future even more, because in many 
cases the carriers want to look well beyond six months; they 
need to be planning their fleets for the next five and ten 
years. So we are working that. Again, your support of that 
assured business really did help us on that.
    Mr. Oberstar. What are your call-up availability 
requirements now, is it 24, 48 hours? Does it differ under 
stage 1, 2, and 3?
    General McNabb. It does, sir. Twenty-four hours for stage 1 
and 2, and 48 hours for stage 3. So, again, I think that the 
system has worked very well, almost everything they have been 
able to do on a volunteer basis, and when we have said we need 
additional help from them, they have been able to figure out 
how to do that. And, again, I think it is about the 
relationships and that coordination between us of mixing and 
matching, and looking at what their requirements are as well, 
their commercial requirements.
    Mr. Oberstar. How many 747s are committed, if that is not a 
classified number, and 767s?
    General McNabb. Sir, I would like to take that for the 
record. When you think about the 1100 aircraft, we have got a 
mix of all types of airplanes, and it is 747s, 767s, 777s.
    You had talked earlier about modernization. It is the one 
thing that I have talked to the carriers and the National 
Defense Transportation Association about that concerns me, is 
how do we incentivize you to modernize your fleet. How do we 
make sure that if we are putting something in the desert, it is 
the 747-100, not the 747-400, which I think is what you were 
getting at.
    And my take is that they are looking hard at that, but one 
of the things they came back to us is they said you have got to 
give us some routes where we can get good utilization on those 
aircraft; and, in fact, we are starting a test in June where we 
are going to have a flight directly from Dover all the way to 
Incirlik, Turkey, and that airplane will just go back and 
forth; and that will get that utilization rate so that they can 
say, hey, I have invested in this aircraft and I now get the 
utilization on it so I can get it to pay back.
    Mr. Oberstar. Now, the investment in the aircraft also 
includes strengthening the internal members, the structural 
support members of the floor of the aircraft to accommodate 
heavier weight and also tie-down facilities internally. So is 
that work still being done on CRAF aircraft? And for that added 
weight is the Defense Department continuing to compensate 
aircraft that fly in commercial service for carrying that 
additional weight and the fuel penalty it engenders?
    General McNabb. Yes, Chairman. And primarily the growth in 
the commercial cargo industry kind of changed everything. I 
mean, obviously, in that 17 years, you think about where 
commercial cargo is vis-a-vis passenger. So where we used to 
have to modify passenger airplanes, we don't have to do that 
anymore; they are coming right off the assembly line built as 
freighters.
    Mr. Oberstar. With that additional internal structural 
strength?
    General McNabb. Absolutely.
    Mr. Oberstar. Maybe Mr. Smith, who is right here with us, 
can explain that in his testimony; he is the leading proponent 
of air freight.
    General McNabb. It is amazing how far the industry has come 
on commercial cargo and how the world has changed. Certainly, 
when I think back to the early 1990s, when I was a Charleston 
squadron commander flying 141s, and when we stood up Desert 
Shield and Storm and you thought of where the industry was then 
and then where we sit today, truly, my biggest concern right 
now is passenger charter, which was not even something we had 
to worry about back in the early 1990s; that was a very robust 
area, but today, because of the market, that has changed a 
little bit.
    Mr. Oberstar. Today, a number of those passenger charter 
operators are sidelined, they are either in bankruptcy or out 
of business altogether, downsized their fleets. Has market 
condition principally post-September 11, but more recently 
since the onset of recession in December 2007, has that reduced 
the scope of aircraft available?
    General McNabb. I think primarily the market changed. And I 
will defer to the second panel, but when I went around and saw 
them, they said, hey, the market has changed the travel agency, 
and it also has changed because newer aircraft, they have 
smaller aircraft that have longer range because of technology.
    So you have really changed the dynamics of the market. 
Where charters filled a portion, in some cases you now have 
direct flights from the legacy carriers going to the places 
where you used to only have charter would be the only way you 
could get there. And I think that that portion of that of 
working with industry to say, hey, based on the new market, how 
do we do this, that discussion continues on. But there are 
opportunities and we are constantly having to adjust that.
    Mr. Oberstar. Thank you. Your comments suggest that with 
improved airframes and improved internal strength, that 
retrofitting aircraft to carry heavier loads is not the issue 
it was 15-plus years ago; you are not making that compensation 
payment for that fuel penalty for heavier internal structure.
    General McNabb. Sir, what I would say is if a commercial 
carrier uses a more efficient airplane, they will make more 
money on that because we will pay them a rate, and if they have 
a very efficient airplane they will make more money; if they 
have a less efficient airplane, they will make less or maybe 
even lose some.
    So that is kind of how we incentivize it now, but, again, I 
have been working with the carriers to say how do we help you 
get to more efficient airplanes that we can use in our Civil 
Reserve Air Fleet day-to-day, so the peacetime lift that we are 
doing, because, obviously, I am very concerned about the amount 
of fuel that we use overall, not only in our military fleet, 
but the commercial fleet that supports us as well.
    Mr. Oberstar. And you need to work out a back-haul for 
those aircraft for efficient use of aircraft and reduce your 
costs?
    General McNabb. Yes, sir.
    Mr. Oberstar. In Desert Shield and Desert Storm and 
subsequently, carriers--I am just looking at our hearing 
transcript--entered into joint venture relationships and 
agreements that allowed one carrier to, through this joint 
venture under the CRAF agreement, to send a different carrier 
out with aircraft. That raised legal problems later on, where 
there was an accident in the zone or on return, or a carrier 
that went out of business, the contract contracted carrier went 
out of business and then the Air Force held the CRAF airline or 
company to accountability. Do those issues exist today?
    General McNabb. No, I would say those issues are not there. 
What I would say is, for instance, with ATA, when ATA was 
grounded, basically, the team that they were part of, they 
picked that up, they felt responsibility. As we had 71 missions 
that were affected, about 3,000 soldiers and sailors and 
Marines and airmen were affected, that team came together very 
quickly and used other members of their team to fill that in, 
and we ended up having a minimal impact. That feeling of 
responsibility by the team to say, hey, we understand that we 
have an obligation here, certainly I think shows how good that 
works.
    I would also say, in this market, I find that there are 
usually a lot of other folks that say we are willing to take 
this on if we can, and the short notice nature is probably the 
hardest part to deal with, because if you give them a little 
time, there are an awful lot of people that can help.
    Mr. Oberstar. In short, your assessment is that the Civil 
Reserve Air Fleet is serving our defense establishment well, 
needs to be continued, there may be some adjustments necessary. 
Are there any adjustments that you think might require 
legislative action?
    General McNabb. Chairman, your help on the assured business 
was huge for us. The continued support of war risk insurance is 
huge for us, that is really important to us. And I think that 
there may end up being--we have some of our carriers have 
talked about if we could get to a multi-year approach in some 
capabilities.
    It is one that not everybody agrees, because the teaming 
relationships are usually one to two years, and then they 
adjust from there. I will just say that is one that I would 
like to look at and I plan to have our folks look at, and I 
promise to take a look if there is anything, any joy there that 
would help the industry overall, but, again, we haven't got far 
enough along that road. That is kind of like the next step that 
we would like to take a look at.
    Mr. Oberstar. Well, that is very encouraging to hear, and 
what a contrast from our hearing a decade and a half ago, when 
DOD refused to show up because they were so embarrassed about 
their program that they couldn't face conflicting testimony 
from the carrier sector, from DOT, and bipartisan--what should 
I say?--correction. You have apparently corrected a lot of 
these issues and I am very much appreciated. Obviously, CRAF is 
in good hands.
    General McNabb. Chairman, your support over these years, 
that is why it is the way it is, because everybody worked very 
hard together, to include this Committee, on doing the kinds of 
things that we needed to do to make sure that we did make it 
whole, because we do say it is a great value to this country to 
have CRAF. I mean, it is tremendous. There are some things that 
they can actually do a whole lot better than anything I can do 
on the military side, and they also teach us about efficiency. 
Industry has a way of coming in and we have that relationship, 
and it really pays off for us as well.
    Mr. Oberstar. Thank you, General. You too are a great 
credit to our country.
    General McNabb. Thank you, Chairman.
    Mr. Costello. The Chair thanks Chairman Oberstar.
    General McNabb, we thank you for appearing before this 
Subcommittee today to offer your testimony. I think Chairman 
Oberstar summed it up correctly, the program is in good hands 
under your leadership. We thank you for your testimony. We look 
forward to working with you to make any improvements that we 
can in the CRAF program, and if you have legislative 
suggestions, as you did with the assured business issue, we 
stand ready to work with you.
    With that, thank you, General McNabb, and we will ask the 
second panel to come forward. Thank you.
    General McNabb. Thank you, Mr. Chairman.
    Mr. Costello. The Chair welcomes all of you at the witness 
table today. Gentlemen, we appreciate your being here and look 
forward to hearing your testimony. Let me introduce and 
recognize our witnesses. Let me say, before I do, that your 
entire statement will be appear in the record. We would ask you 
to summarize your statement.
    The Chair now would introduce the panel. First, I will 
introduce Robert Coretz, the Chairman of the Omni Air 
International; Mr. Brian Bauer, President of Evergreen 
International Airlines; Mr. William Flynn, President and Chief 
Executive Officer, Atlas Air Worldwide Holdings; Mr. Tom 
Zoeller, who is the President and CEO of the National Air 
Carrier Association; Mr. David Graham, the Deputy Director, 
Strategy Forces and Resources Division, the Institute for 
Defense Analyses; and certainly the last witness I will yield 
to my colleague from Tennessee, Mr. Cohen, to introduce Mr. 
Smith.
    Mr. Cohen. Thank you, Mr. Chairman. It is indeed my honor 
to introduce Memphis's number one citizen, Mr. Frederick W. 
Smith. He is Chairman, President, and Chief Executive Office of 
FedEx Corporation, which is the largest and most efficient and 
timely air carrier in the world, a $38 billion global 
transportation company, provides services that are 
headquartered in Memphis, Tennessee.
    Mr. Smith started this company after doing a paper in 
college that didn't receive a very good grade, but that has 
received a wonderful grade from the world's economy, the 
world's business community, and the investing public. It has 
made the difference in my city being a city on the globe and a 
great city in America, instead of being a languishing city 
without national, international reputation, 30,000-odd jobs, 
and an NBA basketball team, which wouldn't have existed without 
Mr. Smith stepping to the plate and funding the arena necessary 
to bring that team to the city.
    When there is anything important in Memphis, Fred Smith is 
there, whether it is coming up with helping with the gold 
tournament at St. Jude's, he is also a co-sponsor of and 
provides Memphis international exposure, but also provides 
funding for St. Jude's, or other efforts, Federal Express is 
there.
    This particular subject matter is, I know, dear to Mr. 
Smith's heart, because when it came time to have a memorial on 
the mall for World War II veterans, he stepped up and was the 
co-chair, if I remember correctly, in raising the funds and 
seeing that our World War II veterans were properly 
memorialized and remembered and that effort was remembered.
    When he was a young man--and I heard this story just 
recently, and I don't know exactly how true it is or accurate--
allegedly, he and Landon Butler, and maybe even Sid, from what 
I was told, got together and decided they need to go over to 
Vietnam and volunteer. They were not drafted, but they 
volunteered for service and Mr. Smith served as a pilot in 
Vietnam.
    I have read his statement. I wish I could be here for the 
entire time. Unlike a mayor, Congresspeople have to be two 
places at once and don't march to their own drum, so I have to 
be at the Judiciary Committee, where we are marking up a 
performer's rights bill, which is important to a lot of 
constituents in my district as well. I have read your statement 
and appreciate what FedEx has done in Desert Storm and other 
areas. It is important that we have this cargo available to us, 
fleets, in case we have the need to call them up in peacetime, 
and FedEx has been there and participated.
    During this recent economic situation, his efforts in not 
cutting employees until absolutely necessary, but, instead, 
jointly cutting pay was highly commendable and recognized and 
he cut his own pay 20 percent, and he has been a leader on the 
challenge of climate change in this country and delivered 
addresses here in Washington and elsewhere to educate the 
public. So it is my honor to be here to represent Mr. Smith in 
Congress and to welcome him to the Aviation Subcommittee.
    Thank you, Mr. Chairman.
    Mr. Costello. The Chair thanks the gentleman from Tennessee 
and now recognizes Mr. Smith.

   TESTIMONY OF FREDERICK W. SMITH, CHAIRMAN AND CEO, FEDEX 
       CORPORATION; ROBERT K. CORETZ, CHAIRMAN, OMNI AIR 
INTERNATIONAL; BRIAN BAUER, PRESIDENT, EVERGREEN INTERNATIONAL 
AIRLINES, INC.; WILLIAM J. FLYNN, PRESIDENT AND CHIEF EXECUTIVE 
OFFICER, ATLAS AIR WORLDWIDE HOLDINGS, INC.; THOMAS E. ZOELLER, 
PRESIDENT AND CEO, NATIONAL AIR CARRIER ASSOCIATION; AND DAVID 
 R. GRAHAM, STRATEGY FORCES AND RESOURCES DIVISION, INSTITUTE 
                      FOR DEFENSE ANALYSES

    Mr. Smith. Well, thank you very much, Mr. Chairman, Ranking 
Member Petri, Chairman Oberstar. Mr. Cohen, I appreciate that 
kind introduction. Let me correct one item for the record, 
though. You talked about the grade I got in college. It was a 
very good grade for me and I was happy to receive it.
    [Laughter.]
    Mr. Smith. I am here, as Mr. Cohen said, representing FedEx 
Corporation. FedEx is a very large enterprise, composed of four 
operating divisions: FedEx Services, FedEx Freight, FedEx 
Ground, and our largest operating company, Federal Express, 
which is the company, as he mentioned, that I founded in 1971. 
It is the world's largest all cargo air carrier, operating in 
220 countries, moving 3.5 million shipments, with a fleet of 
650-plus aircraft. It is the largest assemblage of wide-body 
aircraft in the world. It is by far the largest fleet of wide-
body cargo aircraft in the world.
    We have been a long-term participant in the Civil Reserve 
Air Fleet program and I would like to make a few points, 
noting, as you did, Mr. Chairman, that our complete statement 
is entered into the record.
    We believe that the CRAF program and the participation of 
civil air carriers in our Nation's defense has served this 
country very well. CRAF provides 1,000 civilian aircraft, 
augmenting the Air Force fleet in time of war or crisis in a 
highly cost-effective way. We take our commitment to CRAF very 
seriously, and we have a proven track record in fulfilling CRAF 
obligations. CRAF participants provide aircraft for peacetime 
and surge capacity, as the General noted, and we believe it is 
important that CRAF remain strong and sound.
    FedEx Express is a major contributor to the CRAF program. 
We commit 78 long-range, wide-body aircraft, which is 100 
percent of our eligible long-range fleet and represents 34 
percent of the all cargo wide-body fleet committed to stage 3. 
As an example of that commitment, we moved over one-third of 
the cargo transported on commercial aircraft during Operations 
Desert Shield and Desert Storm. We provide peacetime lift as 
well. We are currently flying about 13 to 14 missions per 
month, and we participate in the military's worldwide express 
cargo program.
    Large scheduled carriers with a large, ongoing business, 
like FedEx, do not utilize, generally, all of the points 
allocated for our commercial fleet. To compensate for the risk 
of that substantial commitment, the CRAF program allows 
carriers like FedEx Express to provide value and receive 
compensation for directing a team of CRAF participants. We 
believe the team concept works well, allowing smaller charter 
carriers on the team to, in effect, purchase some of the points 
from scheduled carriers that gives them more peacetime flying, 
and thereby provides the Department of Defense with a broad 
range of aircraft for peacetime and mobilization, and also, as 
the General pointed out a moment ago, a single point of contact 
for a group of carriers.
    The Civil Reserve Air Fleet program continues to work and 
we believe that the basic structure should be preserved, but we 
believe there are some aspects that can be improved. Some 
commentators recommend discontinuing the team concept, but we 
believe strongly it should be preserved to provide the economic 
incentives for large carriers to commit aircraft, necessary 
levels of peacetime flying for charter carriers, and valuable 
administrative and managerial benefits for the U.S. 
Transportation Command in the Department of Defense.
    The ATA situation that was referenced we do not believe is 
a reason to discontinue teams. The teams were not the cause of 
this, but, rather, the disruption was a lack of sufficient 
passenger charter capacity in the industry as a whole. In fact, 
the team concept allowed the team to assemble assets to meet 
DOD's demand, as General McNabb noted.
    We do not support the requirement to commit to a certain 
level of peacetime flying because we believe it will reduce the 
flexibility of the teams, hinder efforts to place the most 
appropriate aircraft for peacetime missions, and we believe the 
voluntary method works quite well.
    DOD can and should, we believe, rely less on 747 aircraft 
for peacetime flying and more on more cost-efficient, smaller 
wide-body aircraft which can, with proper loading, be used more 
effectively.
    DOD can improve opportunities for carriers to fly a 
peacetime business and thus strengthen the CRAF program through 
operational changes that will encourage increased use of 
simulator training in the military and more use of the less 
costly civilian lift provided by CRAF carriers.
    With that, after the panel speaks, I would be happy to 
answer any questions that you might have.
    Mr. Costello. The Chair thanks you, Mr. Smith, and now 
recognizes Mr. Coretz.
    Mr. Coretz. Mr. Chairman, Mr. Petri, and Members of the 
Committee, as Chairman of Omni Air International, a passenger 
charter airline based in Tulsa, Oklahoma, it is my distinct 
privilege to appear before this House Aviation Subcommittee to 
discuss the economic viability of the Civil Reserve Air Fleet. 
Providing passenger air charter service is the core competency 
of our airline. Hence, my comments this morning will be focused 
on the passenger charter segment of the industry and its 
relevance to the CRAF program.
    Omni has been an approved CRAF carrier since 1995 and has 
been an active and significant CRAF participant providing 
passenger airlift to USTRANSCOM. From 2001 to present, Omni, 
along with other charter and scheduled airlines, have safely 
transported nearly 4 million U.S. service men and women in 
support of DOD operations in Iraq and Afghanistan. Notably and 
importantly, during this time period, charter passenger 
airlines provided in excess of 90 percent of all USTRANSCOM 
commercial passenger airlift. Less than 10 percent of 
USTRANSCOM missions were operated by scheduled airlines.
    Why this disproportionate amount of business between the 
charter versus the scheduled airlines? The substantial majority 
of USTRANSCOM passenger demand requires mission flexibility. 
This airlift is being met daily by charter airlines. Charter 
airlines are in the business of providing on-demand lift based 
on the customer's schedule, not the airlines' schedule.
    While scheduled airlines provide an important and 
meaningful role within CRAF, the fact remains that the large 
scheduled airline operating systems were designed for their 
core business of routine scheduled airline service for business 
and leisure passengers. Their systems are rigid and do not 
successfully allow for the elasticity required to meet the 
challenges unique to DOD operations.
    Charter airlines are those the Nation regularly counts on 
for mobility and readiness, no matter what the contingency or 
mobilization requirement. Charter airlines are now, as we 
speak, providing the majority, if not all, the augmentation DOD 
needs to support our troops in Iraq, Afghanistan, and other 
military efforts around the world. In any national crisis, 
charter airlines are the first responders to USTRANSCOM, with a 
can-do philosophy to get the job done.
    Maintaining a strong, continued, viable, robust CRAF 
requires a national focus on those elements that optimize 
commercial fleet participation along with best value to the 
government. An intimate understanding is needed from the unique 
perspective of the charter passenger airlines and their role 
supporting USTRANSCOM in order to fully understand the charter 
airline significant value within the CRAF program.
    The past success of CRAF government program and industry 
partnership will evolve to a new level of success with the 
benefit of hindsight only by understanding the current 
challenges and taking appropriate action. In order to maintain 
an economically viable CRAF, specific actions must include:
    First, minimum annual purchase which focuses appropriated 
funding directly to the passenger charter airlines who bring 
the war fighter to the fight and ensures optimum readiness at 
the least cost and best value.
    Second, understanding USTRANSCOM utilization requirement. 
This becomes the economic driver dictating best value assets to 
provide passenger airlift to USTRANSCOM. Such assets should be 
selected by industry through responsible economic modeling.
    Third, CRAF can be further stabilized by providing multi-
year contracting. This allows predictability to charter 
airlines, ultimately benefitting DOD with stability and cost 
savings which come through long-term planning.
    Fourth, the 60/40 rule previously discussed is antiquated 
and should be permanently abolished. It is advantageous to the 
government to allow airlines to exercise fiscal responsibility 
in determining their own customer base. An arbitrary government 
mandated business mix is detrimental and causes destabilization 
of airlines.
    Fifth, USTRANSCOM and Congress decision-makers should 
continue to collaborate with the charter industry for 
successful implementation of any changes in CRAF policy.
    Incontrovertibly, since its inception in 1951, the CRAF 
program has proven to be a successful government and industry 
partnership. The CRAF program has repeatedly demonstrated its 
significant economic value to the American taxpayer.
    In closing, CRAF enjoys an enviable, proven track record. 
USTRANSCOM is an exceptional customer with unique requirements. 
While CRAF remains strong and viable, there is room for 
modification to assure future health and success. Such 
improvements can only be achieved by spending dollars wisely 
that appropriately align with USTRANSCOM's need of flexible 
mobility.
    Thank you.
    Mr. Costello. The Chair thanks you, Mr. Coretz.
    Before I recognize Mr. Bauer, let me announce that we have 
three votes pending on the floor. We hope to receive your 
testimony, Mr. Bauer, and then we will go to the floor as 
quickly as possible, get the votes done, and come back and 
resume the hearing.
    Mr. Bauer, you are recognized.
    Mr. Bauer. At least I have no pressure today.
    Mr. Chairman, Members of the Committee, on behalf of the 
men and women of Evergreen International Airlines, I am pleased 
to appear before you today to discuss the Civil Reserve Air 
Fleet and the role Evergreen plays in CRAF peacetime and 
contingency operations and plans.
    In brief, CRAF represents the best of a public-private 
partnership. It is a partnership tested in times of contingency 
and exercised daily for the USTRANSCOM CRAF contracting 
provisions, which we believe have served the program well for 
many years. Abrupt changes to these provisions, including 
teaming arrangements, would have a significant negative effect 
on CRAF participation.
    Evergreen is a manager of the largest teaming arrangement 
involving almost 50 percent of the CRAF aircraft, and we well 
understand our partners' concerns for changes affecting their 
participation. It must also be noted that maintaining a vibrant 
CRAF is dependent upon the level of peacetime airlift business 
to sustain current CRAF commitments. It is the robust and 
assured level of peacetime contract dollars that allow CRAF 
participants to operate daily for the DOD. Reducing that level 
of business would be detrimental to CRAF participation and, as 
a result, national security will be jeopardized.
    We applaud Congress for passing the assured business 
legislation affecting CRAF contracting; however, we would 
suggest it should also extend beyond passenger operations and 
include cargo operations as well.
    For its part, Evergreen is proud of the fact that it has 
been a CRAF carrier since its inception. Year after year, 
Evergreen has operated peacetime cargo missions for the 
Department of Defense and has been at the forefront of missions 
operating during CRAF activation. Evergreen operates a fleet of 
classic Boeing 747 cargo aircraft.
    To better respond to the Department of Defense's needs, we 
are assessing the cost benefit of fleet enhancement to more 
modern 747s, which offer increased payloads at significantly 
less cost, especially in terms of fuel. We are cognizant of the 
Nation's continued dependence on foreign-provided fossil fuels 
and hope through these efforts to do our part for the strategic 
and environmental benefit that will accrue.
    While we are eager to proceed on our capitalization plan, 
the Nation's current economic plight has thwarted our attempts 
to obtain sustainable credit and terms to satisfy this effort. 
We are in search of a bold new leadership approach which will 
afford Evergreen, and any other CRAF carrier, the opportunity 
to upgrade our fleet.
    The Administration and the Congress have recognized the 
importance of measures to stimulate the economy. Providing such 
an opportunity to the CRAF carries makes good sense for all of 
the reasons above, as well as stimulating employment in the 
manufacture and re-manufacture of commercial aircraft tied to 
the CRAF. Evergreen looks to your leadership to assist the U.S. 
commercial aircraft industry gain the benefits associated with 
incorporating modern aircraft into their flights. It makes good 
sense for the industry and for our Nation
    Thank you for your attention.
    Mr. Costello. The Chair thanks you, Mr. Bauer.
    The Subcommittee will recess. I would ask our witnesses at 
the table to please return. We are hoping to resume the 
Subcommittee hearing at 11:50, so I think you have got about 
20, 25 minutes to get a cup of coffee or whatever you would 
like to do. We will return immediately after the third vote.
    The Subcommittee stands in recess.
    [Recess.]
    Mr. Costello. The Subcommittee will come to order. The 
Chair will now recognize Mr. Flynn.
    Mr. Flynn. Good afternoon, Chairman Costello and Members of 
the Committee. I want to thank you and the Committee for the 
opportunity to participate in this hearing today and share the 
Atlas perspective in CRAF.
    The strength of our company begins with our people. Among 
our 1500 employees, we have 900 pilots, 324 who have prior 
military aviation experience and 34 of whom currently serve in 
the National Guard and in the Air Force Reserve, and our 
strength is built upon our fleet. Atlas operates the world's 
largest fleet of Boeing 747 freighter aircraft. We currently 
have 29 aircraft in our fleet.
    To Mr. Oberstar's point earlier, 21 of these aircraft are 
modern, purpose-built 747-400 freighters and have an average 
life of nine years.
    In addition, we are a launch customer for Boeing's newest 
747-8 freighter. We have 12 on order. Our order is valued at 
about $2 billion and represents a significant modernization of 
our fleet and all of our aircraft, including our new deliveries 
will be committed to CRAF.
    Atlas is one of the few American flag carriers that other 
major foreign airlines contracts with for heavy airlift 
requirements. Our customers include British Airways, Emirates, 
Qantas, and DHL Express. In 2008, we operated over 19,000 
flights, serving 316 destinations in 110 countries.
    The CRAF program is the benchmark for how government and 
industry can work effectively together to support U.S. national 
security interests around the globe. Like my CRAF teammates 
here today, Atlas is proud of our CRAF participation and 
support of our troops in Iraq, Afghanistan, and other locations 
around the world.
    I have the following comments and recommendations that 
relate to the future economic viability of the CRAF program. I 
would like to first focus on assured business. I applaud 
Congress for enacting the legislation that approves assured 
business and peacetime incentives for U.S. flag CRAF carriers 
that appeared in the 2009 National Defense Authorization Act. 
Assured peacetime business does attract and incentivize CRAF 
volunteerism, as General McNabb pointed out, and peacetime 
business is a strong incentive to participate in CRAF.
    I would like to point out, though, that the assured 
business language specifically mentions CRAF passenger 
carriers. I believe the intent was to include both CRAF cargo 
and passenger carriers, and I suggest the language be amended 
to recognize both groups' participation and contribution.
    I would also like to focus on organic and commercial 
readiness. Commercial fleets have been effectively and 
efficiently integrated into the DOD and combatant commander 
plans for many years. Together, we produce unmatched mobility 
for the U.S. forces who respond to crises and contingencies 
around the globe. Unfortunately, our organic military fleets 
are experiencing unprecedented wear and tear resulting from the 
additional flying hours required to prosecute two wars. 
Concerned commanders, including General McNabb, have stressed 
that this increased wear and tear threatens not only our 
current readiness, but also jeopardizes our Nation's future 
ability to surge.
    We can reduce military fleet wear and tear by increasing 
utilization of commercial CRAF carriers, as directed in the 
national air lift policy, and this will preserve and extend the 
critical combat life of our organic military fleets.
    Modern aircraft, like the 747-400 and the new 747-8F, offer 
significant operating cost efficiencies, and those savings can 
be passed on to the American taxpayer. We need to adopt and 
accelerate the business processes that realize supply chain and 
distribution chain efficiencies, and task the most efficient 
and effective aircraft for those missions, as outlined by 
General McNabb in his earlier statement.
    Mr. Chairman, I believe we have a call to action here 
today. We need to preserve CRAF capability and ensure its 
future viability. Our national security depends on our 
collective commitment, and a viable and vibrant CRAF preserves 
and creates jobs that will aid our national economic recovery.
    Mr. Chairman, I appreciate the Committee's willingness to 
address this important issue and raise the level of awareness 
across the Government. We are committed to modern aircraft 
solutions that drive commercial economic growth and 
development, while standing ready to support the DOD through 
the U.S. Transportation Command, should the Nation call.
    This concludes my remarks. Thank you.
    Mr. Costello. The Chair thanks you, Mr. Flynn, and now 
recognizes Mr. Zoeller.
    Mr. Zoeller. Thank you, Mr. Chairman, Members of the 
Committee. Thank you for the opportunity to appear here today 
to discuss the financial viability of our Nation's charter 
airline business and the economic viability of the Civil 
Reserve Air Fleet program.
    As you have already heard this morning, given the global 
economic environment, recession, fuel prices, the occasional 
outbreak of H1N1 flu, these are difficult times for the air 
carrier industry, and that is what makes this hearing so 
timely.
    We certainly appreciate the opportunity, as the association 
that represents a number of the carriers that are involved in 
the daily operations of CRAF, to be here today. NACA is an 
industry association which represents a variety of Part 121 air 
carrier operators, including low-cost passenger airlines, 
charter passenger carriers, and charter and ACMI cargo 
operators.
    At the outset, let me say that the CRAF program has worked 
well and has been an instrumental part of the success of the 
military's operations, getting our troops and cargo to their 
intended destinations safely and on time. It is a model 
partnership between the Federal Government and the private 
sector, and over the last 50 years it has been continually 
nurtured and refined and is today a robust program.
    General McNabb and General Lichte at Air Mobility Command 
continue to monitor the overall economic health of the 
carriers. Through informal and formal meetings, we work with 
both the generals and their staffs to provide timely updates on 
the status of our carriers and the industry as a whole. We 
believe that it is important that we continue to work together 
to refine and develop appropriate policies that sustain the 
economic viability of the carriers.
    As we have already heard from General McNabb and the other 
witnesses today, the success of the missions rely heavily on 
the commercial airline industry. From April 2008 to March 2009, 
commercial passenger aircraft accounted for 58 percent of the 
transportation of troops and 32 percent of the cargo was 
transported by commercial aircraft.
    Throughout the years, a number of U.S. troops overseas has 
determined the transportation requirements for TRANSCOM. As a 
result, the level of incentives has fluctuated. Logistic 
policies and programs continue to change and while most of the 
focus at TRANSCOM has been on the transportational logistics 
for the draw-down of troops in Iraq and the renewed focus in 
Afghanistan, TRANSCOM and AMC have begun to look towards the 
future when our military involvement in both countries comes to 
an end.
    Certainly, we have heard enough of the minimum annual 
purchase requirement for charter carriers. A so-called minimum 
buy authorization language included in last year's Defense 
Authorization Act was important to our members and we certainly 
appreciate the work of Congress in providing TRANSCOM this 
authority, which simply authorizes TRANSCOM to take the steps 
necessary to improve the predictability of the DOD charter 
requirements.
    We will be working with USTRANSCOM as it begins to 
implement this authority. We want to ensure that the minimum 
buy is set at the right level of value to ensure appropriate 
subscription of carriers into the CRAF program. The total value 
must be sufficient to provide the appropriate incentives to 
upgrade the aircraft, which in turn can improve the overall 
efficiency for CRAF operations.
    While the minimum buy program goes a long way to help 
sustain the charter airline industry, there are other Federal 
policies that are equally important to the overall health of 
the charter industry in the United States. We are deeply 
concerned about the upcoming negotiations between the U.S. and 
the European Union as they continue discussion on the drafting 
of a second Open Skies agreement, which is intended to build 
upon the agreement which went into effect last March.
    It has been made clear within the context of initial 
negotiations and the exchange of correspondence that the EU is 
extremely interested in the further liberalization of U.S. laws 
and regulations. In particular, the Europeans are strongly 
interested in an agreement which would grant European carriers 
seventh freedom rights.
    For many years, the DOT has permitted foreign air carriers 
charter authority to fly U.S. passengers from the U.S. to third 
country destinations. A majority of the foreign carriers 
operating these flights pair with U.S. tour operators or other 
indirect air carriers in the winter months to run vacation 
programs from the U.S. to various destinations. These charters 
operate for extended periods of time, for up to four months or 
so, without ever returning to their home country.
    The primary reason that foreign carriers are used is price. 
At the height of the winter travel season in the U.S., carriers 
around the world are experiencing a low in passenger vacation 
flights, and these foreign carriers have the excess capacity 
and aircraft and are willing to offer them to U.S. tour 
operators at cost to simply meet the lease payments on the 
aircraft. The U.S. carriers simply cannot meet this competitive 
advantage, thus, resulting in the lost business for the U.S. 
charter airlines, and we believe an ultimate threat to the 
long-term viability of U.S. charter aircraft participation in 
CRAF.
    Despite some regulatory clarifications made by the DOT in 
2006, we believe that DOT is routinely approving seventh 
freedom charters in part because the DOT argues that it has 
total discretion in deciding what criteria it will use for 
granting such permission, as they consider this an extra 
bilateral issue. As I mentioned, this is taking renewed 
importance within the context of the second agreement 
negotiations. The EU has proposed to formally adopt seventh 
freedom passenger rights in any new agreement.
    We strongly oppose the adoption of seventh freedom traffic 
within the context of a second Open Skies agreement because we 
result it will result in destruction of the U.S. charter 
industry. First, there is no significant market in the EU for 
U.S. carriers to fly. Many EU residents use the extensive rail 
system and the advent of low-cost carriers like Ryan Air and 
Easy Jet. The charter market has become less viable in Europe 
today than before. Contrast that to the U.S., where air 
transportation is essential for tourists to reach their 
destinations.
    EU carriers are attractive to tour operators because they 
cost generally less than U.S. carriers. There is a significant 
difference in the cost of the U.S. regulations compared to 
foreign carriers. Basically, the FAA has authority only over 
making sure that crew members have valid pilot certificates and 
that aircraft have valid air worthiness certificates.
    In addition to seventh freedom rights, we have seen 
deterioration in the application of the Fly America Act, which 
requires that any contract for air transportation of passenger 
or property by any U.S. Government agency must be provided by 
U.S. air carriers. Fly America is an essential element in our 
national defense, as the U.S. is so dependent on the commercial 
air fleet for its airlift needs.
    Finally, I would just add, Mr. Chairman, I was going to 
talk a little bit about congestion, because that continues to 
be a problem. We certainly appreciate the work that this 
Committee has done in moving a long-term, financially stable 
program for funding NextGen to the FAA, which is long overdue.
    I was going to talk a little bit about the slot 
restrictions in New York, but I think Secretary LaHood today 
took care of that for us, so that will hopefully resolve itself 
through negotiations with DOT and the carriers. But, obviously, 
our carriers operate the entire air transportation system here 
subject to the same problems as our legacy carriers, so we 
appreciate the work and we look forward to working with you.
    Mr. Costello. The Chair thanks you, and let me say, as you 
know and I think everyone in the room knows, we passed our 
reauthorization bill in the House in September of 2007. We 
believe that that bill and the bill that we are about to move 
to the floor of the house, hopefully next week, has a robust 
funding mechanism not only to provide additional funding to the 
FAA to do things that they need to do as far as inspecting 
repair stations and a number of other things, but also provides 
a substantial amount of money to moving NextGen to its next 
step, which we all know is vitally important to the aviation 
system in the United States.
    I thank the gentleman for his testimony, and while I have 
you, all of you, you might, assuming that we get to the Floor 
next week and have the same positive result that we had in 2007 
in moving a bill out of the House, we would encourage you to go 
over to the other body and encourage them to pass a 
reauthorization bill so that we can get to conference and get a 
stable flow of funds into the system for the next three to four 
years.
    With that, the Chair now recognizes Dr. Graham.
    Mr. Graham. Thank you, Mr. Chairman.
    I directed the Institute for Defense Analyses' review of 
the viability of the CRAF program. IDA's August 2008 report has 
been released by DOD and is available to the public. I am 
pleased to be joined today by two of my coauthors, retired 
General H.T. Johnson and Dr. Jerome Bracken. I will take a 
couple minutes to briefly highlight the main themes of the IDA 
report, many of which have been hit upon already today.
    First, our main findings. Today, the CRAF program is robust 
and is meeting DOD's needs. U.S. airlines are providing between 
$2.5 billion and $3 billion of air services each year to DOD. 
These are mostly in support of Operation Enduring Freedom and 
Operation Iraqi Freedom. Through the CRAF teaming arrangements, 
the U.S. airlines today commit to provide over 650 long-haul 
aircraft if called upon to meet DOD's mobilization needs for a 
national emergency and a total commitment of over 1,000 
aircraft, as you heard earlier.
    Looking forward, DOD's continuing operational demands will 
contribute to a healthy program. But we have one concern that 
was identified in our report, which is the prospect of 
continued reductions in the fleets of the passenger charter 
airlines. Their commercial revenues are in long-term decline as 
the tour group business has migrated to the scheduled airlines. 
In contrast, the demand for the commercial cargo charter 
airlines is strong, so the cargo industry will not have 
difficulty in meeting DOD's future demands.
    To address this evolving situation in the airline industry, 
the principal recommendation of the IDA study is to implement 
an assured supply approach in contracting for CRAF. The primary 
goals of this approach are to set expectations and to create 
airline commitments to meet DOD's demands in all circumstances.
    USTRANSCOM needs to ask the airline industry to partner in 
meeting a range of both preplanned and probable needs through 
the normal charter contract. This would avoid too rapid a move 
to CRAF activation in the event of unplanned military 
operations short of all-out national emergencies. The CRAF 
participants need to be able to back up their obligations for 
assured supply. The approach should be flexible, but, to build 
a proper partnership, it may be desirable to establish separate 
passenger and cargo teams.
    In return for these commitments from the airlines, DOD 
would adopt proven practices that would strengthen the 
government-industry partnership. First, multi-year contracts 
would allow both USTRANSCOM and its industry partners to plan, 
invest, and organize their operations in a more efficient 
manner. Currently, Congress permits such long-term contracts 
under performance-based logistics in selected areas. We believe 
this authority should be extended to include airlift.
    Second, improvements in the sharing of planning information 
would help the airlines to make more efficient and effective 
investment decisions and help them to secure financing. Our 
report outlines a best practice approach that is in common 
commercial use.
    We also have recommended suspending the rule that requires 
the airlines to obtain no more than 40 percent of their 
revenues from DOD. In our view, this rule has outlived its 
original intent, and it likely will not be enforceable on a 
routine basis as the commercial revenues of the passenger 
charter segment continue to shrink.
    Our report outlines a number of other adjustments in the 
CRAF program designed to improve effectiveness and efficiency. 
These address CRAF rate-making procedures, actions to increase 
the monthly utilization rates for CRAF aircraft, the structure 
of the Air Medical Evacuation program, and the potential to 
substitute commercial aircraft for DOD airlift in current 
operations in order to preserve the life of DOD's fleet.
    DOD possesses most of the policy and management levers it 
needs to act on our recommendations, but Congress would need to 
act to extend multi-year contracting authority to CRAF.
    In summary, Mr. Chairman, as you have heard several times 
today, CRAF has been a terrific value for the American taxpayer 
and an effective partnership between government and industry. 
We believe that the assured supply contractual approach will 
help prepare both DOD and the airlines to keep the program 
viable for the foreseeable future.
    Thank you very much.
    Mr. Costello. The Chair thanks you, Dr. Graham, for your 
testimony and now recognizes the distinguished Chairman of the 
Full Committee, Chairman Oberstar.
    Mr. Oberstar. Thank you, Mr. Chairman.
    I regret that I have to pop in and out of the Committee 
hearing because of other Committee activity. I wanted to take 
this opportunity, though, to congratulate Fred Smith, President 
of FedEx, for the continued support of the Civil Reserve Air 
Fleet. Going back to my Chairmanship of the Aviation 
Subcommittee, FedEx was the most dependable and the broadest 
based participant in the Civil Reserve Air Fleet and had very 
constructive observations to make back in the 1980s and in 
1991, after Gulf War I, when a number of recommendations were 
made by FedEx and other carriers, and you still are at it.
    I wanted to comment on your request for more flexibility in 
the type of aircraft requested in peacetime for cargo 
movements. I think that is a good suggestion. There were 
limitations fixed in the three stages of call-up of Civil 
Reserve Air Fleet and in the peacetime operations that can be 
adjusted now. As the General noted in his testimony, civilian 
aircraft are stronger, have heavier lift capability, have 
longer range, more fuel efficiency today than they did 18-plus 
years ago.
    You also made a suggestion of the use of simulators for 
military flight training. Simulators are widely used in the 
civilian fleet and are very cost-efficient, cost-effective, and 
I am sure we will have an opportunity to discuss that with 
General McNabb later.
    A suggestion made by Dr. Graham just now that the provision 
limiting revenues for a carrier from CRAF to no more than 40 
percent of the operation, that was initiated back in 1952 and 
subsequently to keep fly-by-nights out of the operation to 
ensure or prevent any carrier becoming totally dependent upon 
the Civil Reserve Air Fleet for its operations, and I would 
like to have your comment on that, Mr. Smith.
    Mr. Smith. On the 60/40 thing, Mr. Chairman? Our opinion on 
it is pretty straightforward. It is currently not being 
enforced. The impact is primarily on the passenger side of the 
house, so our view is it should either be enforced or 
eliminated.
    I think, at the end of the day, the objective, as you 
mentioned a moment ago, is simply to ensure that the carrier 
that is providing services to the Department of Defense is on 
sound financial footing, and that could be accomplished in ways 
other than the 60/40 rule. So as long as the DOD can satisfy 
itself that the carriers are well funded, the equipment is 
modern and safe, it doesn't seem to us there is any particular 
reason for the 60/40 rule anymore, and, as I said, it is not 
being observed now.
    Mr. Oberstar. As long as the carrier has its fitness 
certificate, fit, willing, and able, meets those three 
criteria, you would be comfortable with that provision being 
removed?
    Mr. Smith. Yes, sir, I would, because I think as long as 
the DOD has the ability to assess the quality of the carrier 
services for its mission, you know, they are using modern 
airplanes, not junk airplanes, and things of that nature, and 
they are on sound financial footing, that is the objective of 
the 60/40 rule. So that can be accomplished in a way other than 
the 60/40 rule.
    Mr. Oberstar. Yes.
    Mr. Coretz. Mr. Oberstar, I would like to add that I agree 
with Mr. Smith. First of all, from a safety point of view, as 
General McNabb pointed out, not only are all the airlines 
sitting at this table required to meet FAA 121 standards from a 
regulatory point of view, but we are under further scrutiny and 
positive scrutiny direct by the DOD under the Civil Aeronautics 
Review Board.
    Secondly, at least from a passenger charter industry, if 
the 60/40 rule were enforced, there would be no passenger 
charter industry. Twenty years ago, 10 years ago, the passenger 
charter segment was $1.5 billion annual revenue stream; today, 
that is under an estimated $200 million.
    So I think the key is safety and that there are not the 
fly-by-night operations that you had brought up, and that is 
being very adequately enforced through regulatory compliance.
    Mr. Oberstar. Thank you. Thank you. I want to thank all the 
panel and thank General McNabb for his testimony earlier. I 
have to run off to another Committee responsibility, but I just 
wanted to take this opportunity again to compliment Federal 
Express on their consistent support of the Civil Reserve Air 
Fleet and the contributions, which were very substantial in 
Gulf War I and II.
    Thank you, Mr. Chairman.
    Mr. Costello. Thank you, Mr. Chairman. The Chair thanks 
Chairman Oberstar and now recognizes the gentleman from 
Arkansas, Mr. Boozman.
    Mr. Boozman. Thank you, Mr. Chairman.
    And thank all of you all for being here.
    Mr. Smith, do you see your level of CRAF participation 
continuing in the future?
    Mr. Smith. Yes, sir. I would see no reason that it would 
decline.
    Mr. Boozman. Okay.
    Any of the rest of you guys want to comment in that regard? 
Yes, sir.
    Mr. Flynn. At Atlas Air, we certainly remain committed to 
CRAF, and, as I commented in my written remarks, the new 
aircraft that we will begin to take delivery of will also be 
committed to CRAF as we on-board them to the fleet.
    Mr. Boozman. Good. Yes, sir.
    Mr. Coretz. I would add from a passenger point of view, 
Omni Air International is fully committed to meeting the 
passenger requirements on a continuing basis with CRAF.
    Mr. Bauer. And, of course, Evergreen. We have operated this 
program for many years and we continue to remain committed to 
the program.
    Mr. Boozman. Thank you, Mr. Bauer.
    Mr. Zoeller, in your written statement you discuss several 
provisions of the FAA reauthorization bill that, if enacted, 
will be very costly for your member airlines. Can you tell me, 
if enacted, what impact the implementation of these provisions 
might have on the CRAF program?
    Mr. Zoeller. Well, I think it goes really to the charter 
industry, and many of the carriers here are already low-cost 
operators over all. So the challenges that would be presented 
by some of those provisions would make their operating costs 
such that not to say that they would go out of business, but I 
think they would have to look for other business opportunities 
besides beyond the CRAF program.
    So when you are looking at sort of the entire context of 
issues that confront the charter industry today, those 
challenges that some of the provisions of reauthorization make 
it more challenging for the carriers to operate, so that cost 
structure just would make it more difficult for them to remain 
in business, I think. I think some of them could answer more 
specifically on that, but that is sort of the concern that our 
members have.
    Mr. Boozman. What do you think are some incentives we could 
do to perhaps have more modern aircraft usage in the CRAF 
program?
    Mr. Zoeller. Well, I think that is an issue that we have 
been working with General McNabb, and they are certainly aware 
in order to bring more aircraft, more efficient aircraft into 
the fleet, you have to have a higher utilization rate. I think 
a lot of credit has to be given to TRANSCOM and AMC, because 
they have been trying to reduce the block time for the carriers 
so that they can use the aircraft in other services.
    So that is one of the issues I think that is what we are 
looking at. I think also certainly the assured business model 
will at least provide some level of guarantee of revenue for 
the carriers that they will be able to go, hopefully, when we 
have a capital market, to go to the capital market and be able 
to acquire some of the aircraft.
    Mr. Boozman. Mr. Graham, in conducting your study of the 
CRAF program, did you interview or talk to any of the air 
carriers participating in the CRAF program?
    Mr. Graham. This was our third or fourth study of the CRAF 
program. We have met with the carriers I guess throughout the 
time that we have conducted these studies. We did not meet with 
anyone during the course of this particular study. We briefed a 
meeting where all of the airlines participated at TRANSCOM in 
January of this year, after concluding this study, and we had 
met with a large group of carriers about 15 months before that.
    Mr. Boozman. Very good. At least one of the CRAF 
participants has expressed concern that a multi-year contract 
will be a disincentive for CRAF participation, rather than an 
incentive. What was IDA's reasons for believing that multi-year 
contracts would improve the program?
    Mr. Graham. If you look at the general DOD rationale for 
multi-year contracts, they are put in place when companies that 
are supplying services to the government are required to do 
their business efficiently and effectively to make investments 
that are specialized to the relationship with the government in 
providing services to the government. Looking forward in the 
CRAF program at the degree of commitment that some airlines are 
going to have to make to the government business, we think that 
rationale applies squarely in this case as well.
    Mr. Boozman. Okay. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Costello. The Chair thanks the gentleman.
    Mr. Smith, I want to join in Chairman Oberstar's comments 
about FedEx's commitment to the CRAF program; it is well known, 
well documented, and the program would not be as successful as 
it has been without the commitment of FedEx, as well as others, 
but in particular FedEx. So we thank you and we assume that 
your company will stay committed to the CRAF program in the 
future.
    I only have a few questions just for the record, so we can 
clarify a few things for the record. In your testimony, you say 
that FedEx opposes a system where team members must commit a 
certain level of peacetime and surge flying. I wonder if you 
might explain why FedEx opposes that.
    Mr. Smith. Well, Mr. Chairman, we think that the current 
team concept works well for the DOD's requirements. Simply put, 
you know, if it ain't broken, don't fix it. The team concept 
has provided, over the years, a lot of flexibility on the part 
of the carriers to meet the DOD's needs, and the more you put 
rigidity into that process, the less flexible the system is 
going to be.
    So we just don't concur with the idea that somehow this 
system is not meeting the needs of DOD, except to the extent, 
as has been brought out in the testimony, that aircraft that 
are primarily passenger charter airplanes only are declining. 
So with that one proviso there, we think that the teaming 
concept works well.
    Mr. Costello. Dr. Graham, in your testimony you suggest 
that CRAF teams should either specialize in either cargo or 
passenger. I wonder if you might elaborate on the record.
    Mr. Graham. To be very clear, our point is that the CRAF 
teams should be capable of meeting the commitments that they 
make for meeting the ups and downs in day-to-day business, and 
our point is that, in order to be able to back up those 
commitments, it may require the teams to specialize. We are not 
advocating that they specialize.
    Mr. Costello. Any other member on the panel want to 
comment? Yes, Mr. Coretz.
    Mr. Coretz. I would comment. It was brought out earlier by 
General McNabb about ATA and the failure of ATA, and the team 
structure proved that there was very little disruption in 
service. Certainly, when any airline fails, there is going to 
be some disruption, but the other team members stepped up to 
the plate to provide the immediate lift required by USTRANSCOM. 
In addition, FedEx actually paid for seats on scheduled traffic 
in order to ensure that that business that was committed 
through the team structure was actually flown. So I think that 
has quite well proven the value of the teams.
    Mr. Costello. Mr. Bauer?
    Mr. Bauer. Evergreen, of course, is a member of the 
Alliance team, which makes up probably the largest 
participation of the legacy carriers, commercial passenger 
carriers. At the same time, we do a significant amount of the 
cargo flight. The team basically manages itself to balance that 
commitment both at the primary carriers and then having the 
secondary carriers to provide the lift in the call-ups.
    Mr. Costello. Dr. Graham, you indicate in your testimony 
that TRANSCOM should revise its charter service rate-making to 
level the playing field for modern and classic aircraft. I 
wonder if you might elaborate on that.
    Mr. Graham. Yes. We have looked at the rate-making formulas 
and practices at AMC and TRANSCOM, and without going into a lot 
of details, the situation is that it is possible to earn a much 
higher rate of return on an older aircraft in the program just 
because the way rates are calculated today.
    In looking forward, we were trying to think of a way that 
would help to manage the transition from the current generation 
of aircraft that are in the CRAF program to a next generation 
of aircraft. If you consider the choices that an airline would 
have to make with an old aircraft today, they will come to a 
point where a major inspection will reveal problems--this is 
just a fact of life--that will require either a major 
investment in maintaining that aircraft, or trading in that 
aircraft for a more modern aircraft, or parking the aircraft 
that they have got and reducing the amount of capacity that 
they offer to the government.
    We think the rate-making process should encourage a 
decision to modernize the aircraft, so the recommendations that 
we made specifically would have been to essentially allow the 
airlines to earn the same rate of return on a newer aircraft as 
they earn on the older aircraft, which would allow them, when 
they have to make the decision about the future of their 
offering to DOD to choose to provide modern capacity.
    Mr. Costello. To the point that Dr. Graham makes, Mr. 
Flynn, you indicate in your testimony that, if there was a 
greater commitment on behalf of TRANSCOM, that it would result 
in CRAF carriers' ability to seek and get financing to 
modernize their fleet on an assured business comment. Do you 
want to comment?
    Mr. Flynn. Yes, thank you, Mr. Chairman. That comment in 
our testimony essentially builds on what Dr. Graham said, that 
new aircraft, for example, a new 747-8, is going to cost 
somewhere around $180 million for one plane. Now, it will 
deliver to CRAF, for example, substantially lower fuel burn, as 
well as substantially more cargo capacity. But if an adequate 
level of return can't be generated on the aircraft, it is hard 
to commit it and make those kinds of investments.
    Mr. Costello. And the commitment that you are speaking of, 
that if TRANSCOM made more of a commitment, it is the same 
commitment Dr. Graham is talking about, rate-making to level 
the playing field?
    Mr. Flynn. Well, I think it is a couple of things. It is 
certainly rate-making to reflect the capital investment in the 
newer asset, but then combined with it would be some of the 
initiatives that General McNabb talked about earlier. In his 
written testimony he has talked about a pilot program running 
aircraft direct from the U.S. to Turkey and perhaps to Kuwait, 
and at the same time ensuring the maximum loadability of that 
aircraft.
    The combination of rate-making that reflects the capital 
commitment and some of the simple supply chain innovations that 
General McNabb talked about will allow the carrier to earn a 
return, have good utilization on his aircraft, and, we believe, 
ultimately lower the cost to the taxpayer because TRANSCOM 
would achieve the lowest cost per pound to move freight from 
the United States to some operating theater overseas.
    Mr. Costello. I thank you.
    I want to let our witnesses know today that there are a 
number of Members who could not be here because there are other 
hearings going on, a lot going on today on Capitol Hill. In 
fact, I have another markup going up right now that I will be 
going to in just a few minutes, so we are about to conclude. 
But I wonder if any of you would like to offer, in addition to 
your written testimony, your comments, any other comments that 
you would want to offer to us to put into the record concerning 
not only your testimony, but the testimony of the other 
witnesses.
    I would turn to you, Mr. Smith, first.
    Mr. Smith. Well, Mr. Chairman, I think we have laid out our 
position about CRAF and our commitment to it. I mentioned that 
we do not have any intention of decreasing our commitment to 
the CRAF program. We have not made a decision yet as to whether 
we will put in the new long-range 777 airplanes that we have on 
order; we have 30 of them on order.
    And I would be remiss, and I am sorry the Chairman isn't 
here, if I didn't express to this Committee again our strong 
opposition to the Railway Labor Act provision that concerns 
FedEx that was in the FAA reauthorization bill. We think it 
overturns over a century of knowledge. FedEx Express has always 
been under the Railway Labor Act; its ground operations exist 
only to service the air carriers.
    The issue was litigated; the Ninth Circuit Court found that 
it was correctly configured. Alternatively, UPS, which has a 
very different genealogy, that issue was also litigated and 
firmly decided in the Second Circuit Court of Appeals, and it 
is an issue that, quite frankly, we feel is a major public 
policy issue and an issue that, if that is what the Congress 
wants to look at it, it ought to be subject to hearings and a 
separate piece of legislation where the public interest can be 
represented in terms of the customers that rely on these 
systems.
    It is a very important issue to us and, as you may know, 
such a big issue that, when we exercise the option on our 
remaining 15 777s, those orders are conditional that FedEx 
Express remains a Railway Labor Act carrier, those orders are 
cancelled. And it isn't because there is any peak on our part 
in any way, shape or form, it is simply a reflection of the 
board of directors of FedEx understanding that the purpose of 
the Railway Labor Act is that a system has to be a hole, that 
it can't be subject to local labor disruptions. That is why it 
was passed in 1926, after 50 years of failed labor laws. So it 
is a huge issue to us and it will have an impact on our company 
if that passes.
    Mr. Costello. Well, I thank you and I am sure that we have 
had a lively debate on the issue in the Full Committee. I am 
sure, when we get to the floor, that that will be one of the 
issues that will be fully debated not only on the floor, but if 
we get into conference as well. If it is still in the bill in 
conference, it will be certainly a subject of lively debate.
    The Chair now recognizes Mr. Coretz.
    Mr. Coretz. Thank you, Mr. Chairman. I would say that if 
you ask the average American what they knew about the CRAF 
program, they would wonder what you are talking about, and the 
reason is it works. It is a program that has been 
noncontroversial, a benefit to the taxpayer, and it is a really 
strong program that works in concert, as everybody has said 
across this table, in partnership with industry and government.
    The two points I would like to stress is, A, we do applaud 
and commend the legislation that approves the assured business 
model. Our hope now is a continuation of dialog between 
government, USTRANSCOM, and industry to implement those dollars 
effectively and to implement those dollars where they best use 
and create effective lift capacity for USTRANSCOM. I think it 
is key to get that legislation or the issuance of those dollars 
appropriated correctly.
    Secondly, as far as equipment that we talked about, I would 
just like to add a comment. In order to add new modern, 
efficient aircraft, it is a function of either a higher rate to 
pay for it or higher utilization. The current historic DOD 
utilization for a passenger airplane is eight hours a day. If 
the utilization were 12, 14 hours a day, we could justify newer 
equipment. However, we don't feel that we are in a position to 
change how our customer does business; they are unique, 
distinct, and their historical perspective or use of aircraft 
evolves around an eight-hour-a-day utilization model.
    So, in summary, I would say to that point I think industry 
needs to determine when it is best to equip aircraft with a 
different generation or type.
    Mr. Costello. The Chair thanks you.
    Mr. Bauer?
    Mr. Bauer. I would like to thank the Committee for the 
opportunity, also thank TRANSCOM for the opportunity to provide 
the service; we appreciate it. Just to sum it up, I am going to 
steal from Mr. Smith. If it ain't broke, don't fix it.
    Mr. Costello. Mr. Flynn.
    Mr. Flynn. Thank you, Mr. Chairman. We appreciate the 
opportunity to be here today. I think I speak for all the 
witnesses here today: we think CRAF works very well. We 
appreciate your leadership and the leadership of General 
McNabb, and we think there are some incremental improvements 
that can be made which will ultimately result in a more 
efficient system for TRANSCOM and for the taxpayer. Thank you, 
sir.
    Mr. Costello. Mr. Zoeller?
    Mr. Zoeller. Thank you, Mr. Chairman. Just to follow up on 
the exchange earlier with some of the members and General 
McNabb about counter MANPADS, and I think there is still an 
interest on some of our members about exploring a feasibility 
study to see if such a program would work. As you know, 
Department of Homeland Security had a program and we think 
there is at least some interest on the part of our carriers to 
look at that to see if that could be applied in the CRAF 
environment that could provide an added level of safety to the 
missions and provide more opportunities for the carriers.
    Mr. Costello. Dr. Graham.
    Mr. Graham. I guess my final comment would be that the 
issues facing the CRAF program are on the table. I think there 
has been a commendable amount of communication between the 
government and industry on these issues and kind of a healthy 
exploration of options as to how to move forward.
    Mr. Costello. Well, the Chair thanks all of you for being 
here today, for offering your testimony and answering the 
questions. I am aware that a few Members will be submitting 
questions in writing that we would ask that we would submit to 
you and ask you to submit an answer in writing so we can share 
that for the record with the Members who have expressed an 
interest in certain issues.
    Obviously, the CRAF program is working well. As General 
McNabb testified, there is always room for improvement, and 
that is his job and our job, all of us, to continue to seek 
improvements in the CRAF program and other programs that we 
have responsibility for. So we stand ready as a Subcommittee to 
work with TRANSCOM and to work with our private partners as 
well in making this program even more efficient and more 
successful in the future.
    Again, we thank you for your testimony and we look forward 
to working with you in the future.
    That concludes the hearing and the Subcommittee will stand 
adjourned.
    [Whereupon, at 12:53 p.m., the Subcommittee was adjourned.]

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