[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]







               AIR SERVICE TO SMALL AND RURAL COMMUNITIES

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

                                (113-69)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                                AVIATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 30, 2014

                               __________

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             Committee on Transportation and Infrastructure



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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska                    NICK J. RAHALL, II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         ELEANOR HOLMES NORTON, District of 
JOHN J. DUNCAN, Jr., Tennessee,          Columbia
  Vice Chair                         JERROLD NADLER, New York
JOHN L. MICA, Florida                CORRINE BROWN, Florida
FRANK A. LoBIONDO, New Jersey        EDDIE BERNICE JOHNSON, Texas
GARY G. MILLER, California           ELIJAH E. CUMMINGS, Maryland
SAM GRAVES, Missouri                 RICK LARSEN, Washington
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
CANDICE S. MILLER, Michigan          TIMOTHY H. BISHOP, New York
DUNCAN HUNTER, California            MICHAEL H. MICHAUD, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas  GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas              TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana               STEVE COHEN, Tennessee
BOB GIBBS, Ohio                      ALBIO SIRES, New Jersey
PATRICK MEEHAN, Pennsylvania         DONNA F. EDWARDS, Maryland
RICHARD L. HANNA, New York           JOHN GARAMENDI, California
DANIEL WEBSTER, Florida              ANDRE CARSON, Indiana
STEVE SOUTHERLAND, II, Florida       JANICE HAHN, California
JEFF DENHAM, California              RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin            ANN KIRKPATRICK, Arizona
THOMAS MASSIE, Kentucky              DINA TITUS, Nevada
STEVE DAINES, Montana                SEAN PATRICK MALONEY, New York
TOM RICE, South Carolina             ELIZABETH H. ESTY, Connecticut
MARKWAYNE MULLIN, Oklahoma           LOIS FRANKEL, Florida
ROGER WILLIAMS, Texas                CHERI BUSTOS, Illinois
MARK MEADOWS, North Carolina
SCOTT PERRY, Pennsylvania
RODNEY DAVIS, Illinois
MARK SANFORD, South Carolina
DAVID W. JOLLY, Florida
                                ------                                

                        Subcommittee on Aviation

                FRANK A. LoBIONDO, New Jersey, Chairman
THOMAS E. PETRI, Wisconsin           RICK LARSEN, Washington
HOWARD COBLE, North Carolina         PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee       EDDIE BERNICE JOHNSON, Texas
SAM GRAVES, Missouri                 MICHAEL E. CAPUANO, Massachusetts
BLAKE FARENTHOLD, Texas              DANIEL LIPINSKI, Illinois
LARRY BUCSHON, Indiana               STEVE COHEN, Tennessee
PATRICK MEEHAN, Pennsylvania         ANDRE CARSON, Indiana
RICHARD L. HANNA, New York           RICHARD M. NOLAN, Minnesota
DANIEL WEBSTER, Florida              DINA TITUS, Nevada
JEFF DENHAM, California              SEAN PATRICK MALONEY, New York
REID J. RIBBLE, Wisconsin            CHERI BUSTOS, Illinois
THOMAS MASSIE, Kentucky              CORRINE BROWN, Florida
STEVE DAINES, Montana                ELIZABETH H. ESTY, Connecticut
ROGER WILLIAMS, Texas                NICK J. RAHALL, II, West Virginia
MARK MEADOWS, North Carolina           (Ex Officio)
RODNEY DAVIS, Illinois, Vice Chair
BILL SHUSTER, Pennsylvania (Ex 
    Officio)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    iv

                               TESTIMONY

Hon. Susan L. Kurland, Assistant Secretary for Aviation and 
  International Affairs, U.S. Department of Transportation.......     5
Gerald L. Dillingham, Ph.D., Director, Physical Infrastructure 
  Issues, U.S. Government Accountability Office..................     5
Captain Lee Moak, president, Air Line Pilots Association, 
  International..................................................     5
Bryan K. Bedford, chairman, president and chief executive 
  officer, Republic Airways......................................     5
Dan E. Mann, AAE, executive director, Columbia Metropolitan 
  Airport........................................................     5
Brian L. Sprenger, airport director, Bozeman Yellowstone 
  International Airport..........................................     5

           PREPARED STATEMENT SUBMITTED BY MEMBER OF CONGRESS

Hon. Elizabeth H. Esty, of Connecticut...........................    39

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Hon. Susan L. Kurland............................................    40
Gerald L. Dillingham, Ph.D.......................................    49
Captain Lee Moak.................................................    76
Bryan K. Bedford.................................................    86
Dan E. Mann, AAE.................................................   102
Brian L. Sprenger................................................   107

                       SUBMISSIONS FOR THE RECORD

Hon. Richard M. Nolan, a Representative in Congress from the 
  State of Minnesota, request to submit the following items into 
  the record:

    Robert W. Anderson, mayor, city of International Falls, 
      Minnesota, letter to Hon. Frank A. LoBiondo, a 
      Representative in Congress from the State of New Jersey, 
      April 30, 2014.............................................    21
    James L. Oberstar, Member of Congress from 1975-2011, letter 
      to Hon. Anthony Foxx, Secretary, U.S. Department of 
      Transportation, April 28, 2014.............................    23

                        ADDITIONS TO THE RECORD

Captain Keith Wilson, president, Allied Pilots Association, and 
  Captain Bob Coffman, chairman, Government Affairs Committee, 
  Allied Pilots Association; joint written statement.............   113
Coalition of Airline Pilots Associations, written statement......   114
Craig A. Moffatt, executive board president, Teamsters Local 
  Union No. 357, written statement...............................   120
Families of Continental flight 3407, written statement...........   124
Hon. Blake Farenthold, a Representative in Congress from the 
  State of Texas, request to submit a letter from D. Dale Fowler, 
  CEcD, president, Victoria Economic Development Corporation, 
  April 29, 2014.................................................   129


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               AIR SERVICE TO SMALL AND RURAL COMMUNITIES

                              ----------                              


                       WEDNESDAY, APRIL 30, 2014

                  House of Representatives,
                          Subcommittee on Aviation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:02 a.m. in 
Room 2167, Rayburn House Office Building, Hon. Frank A. 
LoBiondo (Chairman of the subcommittee) presiding.
    Mr. LoBiondo. Good morning. The subcommittee will come to 
order.
    Before we get started, Mr. Larsen and I would like to 
recognize the Colgan Air families for being here. We want to 
thank you for your advocacy, we want to thank you for being 
involved and making a difference. And we are very pleased that 
you are here today.
    I ask unanimous consent that Members not on the 
subcommittee be permitted to sit with the subcommittee at 
today's hearing to offer testimony and to ask questions.
    [No response.]
    Mr. LoBiondo. Without objection, so ordered.
    Today we look forward to hearing from the Department of 
Transportation, the Government Accountability Office, and 
industry stakeholders on an important topic to our country: air 
service to small and rural communities. Airports are vital 
elements of our Nation's infrastructure. They enable millions 
of passengers to travel through the United States and to the 
rest of the world. Airports are economic drivers for many 
communities across the United States, contributing millions of 
jobs to our economy, and generating trillions of dollars in 
economic input. They serve as staging points for lifesaving 
emergency services, as well as a lifeline to many rural or 
remote communities. The impact of airports is felt way beyond 
the tarmac and the terminal.
    In recent years, smaller airports in the U.S. have, for a 
variety of reasons, experienced a decrease in air service. The 
subcommittee is interested in hearing from the witnesses about 
the Federal programs that exist to assist in delivering air 
service to small and rural communities, and how they are being 
utilized. We are also very interested in hearing about 
innovative approaches that industry stakeholders from airports 
to air carriers to local communities have taken to retain or to 
be able to increase that service.
    I am well aware of how important airports are to local 
communities. In my own district we have seen an increase in 
routes, bringing new air service to Atlantic City International 
Airport. And, starting on April 1st, United began two new 
direct routes to Houston and Chicago from Atlantic City. We 
believe this level of service is the type of increase that will 
help local businesses and the economy.
    As we hear more about the types of successes later, I can 
tell you that it is not something that just happens overnight. 
It takes a lot of hard work, a lot of coordination on the local 
level, a true community effort. And the end result is what 
makes all that hard work worth it.
    I look forward to hearing from our witnesses, and thank 
them for joining us today.
    Before I recognize my colleague, Mr. Larsen, for his 
comments, I would like to ask unanimous consent that all 
Members have 5 legislative days to revise and extend their 
remarks, and include extraneous material for the record of this 
hearing.
    [No response.]
    Mr. LoBiondo. Without objection, so ordered. And now I 
would like to yield to Mr. Larsen.
    Mr. Larsen. Thank you, Mr. Chairman. I too want to 
recognize the Colgan Air families, and thank you for your 
continued advocacy to help improve air safety here in the 
United States.
    Mr. Chairman, residents of remote, small communities across 
the country connect to national and international aviation 
systems through our smaller airports and the regional carriers 
that serve them. Air service not only connects these 
communities to the economy, but serves as a lifeline for 
emergency services, disaster relief, and delivery of time-
sensitive cargo. And as we begin to consider the next FAA 
reauthorization, today's hearing helps us assess some of these 
issues and challenges facing small community air service.
    In 1978, Congress enacted the Airline Deregulation Act, 
which phased out the Federal Government's control over domestic 
air fares and routes. Since the deregulation, airlines have 
largely been free to decide where to fly. And, as a 
consequence, small communities have struggled to attract and 
retain air service. And almost four decades later, air service 
in the U.S. is, not surprisingly, highly concentrated at the 
largest airports, where routes are more profitable. Eighty-
eight percent of passengers board at sixty-two large or medium-
hub airports.
    Further, in recent years we have seen a significant airline 
industry restructuring, in part as a response to recessions and 
increasing fuel prices. Since 2005, there have been three 
mergers involving six major U.S. legacy carriers, and greater 
capacity discipline throughout the industry. There is no doubt 
that these recent developments have had a major effect on small 
community service.
    From 2007 to 2012, roughly 1.4 million yearly scheduled 
domestic flights have been cut. And during that same time 
period, the 29 largest airports lost 8.8 percent of the 
scheduled domestic flights, while the impact is 
disproportionate as small-, medium-, and non-hub airports have 
lost 21.3 percent of the scheduled domestic flights.
    So, today this committee will hear from two airport 
directors about proactive and innovative steps they have taken 
in their small communities to attract and retain air service. 
But despite these examples of strong local leadership, 
maintaining a truly national air transportation system does 
require a sustained Federal commitment.
    When Congress deregulated the airlines in 1978, it also 
recognized that the market alone could not reliably maintain 
air service to small communities. Therefore, Congress created 
the Essential Air Service program, the EAS program, which 
guaranteed that communities served by carriers before 
deregulation would continue to receive air service.
    So we can't have it both ways. We can't support small 
community air service, while advocating for the elimination of 
the EAS program. A House-passed authorization bill in 2011 
would have eliminated the EAS program everywhere except Alaska 
and Hawaii. And earlier this month, the House-passed budget 
doubled down on that policy by ending service to small 
communities by proposing to phase out the EAS program.
    Now, Mr. Chairman, you and I have both stated several times 
in the past few months that we have every intention to craft a 
bipartisan FAA reauthorization bill. So I hope, in the next 
reauthorization, efforts to dismantle EAS are a nonstarter from 
the get-go. And I look forward to working with my colleagues on 
both sides of the aisle to preserve and strengthen this 
important program that guarantees service to more than 160 
small communities across the country.
    And finally, Mr. Chairman, in 2010 Congress mandated new 
pilot training, qualification, and work-hour rules that have 
only recently come into effect. Some regional carriers that 
serve small communities claim they are having difficulty hiring 
pilots because of these new safety regulations. Just last 
month, the GAO examined this issue and reported that, in fact, 
a large pool of qualified pilots exists, relative to projected 
demand. But whether such pilots are willing or available to 
work at the wage that is being offered is unknown.
    According to GAO, the average base entry-level salary at 
regional airlines--at the airlines examined equates 
approximately $21,600 a year. And, according to the Wall Street 
Journal, Great Lakes Airlines, the carrier with the largest 
presence in the EAS program, offers entry-level starting 
salaries of $16,500 a year. And, not surprisingly, Great Lakes 
claims it is having a hard time hiring new pilots, and has cut 
service to a handful of EAS communities. And, to date, the 
Department of Transportation has been successful in finding 
replacements for most of these communities.
    But we ought to be clear, Mr. Chairman, that Congress 
enacted the 2010 safety law to improve safety. However, the 
investigations in the 2009 Colgan Air flight 3407 tragedy 
revealed a two-tiered airline industry labor structure, that 
was broken. And, for over a decade, industry consolidation and 
cost cutting at regional airlines led to lower and lower 
airline pilot pay, and a race to the bottom that is destroying 
the American airline pilot profession. That situation is not 
sustainable.
    Moreover, I also believe the Department must examine its 
relationship to EAS carriers that are paying pilots minimum and 
poverty-level wages. The race to the bottom should not be 
driven by carriers whose broken business models are sustained 
largely by Federal contracts.
    Moreover, it is not realistic for the Department to assume 
that these carriers can provide reliable service when they 
cannot attract new pilots by offering a livable wage.
    So, these are very tough issues we are facing, Mr. 
Chairman, but I look forward to exploring them with you, and 
thank you, and look forward to hearing from our witnesses.
    Mr. LoBiondo. Thank you, Mr. Larsen. And before we go to 
our panel, I would like to recognize Chairman Shuster. Before I 
do that, though, I would like to thank Mr. Shuster and Mr. 
Rahall for the particular attention they are paying to aviation 
industry issues, to the stakeholder problems, to participating 
in what we are doing on an aviation standpoint, and recognizing 
the critical importance from a safety standpoint and an 
economic standpoint.
    And, Mr. Chairman, thank you, and you are recognized.
    Mr. Shuster. Thank you, Mr. Chairman. First I want to thank 
the chairman for those kind words. And I appreciate that he and 
Mr. Larsen are working so hard and diligent on the issues that 
face aviation in America, which I think are serious. And we 
really need to pay attention to it. And, as I have said in a 
number of statements and speeches, we really need to look at 
how we operate, whether it is in manufacturing, and the 
pressure they are under from foreign competition, or our 
airlines, the competition that they are facing out there, to 
the burdens we put on both segments or all segments of the 
aviation industry from the Government. So, again, we have 
started a discussion, and I appreciate Mr. Larsen and Mr. 
LoBiondo's participation.
    I too want to thank the Colgan Air families for their 
efforts. Thanks for being here today, and we look forward to 
continuing to work with you.
    In my home State of Pennsylvania, aviation plays a critical 
role in our economy, supporting over 300,000 jobs. With 
continued investment in our national aviation system, small and 
rural communities will be able to stay connected to our 
Nation's larger cities and markets. Airports in my district--we 
have got Altoona-Blair County Airport and the neighboring 
district, the Johnstown Airport--act as economic engines in 
attracting and supporting businesses. The airport provides a 
critical link to the rest of the country that is necessary for 
local businesses to thrive and reach markets that otherwise may 
not be possible.
    Sheetz Corporation, for those of you that have ever 
traveled to Pennsylvania or outside Washington, a very 
successful convenience store operator in my district, 
headquartered in my district. It relies on the transportation 
network around the Altoona-Blair County Airport to remain 
successful. Without that vital link the airport provides in 
connecting to the rest of the country, many businesses like 
Sheetz would be forced to operate elsewhere.
    But in small and rural areas across the country, like the 
district that I represent, we have seen a reduction in overall 
air service, market consolidation, Government mandates on pilot 
training, and other economic factors all play a significant 
role in the trends that we have seen. I am committed to finding 
solutions that will help retain and protect critical air 
services to keep small and rural airports up and running, 
protect jobs, and provide the critical assets to those local 
economies.
    I look forward to hearing from our panel today, thank all 
of our panel members for being here and taking the time, 
especially the two airport directors, the steps they have taken 
to keep their airports central to the local economy. You are 
the guys on the ground who are always looking for ways to 
improve the airports and generate local business, and we 
appreciate that.
    And, with that, Mr. Chairman, I yield back.
    Mr. LoBiondo. Thank you, Mr. Shuster. And now we are going 
to turn to our panel. Our witnesses today are the Honorable 
Susan Kurland, Assistant Secretary for Aviation and 
International Affairs at the Department of Transportation. A 
frequent guest, Dr. Dillingham--we are happy you are back. Dr. 
Dillingham is Director of Physical Infrastructure Issues for 
the U.S. Government Accountability Office. Captain Lee Moak, 
also another frequent guest. Captain, thank you for being here. 
He is the president of the Air Line Pilots Association. Mr. 
Bryan Bedford, chairman, president and CEO of Republic Airways. 
Mr. Dan Mann, executive director of the Columbia Metropolitan 
Airport, and Mr. Brian Sprenger, airport director of Bozeman 
Yellowstone International Airport.
    Secretary Kurland, you are recognized for your statement.

  TESTIMONY OF HON. SUSAN L. KURLAND, ASSISTANT SECRETARY FOR 
    AVIATION AND INTERNATIONAL AFFAIRS, U.S. DEPARTMENT OF 
TRANSPORTATION; GERALD L. DILLINGHAM, PH.D., DIRECTOR, PHYSICAL 
 INFRASTRUCTURE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; 
   CAPTAIN LEE MOAK, PRESIDENT, AIR LINE PILOTS ASSOCIATION, 
INTERNATIONAL; BRYAN K. BEDFORD, CHAIRMAN, PRESIDENT AND CHIEF 
    EXECUTIVE OFFICER, REPUBLIC AIRWAYS; DAN E. MANN, AAE, 
EXECUTIVE DIRECTOR, COLUMBIA METROPOLITAN AIRPORT; AND BRIAN L. 
 SPRENGER, AIRPORT DIRECTOR, BOZEMAN YELLOWSTONE INTERNATIONAL 
                            AIRPORT

    Ms. Kurland. Chairman LoBiondo, Chairman Shuster, Ranking 
Member Larsen, and members of the subcommittee, I appreciate 
the opportunity to appear before you to discuss the state of 
air service at small and rural communities. Like Congress, the 
Department understands how vitally important air service links 
are to these communities. I will concentrate my remarks on two 
congressionally mandated programs that the Department 
administers, which provide communities with resources to 
address their air service needs: the Essential Air Service 
program, EAS; and the Small Community Air Service Development 
Program, SCASDP.
    The EAS program currently subsidizes service to 160 
communities nationwide, including 43 in Alaska. The program 
connects rural America with the rest of our country and, 
indeed, with the entire world. The financial investment in 
achieving that connectivity has, in a number of cases, led 
communities to being able to substantially reduce or even 
eliminate their need for Federal subsidy.
    For instance, between 2011 and 2013, with the right 
carrier, equipment, and frequency levels, Joplin, Missouri, saw 
its annual subsidy need drop from $2.8 million to $340,000. 
Further, examples of communities that have been able to 
eliminate Federal subsidies include Rock Springs in Riverton, 
Wyoming; Dickinson, North Dakota; and Manhattan, Kansas.
    Unfortunately, the program's ability to match the right 
carrier, equipment, and frequency level is becoming 
increasingly more challenging. Several airlines that had 
traditionally served EAS communities have shut down or 
withdrawn from the program, leaving it with fewer carriers and 
higher costs. In addition, residents of many EAS communities 
are choosing to drive to cities where low-fare service options 
are offered, thereby reducing enplanement levels on EAS 
services.
    Right-sizing equipment has also become much more difficult, 
because the number of regional airlines that have the 
appropriately sized equipment for the program has continued to 
decline. For the last 20 years or more, the backbone of the EAS 
program has been the 19- to 34-seat aircraft. However, those 
aircraft are aging and being retired with no replacement 
aircraft of comparable size.
    And, finally, a number of recent developments in the 
industry have resulted in a current shortage of pilots, which 
has caused a strain in carriers' abilities to serve small 
communities. As Congress debates reauthorization of aviation 
programs, I think there will be an opportunity for a 
comprehensive discussion of these issues and how best to 
address them. And I want to commend the subcommittee for 
getting an early start on that process.
    The Department also administers SCASDP. Small communities 
apply for these grants, which the Department awards annually, 
based on a comparative analysis of proposals. Over the last few 
fiscal years, the annual SCASDP budget has been $10 million or 
less, and the Department has awarded an average of about 25 
grants a year.
    The program has clearly experienced some notable success 
stories. For example, after the Department awarded a grant to 
the Akron-Canton Airport in Ohio to support new nonstop flights 
to LaGuardia, traffic increased by 100 percent. And this 
service is still in place today. Among other communities that 
have experienced similar success are Provo, Utah, and 
Harrisburg, Pennsylvania.
    Some independent reviews have concluded that the program 
has had a limited success rate. However, it is important that 
the criteria for measuring a successful outcome reflect 
Congress' goals for the program. In a program designed to 
foster innovative approaches among communities that have had 
the most difficulty in attracting and sustaining air service on 
their own, there will inevitably be some grants that do not 
completely fulfill sponsors' objectives.
    The Department views SCASDP as a laboratory for communities 
to explore creative ideas to develop their air service. Our 
transparent process in administering the program allows 
communities to learn what works and what does not, and to use 
its collective experience in their own air service development 
plans.
    Mr. Chairman, this concludes my testimony. I would be happy 
to answer any questions that you or your colleagues may have. 
Thank you.
    Mr. LoBiondo. Thank you, Madam Secretary.
    Dr. Dillingham, you are recognized.
    Dr. Dillingham. Thank you, Mr. Chairman. Chairman Shuster, 
Ranking Member Larsen, members of the subcommittee, it is 
always a pleasure, always an honor to be invited before the 
subcommittee.
    Since 2001, the Nation's airline industry has experienced 
considerable turmoil, including two economic downturns, the 
events of 9/11, and rising fuel cost, as well as several 
airline bankruptcies and restructuring. Over the last 4 years, 
however, the airline industry has rebounded, becoming more 
profitable, in part due to the better management of available 
capacity. In fact, our research shows that the number of 
flights since 2007 has declined for all sizes of airports, with 
the notable exception of EAS airports.
    The situation for small communities is exacerbated by a 
range of factors, including the decline of population in small 
communities, and what we sometimes refer to as leakage of 
potential small airport customers to nearby airports with more 
frequent and lower priced service. Other factors on the horizon 
include the phasing out of the perimeter rule, the lack of 
qualified pilots, and FAA's recent tentative order that EAS 
communities must have an average of 10 enplanements per day to 
participate in the EAS program.
    My statement this morning focuses on three issues: how the 
EAS and the Small Community Air Service Development Programs 
have affected service to small communities, and suggestions to 
enhance the connectivity of those communities to the national 
transportation network.
    Regarding the EAS program, overall, the size and cost of 
the program has increased. Specifically, between 2002 and 2012, 
the number of communities participating in the program has 
grown from 94 to 160. The total annual subsidy for the program 
has increased steadily, from $89.6 million in 2002 to as much 
as $225 million in 2012. The per community subsidy has also 
increased during that same time period, almost doubling from $1 
million to just under $2 million. EAS airports, as a whole, 
have also experienced an increase in service since 2007. 
However, as of 2013, planes serving airports that provide EAS 
service were 49 percent full, while planes serving all airports 
were nearly 83 percent full.
    Regarding the Small Community Air Service Development 
Program, overall, the size and cost of the Small Community Air 
Service Development Program has decreased. Between 2002 and 
2013, an average of about 30 grants were awarded. The total 
grant amount for the program has declined steadily from $20 
million in 2002 to $6 million in 2013. Multiple studies 
consistently suggest overall mixed results regarding the 
success of this program. Although the grants that could be 
deemed successful were in the minority, those grants did 
generally result in improved services, in terms of adding 
flights, airlines, and destination, and curbing customer 
leakage. Those grants deemed not successful generally did not 
achieve the objectives proposed in their grant application, and 
often did not sustain service or other benefits after the grant 
was completed or funding ceased.
    Regarding our suggestions to enhance connectivity, some 
small communities in danger of losing airline service or hoping 
to attract new service have opted to provide a range of 
incentives. These incentives include revenue guarantees like 
those mentioned by the chairman that were proposed at Atlantic 
City International, and nonfinancial, in-kind contributions 
like advertising their air service.
    Additionally, we have recommended that DOT consider 
pursuing the goal of connectivity through a multimodal 
approach. This approach would explore other services, such as 
air taxis or ground transportation to larger airports might 
supplement the EAS program, and better serve some communities 
at a lower cost. DOT has taken steps towards including 
multimodal possibilities in both the EAS and Small Community 
Air Service Development Program. We are hopeful that these 
developments will help the Congress and DOT identify 
opportunities to make the EAS program more cost effective and 
strengthen the Small Community Air Service Development Program, 
thus helping to ensure connectivity for small communities.
    Thank you, Mr. Chairman.
    Mr. LoBiondo. Thank you, Dr. Dillingham.
    Captain Moak?
    Mr. Moak. Chairman LoBiondo, Ranking Member Larsen, and 
members of the subcommittee, I am Captain Lee Moak, president 
of the Air Line Pilots Association. And thank you for allowing 
me to be here to represent ALPA's more than 51,000 members who 
fly for 32 airlines in the United States and Canada. Small 
community air service is an important component of our Nation's 
air transportation.
    While today's hearing is focused on this subject, the most 
serious challenge faced by this sector is one that threatens 
the entire U.S. airline industry: foreign airlines that are 
State-owned or supported, and foreign airlines that are 
attempting to use business models that conflict directly with 
U.S. Government policy.
    The economic threat to U.S. airlines is very real. If the 
United States fails to take action to counter it, U.S. airlines 
will struggle to compete internationally. And for that reason, 
I thank you, Chairman LoBiondo and Representative Larsen, for 
your vigilant oversight of our Open Skies Agreements. I may be 
biased, but I believe U.S. airlines and their workers are the 
best in the world. We just need to have sound Government 
policies that give them a fair opportunity to compete.
    I also thank both of you for your understanding of the 
threat posed by the Norwegian Air International's flag of 
convenience business model. You represent regions with once-
vibrant shipping industries, and know the threat that these 
schemes pose to U.S. industry and jobs. We urge this committee 
to stay engaged.
    Likewise, we respect that this committee understands that 
many State-owned and State-sponsored airlines are competing 
with different rules, whether it is no corporate taxes or 
favorable regulatory policies. The U.S. Government must level 
the playing field for U.S. airlines.
    Now, I recognize that I was invited here primarily to talk 
about an alleged pilot shortage, so I want to be clear right 
now. There is no current shortage of qualified pilots in this 
country. There is, however, a shortage of pay and benefits for 
qualified pilots. The average beginning pay at a regional 
airline is about $24,000. From ALPA's award-winning involvement 
on aviation university campuses, we know that many new pilots 
will spend $200,000 or more on their education and flight 
training. Unfortunately, some new pilots are turning to other 
careers, because they cannot earn a living wage at a regional 
airline.
    The lack of a career path for new pilots is also a major 
concern, and some airlines--one, in particular, Jet Blue--are 
working to establish clear career progression to attract new 
graduates. In addition, thousands of experienced U.S. airline 
pilots fly for foreign airlines because of the pay and benefits 
they offer, when compared with U.S. airlines. Now, I know these 
pilots, if given the ability, would choose to live and work in 
the United States, where--if they were offered competitive pay 
and working conditions.
    ALPA strongly supports the Essential Air Service program. 
However, a number of EAS airlines have been vocal about an 
alleged pilot shortage. And last year some of these carriers 
took tens of millions of Federal EAS dollars, while paying 
their first officers near poverty-level wages.
    More troubling, certain U.S. airlines are attempting to use 
this contrived pilot shortage as an excuse to roll back the 
safety gains realized with the new pilot fatigue rule and first 
officer qualification requirements that were legislated by this 
subcommittee. These new safety requirements were developed with 
input from industry, labor, and Government. That is where we do 
our best work, when working together. The Regional Airline 
Association was cochair of the First Officer Qualifications 
Aviation Rulemaking Committee, and the airlines have had years 
to prepare for their implementation.
    While no shortage exists now, avoiding one in the future 
depends on whether U.S. airlines offer pilots competitive wages 
and benefits, and a solid career: a market-based solution. To 
achieve this, Congress should examine with DOT the Government's 
relationship with regional airlines that accept millions of 
dollars under EAS program, while offering wages and benefits at 
levels so low they cannot fill their pilot seats. And the U.S. 
Government must ensure our industry does business on a level 
playing field that allows U.S. airlines to compete and prevail 
internationally by, among other actions, limiting regulatory 
bureaucracy and reducing airline taxes.
    In conclusion, stronger U.S. airlines mean better profits, 
more flights to small communities, and improve wages and 
benefits to attract and retain qualified airline pilots. Thank 
you.
    Mr. LoBiondo. Thank you, Captain Moak.
    Mr. Bedford, you are recognized.
    Mr. Bedford. Good morning, Chairman LoBiondo, Chairman 
Shuster, who is no longer with us, but Ranking Member Larsen, 
and the members of the subcommittee. Thank you for inviting me 
to testify this morning. My name is Bryan Bedford. I am here 
representing Republic Airways.
    Republic Airways is a large regional airline operating in 
the United States. We employ over 6,300 people, many of them in 
your districts. We have over 600 employees in Pittsburgh, 
Pennsylvania. Aside from being a large regional airline, 
Republic Airways is also a very old regional airline. We 
operated our first flight in August of 1974 from Jamestown, New 
York, to Pittsburgh, Pennsylvania. Republic Airways is proud of 
its safety tradition. In our 40 years of business we have 
maintained an unblemished passenger safety record, and it is 
our intention to continue that tradition.
    When I joined the company in 1999, our company operated a 
fleet of 28 turbo prop aircraft. We had fewer than 600 
employees. Today we operate over 1,300 flights a day, all 
across the country. Last year alone we safely flew over 21.5 
million passengers to their destinations. During my tenure 
through the past 15 years we faced extraordinary challenges in 
our industry. Obviously, the challenge of 9/11 was significant 
for us. The challenge of SARS, Asian currency crisis, 
escalating fuel prices, every one of our major airline partners 
going through restructuring, some twice, some not surviving. It 
has been an extraordinary time in our industry.
    And yet, the most--I think the most urgent crisis we face 
in my over-25 years in the industry is the issue of a pilot 
shortage. And while I appreciate the opportunity to speak today 
to the panel, or to the members of the subcommittee on EAS, I 
think that is a secondary issue to actually making sure we have 
competent and qualified pilots able to fly the mission.
    So, with that, rather than use my time to restate the 
testimony that I provided in written format, what I would like 
to talk about is some of the comments we have already heard 
from the panel today.
    First and foremost, we have all referenced a pilot shortage 
report from the GAO. To be factually correct, the GAO 
referenced the fact that there is a mixed indication of whether 
a shortage exists or not. But I think the analysis itself falls 
flat on one important point, and that is the data of looking at 
pilot wages. It cited a study period from 2000 to 2012, where 
pilot wages were decreasing, and in a constrained labor 
environment we would expect rising wages. What the report fails 
to discuss is the context of the decreasing wages, which is 9/
11, the rampant restructuring of the airline industry. If the 
study period had been from 2008 to 2012, we would have seen a 
significant increase in wages and benefits, mainly due to the 
constructive engagement of Captain Moak and his leadership at 
ALPA.
    And while I am not, you know, personally friends with 
Captain Moak, I certainly respect his leadership and his 
engagement, especially for people that I do know and respect at 
Delta Airlines, who have been, you know, very, very 
complimentary of Captain Moak's leadership there during Delta's 
dark years. And I welcome Captain Moak's leadership and that of 
ALPA as we talk about a very important issue.
    I also don't disagree with Captain Moak's market-based 
solutions approach. First officer pay does need to increase. 
And I can't spend my limited time discussing the challenges 
with that, but I do hope the members of the subcommittee will 
ask me followup questions on compensation.
    Finally, let me give you some Republic Airways experience. 
Last year we intended to hire 500 new crewmembers. We found 
over 2,400 qualified applicants, based on the current statute. 
We were only able to find 450 pilots that met our hiring 
standards--450 out of 2,400 ``qualified applicants.'' Rather 
than hiring 50 pilots that didn't meet our standards, we 
decided to take the unprecedented step of parking aircraft, 
grounding 27 of our small regional jets, and leading to the 
disconnection of service to numerous small towns, and even 
medium-sized communities in our countries.
    Republic Airways is not going to sacrifice its standards 
and its safety culture to hire marginal pilots. There are, 
however, plenty of qualified applicants that do not meet the 
current legislative requirements.
    So, what do I think we need to do? First, we need the 
committee to urge the FAA to use the full flexibility provided 
under the statute. What do I mean by that? Well, the--which 
Captain Moak referenced, which the RAA did participate on, did 
make recommendations. They simply weren't accepted by FAA. We 
need the recommendations to be the accepted standard for hiring 
new pilots in our profession.
    Secondarily, the FAA took a very rigid view, a very narrow 
view, of the word ``academic,'' in terms of providing 
experiential training credit. And sitting here today, I believe 
we have fewer than 25 universities that have been accepted 
under the FAA's criteria for academic training. We need that 
expanded to be inclusive of all structured academy-type 
training.
    And then, finally, we do urge the committee to consider the 
viability of the profession, in terms of assistance in 
vocational training for new--the next generation of pilots 
entering the workforce.
    This is a serious issue. I do sincerely appreciate the 
opportunity to participate in the panel today so that we can 
have a serious debate about it. But, at the end of the day, if 
we work constructively together, I am confident we can find a 
solution that will allow us not only to maintain the safest 
aviation system in the world--and also provide a significant 
service to small and medium-sized communities. Thank you.
    Mr. LoBiondo. We thank you, Mr. Bedford.
    Mr. Mann, you are recognized for your statement.
    Mr. Mann. Mr. Chairman, members of the subcommittee, thank 
you for inviting me to participate in the hearing today. It is 
an honor for me to be here. My name is Dan Mann, I am the 
executive director of the Columbia Metropolitan Airport. And 
this is my third airport where I have been the director.
    Each airport and community had the same concerns and goals. 
They all wanted better service to improve economic development 
efforts. The message is the same: better fares, more direct 
flights, and reliable service. To meet those goals, what I 
found to be consistent and effective is to first get the 
airport financial house in order, and, second, make sure the 
community has realistic expectations. Only after you have a 
solid airport business plan and community support can you be 
effective offering creative incentives to airlines for improved 
service.
    In Columbia, the challenges were especially great. Compared 
to 20 similar-sized airports, our costs were over $12 per 
passenger, our debt was excessive, and we had the highest 
number of employees of the 20 benchmark airports. That, in 
addition to the challenge of being a 1\1/2\-hour drive from 
Charlotte, the sixth largest airport in the country. We had to 
do some significant changes to our business plan. We had to do 
community outreach to have any hope at all of keeping the air 
service we had and growing.
    After a significant reorganization, we reduced debt by $20 
million. We reduced staff from 120 to 65. And we were able to 
get our costs to below $9 per passenger.
    Fortunately for Columbia, we had a good economy, a growing 
population, and, after our financial position improved, we were 
able to make a business case to Delta Airlines for more 
capacity and competitive air fares. After 6 years of declining 
enplanements in Columbia, we saw growth in 2012 and 2013. And 
pending good weather, we think 2014 is also going to be a good 
year for us.
    While incentives were not required in Columbia, I have used 
a SCASDP grant on two occasions at two other airports. Again, 
only after we had our airport finances in place, and community 
support, were we able to have a good plan for the community 
outreach grant.
    In Casper, Wyoming, we actually bought an aircraft. It was 
kind of a crazy scheme, but we bought an aircraft. We had an 
airline that was willing to lease it beforehand. We applied for 
the grant and was awarded that. We bought the airplane, leased 
it to the airline, and generated enough passengers to have 
follow-on service with Northwest Airlines to Minneapolis, Saint 
Paul. That service stayed in place for several years, and up 
until the merger of Delta Airlines. The good news about that is 
it was an asset that we were able to sell at a later date, and 
we reimbursed the SCASDP grant nearly the entire amount of the 
grant monies.
    At each airport their service challenges were great. And I 
believe the solutions must come from airports on a local level. 
And the best assistance we can get from the regulatory bodies 
is bringing more flexibility and control with airport-generated 
revenue. I think airports that have a good, solid financial 
plan and local support can come up with their own solutions, 
and that is probably the best alternative.
    The best chance of success--even with some business plan 
and community support, not all communities will be able to 
sustain commercial service. That is just the fact of the 
business run today. But the best chance we have is engaging 
community, local control of airport revenue, and having the 
folks--free market enterprise support us.
    Thank you for the time, and I will be happy to answer any 
questions you may have.
    Mr. LoBiondo. Thank you, Mr. Mann.
    Mr. Sprenger?
    Mr. Sprenger. Chairman LoBiondo, Ranking Member Larsen, 
members of the subcommittee, thank you for inviting me to 
participate in this hearing on air service to small and rural 
communities. My name is Brian Sprenger, I am the airport 
director at Bozeman Yellowstone International Airport, a small-
hub airport located in southwest Montana.
    First of all, I want to thank the members of this 
subcommittee for your continued commitment to our aviation 
transportation system. Aviation provides remote States such as 
Montana access to the world, and a strong aviation system is 
imperative for our continued growth.
    Mr. Chairman, our airport has been fortunate to see a 
strong, consistent pattern of growth over the past 40 years. 
Even through the challenging last 15 years, we have seen growth 
rates averaging 5 percent per year. In 1999, our airport 
handled 436,000 passengers, and this year we expect to handle 
nearly 1 million. Certainly, we have the advantage of the real 
estate adage, ``Location, location, location.'' That being 
said, we have a philosophy at our airport that focuses 
everything we do on making our airport attractive and 
competitive. Simply put, we believe the airlines are the golden 
goose for smaller airports, so don't kill it.
    The airport industry has become quite competitive. We are 
competing for the same seats because the airplane servicing the 
Bozeman market could just as easily be servicing the Atlanta 
market. And we are now seeing a rationalization of airports, 
and the reality is not all airports will be able to retain or 
maintain the same level of service they now have.
    Consequently, we operate our airport more like a business 
than a Government agency, and we think of our airlines more 
like anchor tenants in a mall. We have to be competitive. We 
strive to have one of the lowest costs per enplanement for our 
airline partners. We provide ease of entry and exit to our 
market, and favorable gate access for all airline models. We 
have strong partnerships with our community. We also believe 
airports and communities must have skin in the game to succeed 
in air service development. And, finally, we have invested 
nearly $5 million in services normally provided by the Federal 
Government, such as air traffic control, because Federal 
agencies are slow to adapt in the changes in air service 
dynamics.
    Airlines can move assets quickly, and it is not uncommon 
for smaller airports to see drastic changes in air service. But 
we need level playing fields, so that comparable airports have 
comparable Federal services. We need our Federal agencies to be 
able to adapt quickly and have mechanisms in place to provide 
services commensurate with the activity level of an airport on 
a fair and equitable basis. We also need policies that support 
and encourage airports in developing nonaeronautical revenue, 
so that airports can minimize reliance on revenue from the 
airlines.
    Mr. Chairman, the Bozeman Airport has benefitted from the 
Federal Contract Tower program and the Small Community Air 
Service Development grants because of its significant airport 
and local community investments. We have not shied away from 
doing our part to make those programs and others succeed at our 
airport, and believe that airports and communities must have a 
vested interest for success. We encourage Congress to continue 
to modestly invest in programs that help small airports and 
communities attract and invest in viable commercial air 
service, as well as operate safely.
    In conclusion, Mr. Chairman, Ranking Member Larsen, and 
members of the subcommittee, thank you again for inviting me to 
participate in this hearing on air service at small and rural 
communities. I would be pleased to respond to any questions or 
comments you may have.
    Mr. LoBiondo. Thank you, Mr. Sprenger. I am curious about 
one thing in your statement. You said your airport spent $5 
million to supplement air traffic control. Did I hear that 
right?
    Mr. Sprenger. That is true.
    Mr. LoBiondo. How did that work?
    Mr. Sprenger. Well, it is a combination of things. We spent 
$1.5 million to build our first air traffic control tower about 
15 years ago. We spent another $1.5 million to put in a radar 
in our valley. We spent another $500,000 to put a radar display 
inside the tower. We also spent about--almost $1 million in--
augmenting our air traffic control by adding an hour at the 
beginning of the day and an hour at the end of the day, just to 
have coverage when our airlines were operating in and out of 
the airport, because the contract tower program would not 
provide that within their own funding.
    Mr. LoBiondo. So you had to do all this through the FAA, 
obviously?
    Mr. Sprenger. Correct.
    Mr. LoBiondo. So you all had an idea that would enhance 
your ability with safety, and to run the airport, and then you 
proposed that idea to the FAA, they signed off on it, and you 
spent your money?
    Mr. Sprenger. We spent our money and--some of those 
projects took a decade to achieve.
    Mr. LoBiondo. OK. For Mr. Mann and Mr. Sprenger, I am 
curious about your cost per enplanement. You talk about that a 
little bit. How are you keeping it down, or how does this 
impact your business decisions? Talk to me a little bit about 
that number?
    Mr. Mann. Our costs in Columbia were--in 2010, when I 
arrived there, were well over $12. And we have been having 
declining service. I met with all the airlines, and every one 
of them said, ``Dan, you are just not competitive, and it is a 
mobile asset, we are going to move it.'' We had to get our 
costs under $10. That was the airline's goal for us.
    And again, we had to do that by paying down debt and 
eliminating employees. We had 120 employees. It was the most of 
any of the benchmarked airports, and we had to completely 
reorganize. So we got down to 65, saved about $2 million a 
year. The debt reduction saved about $3 million a year. And we 
were able to get it to $9. We are doing that just by running it 
like a business. I mean it really comes down to are we going to 
be effective at $12, and the answer was no. And so we had to 
get the costs down. And again, we focus on customer service and 
safety, and everything else was a luxury item.
    And so, once we got those costs down, we went primarily to 
Delta Airlines, and they responded with more capacity. And it 
was really just--if we wanted to be competitive, we had to take 
control of our own business model.
    Mr. Sprenger. I would echo what Mr. Mann has said. Our cost 
is actually exceedingly low. Our cost per enplanement is right 
now, in the coming year, about $2.74 per passenger.
    Mr. LoBiondo. $2.74?
    Mr. Sprenger. Yes.
    Mr. LoBiondo. OK.
    Mr. Sprenger. We focus--go ahead.
    Mr. LoBiondo. No----
    Mr. Sprenger. OK.
    Mr. LoBiondo. It is a great number.
    Mr. Sprenger. We focus on two things. Obviously, the first 
thing is expenses. Like Mr. Mann said, you know, we try to 
maintain our expenses as low as we possibly can, yet providing 
a world-class airport. But we also look at the revenue side, 
where we basically work on generating revenue from all of the 
nonaeronautical portions of our airport: the rental cars, the 
parking lot, the concessions inside the terminal, land rent. 
Anything that we can do to generate revenue elsewhere helps us 
lessen the burden on our airline partners.
    Mr. LoBiondo. Mr. Bedford, how does Republic Airways 
interact with the airports on this number, the enplanement 
number?
    Mr. Bedford. Well, it depends, sir. When we are offering 
services essentially on a pro-rate basis, then yes, we are 
directly involved with meeting with the airport officials and 
trying to come up with a win-win construct for new service. As 
Assistant Secretary Kurland said, we were actually one of the 
services that opened from Provo, Utah to Denver using jet 
aircraft. And that was a collaborative effort, to actually 
build the airport and then work with the SCAD grant and 
establish service, which actually was successful until our 
business model changed.
    When we are operating with our major airline partners' 
brands--Delta, United, US Airways, American--they are actually 
the primary interface with the airport community. They are 
deciding where the aircraft will operate, when they will fly. 
They are setting the prices and managing that relationship with 
the ground personnel.
    Mr. LoBiondo. Dr. Dillingham, in your statement you 
indicated that there are many factors that contribute to the 
decrease in demand for air service for small and rural 
communities. What would you say are the most important among 
those factors, and why do you think they are the most 
important?
    Dr. Dillingham. Thank you, Mr. Chairman. I think the two 
most important factors would be, first of all, population 
decline. We have seen a significant decline in population in 
rural and small communities over the last 10 to 15 years. So 
that affects demand. And the other factor, I think, is 
something that was mentioned by several people on the panel. 
That is leakage. When you are able to or you choose to drive to 
a larger airport with more service, and sometimes cheaper 
prices for the Southwest or Jet Blue, you take that option. So 
those are the two factors that I think contribute to that 
lessening of demand, which, in turn, the airlines, you know, 
with their adjustment of capacity, will lessen their service to 
those small communities.
    Mr. LoBiondo. Captain Moak, did you want to add something?
    Mr. Moak. I just wanted to add one thing. Everybody is kind 
of talking around the issue that is driving a lot of this, and 
that is the economics of the industry.
    Mr. LoBiondo. Could you pull your mic a little closer?
    Mr. Moak. Absolutely. The economics of the industry are 
what is driving a lot of this. If you just go back to 2009, to 
the current--to 2014, oil has doubled. It has to be spread over 
a number of seats. We have had a couple of inappropriate taxes 
and regulations that have come into place. One would be the 
$100 TSA fee that goes to debt reduction, for example. Tickets 
are market-based. This has driven ticket prices up, and it has 
had an effect at small communities that is starting the 
regionalization of the airline industry, where people are 
having to make a decision if they are going to drive or not to 
an airport like the doctor has pointed out.
    You can't emphasize enough how the economics are playing 
into what is going on here and the changing business model. 
That is what is driving it.
    Mr. LoBiondo. Thank you. Mr. Larsen?
    Mr. Larsen. Thank you, Mr. Chairman. Mr. Bedford, could you 
elaborate a little bit on your recommendation, or your comment 
about a recommendation that Congress should direct the FAA to 
use its authority to be more flexible on the pilot safety 
training rules.
    Mr. Bedford. Yes, sir. When the statute was first enacted, 
it required an aviation rulemaking committee to work with FAA 
and all the various stakeholders, including the Regional 
Airline Association and ALPA, among others. In that process, 
they came up with a series of recommendations for the 
implementation of the statute. They were not implemented 
according to the ARC recommendation. And, instead, what we have 
is the current implementation of the statute, which does 
provide limited relief for academic training credit, but not 
enough relief.
    And so, essentially, what we are now asking the next 
generation of pilots to do is to graduate with, you know, high 
levels of proficiency and skill-based training, and then we are 
asking them to now spend the next 12 to 18 months essentially 
flying circles in the sky in single-engine piston aircraft and 
fair weather conditions which, frankly, does nothing to improve 
the overall safety proficiency of the pilot.
    In fact, you know, our experience is it leads to the 
creation of bad habits which, frankly, we have a hard time 
training out of potential airmen, which is why I think we are 
seeing such a high rejection rate of ``qualified candidates'' 
that do not meet our standards.
    Mr. Larsen. All right, thanks. Captain, do you care to 
respond to that?
    Mr. Moak. So what I think we should focus on--and on this 
issue in particular--is the good work of this subcommittee, of 
DOT, and of FAA, by setting up that process.
    And then, out of that process, we were actually able to 
come up with a restricted ATP, answering the community by being 
smart and engaged. The restricted ATP, you come out of the 
military with that training, you get that at 750 hours. 
Dependant on the university program that you are--have 
completed, you can get one at 1,000, and then there is one 
perhaps out of Embry-Riddle, 1,000, and then a different one at 
1,250, ultimately with 1,500. So, I believe that we addressed 
those then, OK, and it was a smart way to address it.
    But I do kind of want to focus back on your question 
quickly here. You know, we are--some carriers, perhaps, are 
having trouble recruiting some FOs, and I have tried to point 
that this is a market-based problem, based on the pay that we 
are paying them. And if this was a conversation that we were 
having about hospitals and hospitals having trouble getting 
doctors, we wouldn't be focused on the certification or the 
education reducing that, so that we could get doctors in to 
fulfill seats. We wouldn't be doing that.
    So, what we need to be doing here today is focused on the 
economics that are driving the problem. And, like Mr. Bedford 
said, the major airlines, the brands, are not in the room 
today. And they are the ones that are making decisions, what 
small communities you fly to, what frequency at hub airports, 
they are making those decisions. And they are the ones that are 
pulling service down, based on the economics of the routes. The 
economics are driving it.
    Mr. Larsen. Dr. Dillingham, in your report you report the 
data indicate that ``a large pool of qualified pilots does 
exist, relative to projected demand. But whether such pilots 
are willing or available to work at wages being offered is 
unknown.'' Does an adequate pool of qualified pilots exist to 
meet projected demand by the airlines? Can you answer that in a 
yes or a no? Is that possible?
    Dr. Dillingham. [No response.]
    Mr. Larsen. All right.
    Dr. Dillingham. OK.
    [Laughter.]
    Mr. Larsen. I asked the question----
    Dr. Dillingham. Yes.
    Mr. Larsen. You answer it the way you want to.
    Dr. Dillingham. OK. So the short answer is yes. But I want 
to go back to something that has been said on the panel by Mr. 
Bedford and others to sort of clarify what the GAO report 
actually reported.
    Mr. Larsen. Sure.
    Dr. Dillingham. It was one of those reports, Mr. Larsen, 
where everybody found something in it that they liked, and they 
used it to their best interest. We, in fact, said, by the 
numbers, the BLS numbers, the labor statistic numbers that we 
used, that two out of three indicators indicated that there was 
not a pilot shortage.
    Secondly, we also said that the regional airlines were, 
indeed, indicating that they were having a difficult time 
finding qualified first officers. We also said in that report 
that the major carriers said they were not having a difficult 
time finding qualified pilots.
    And directly to your question, what we also said in the 
report is that there is a projected need of about 10,000 pilots 
over the next few years, and we found information that 
indicated that there were some 70,000 qualified pilots--
qualified meaning that they had the ATP, they had the first-
class medical--and they were working in various other 
occupations, some nonairline, some airline, some in foreign 
countries.
    So, you know, the direct answer is, you know, those pilots 
are out there. Why the regionals are having a difficult time is 
something that the regionals can speak to better than I. Thank 
you.
    Mr. Larsen. Thank you. Mr. Chairman, that is fine for now. 
I may have a second round. Lot of Members here, so I will yield 
back.
    Mr. LoBiondo. OK. We are now going to turn to Mr. Hanna.
    Mr. Hanna. Thank you, Chairman. Mr. Bedford, Mr. Moak, it 
is fascinating to me that we are talking about something that 
is kind of--we are both talking about market-based solutions, 
right, and yet we have pilots who--clearly, $24,000 a year is 
underpaid. And yet you had 2,500 applications, you were able to 
find 470-something that fit your requirements.
    So, that is almost contradictory in its nature, that we 
have somebody who--both people believe in the market. Your 
pilots are underpaid. You can't find enough pilots. I feel like 
I am missing something in this conversation, here. We are 
talking about training people to be prepared. We have 
requirements to train them, but they don't meet what you want.
    I guess I would love to hear the two of you talk about that 
together, because it sounds like you are really arguing from 
the same position, but--and for the same people. So, Mr. 
Bedford, why am I getting a headache over this?
    Mr. Bedford. Well, trust me, Congressman, I share your 
headache. I think the--you know, we are splitting hairs on what 
is the definition of qualified. There is a statutory definition 
that has now been codified in the form of the FAA's rulemaking 
process, which Mr. Moak spoke to, that discussed qualified as 
being someone with 1,500 hours and an ATP. I can assure you 
that having 1,500 hours and an ATP does not make you qualified 
to fly as a commercial airline pilot.
    So, yes, there may be 70,000 registered ATP holders. I 
don't know how old they are. I am probably in that database 
somewhere. I am not qualified to fly any more, OK? But that 
doesn't mean we don't have a shortage of qualified pilots. You 
know, Mr.--or, I am sorry, Captain Moak; I don't mean to 
disrespect you.
    Mr. Moak. No problem.
    Mr. Bedford. Captain Moak talked about, you know, equating 
this to hospital training. Well, you know, we don't take, you 
know, people who are newly emerged from medical school, and 
then send them off to be, you know, library technicians or 
something, you know, letting their skills atrophy. And what we 
find is young men and women coming out of qualified training 
programs, when we hire them, as long as they don't have bad 
habits, we invest another $30,000 in training them to our 
requirements.
    As far as entry-level pay and market-based solutions, I 
absolutely agree with Captain Moak on this. FO wages are too 
low.
    Mr. Hanna. There must be something attractive about being a 
pilot, Mr. Moak. I am a pilot. I am the most dangerous one in 
the sky; I am a private pilot. But when people will actually 
take $24,000 a year, there must be some expectation that they 
will do better later, because that is starvation wages. So part 
of that must be the market that they are anticipating, or the 
shortage that must exist, although you would suggest--one would 
suggest that with that kind of pay, people are willing to do 
it, supply and demand might suggest a whole number of things. 
But go ahead.
    Mr. Moak. So, Congressman Hanna, first, being a seaplane 
pilot, certificated like yourself, you are probably one of the 
safest pilots, because I see you sitting here today, and I know 
how difficult that flying is, to be able to reuse the----
    Mr. Hanna. So far so good, you know?
    [Laughter.]
    Mr. Moak. There you go, there you go. But look, the issue 
here is the market has changed. There was a glut during what 
was considered the deregulation bankruptcy period. When this 
Congress deregulated the airline industry, it did it for 
scheduled service product. It didn't deregulate with the idea 
that we would compete on safety, security, or labor. That 
wasn't the idea. It had the vision and the foresight to protect 
small communities with EAS programs and others. Great.
    So now, many years later, we are at this point. And at this 
particular point, the market rates for entry-level FOs who are 
going to college, who are getting their certificates, are much 
higher than the union contracts. People are competing for our 
best and our brightest coming out of college. They are 
competing for it. They are going overseas. Some are going 
directly to mainline.
    So, what we have going on here is the right regulations, 
the right oversight, the right certification that this group, 
again, had the vision to put in place with FAR 117 that now 
guaranteed that a pilot would not be fatigued during his 
rotation, that he would--imagine this--he would get 8 hours 
behind the door at a hotel so he could be rested. Those things 
are all good, they are positive. But what is going on is merely 
a economics and market problem for some carriers. The solution 
is to compete and pay more. That is the solution. That is what 
we need to focus on.
    Mr. Bedford. If I may just add a quick commentary, first of 
all, there are--flying is one of the best jobs in the world. 
You have been up there, I have been up there. Until you do it, 
I mean, it is hard to really put into terms just the beauty and 
the fulfillment that you get. And it is a serious business, 
though, and it doesn't work for everybody. So you can go out 
and you can get time and you can get ratings. That doesn't, 
again, qualify you as a pilot.
    What is unfortunate, I think, is a regulation that limits 
the ability of truly qualified pilots to actually practice 
their craft, and forces them into a time consuming, laborious, 
unproductive, unstructured, and unhelpful, and financially 
draining process of accumulating time, simply to check a box. 
Either our training programs are safe and proficient or they 
are not, and the FAA should de-certify any airline that cannot 
operate to a single level of safety equivalent to any major 
international carrier. That ought to be the focus. Either 
pilots are proficient and safe, or they have no business being 
in a cockpit.
    And I would challenge the fact that the arbitrary nature of 
how the ultimate regulation was imposed, was codified, is not 
fulfilling the desires of the families of Colgan Air flight 
3407. It is not building safety into the cockpit. In fact, I 
fear it is pushing us in the other direction. We may have less 
qualified guys, although qualified per statute, potentially 
coming into these cockpits. And I think we do that at great 
risk.
    Now, as far as the economics are concerned, Republic 
Airways is a highly unionized company. Over 75 percent of our 
employees participate in labor unions, predominantly the 
International Brotherhood of Teamsters. Our flight attendants, 
our pilots, our dispatchers all participate in labor 
organizations. We respect the process.
    But on numerous occasions over the past 3 years, without 
any hooks into Section 6 bargaining, we have attempted to 
dramatically increase first officer pay, which, by the way, in 
the first year of employment at Republic Airways, first 
officers compensation is in excess of $30,000, on top of 
additional $6,000 in health care and 401(k) contributions that 
come to the pilot, on top of the $30,000 of investment we make 
in training them to our specifications. So there is an 
extraordinary amount of investment. And that is career 
investment that they will carry with them throughout the 
entirety of their career.
    Why do people work for $30,000 a year? The goal is to get 
to mainline carriers, where they are going to enjoy $150,000 to 
$250,000 in compensation. Should we regulate--should we tell 
Apple Computer--should we tell Apple that you can only hire 
employees that have 10 years of experience?
    Mr. LoBiondo. Mr. Bedford, I am sorry to interrupt you.
    Mr. Bedford. Sorry.
    Mr. LoBiondo. We are trying to be flexible here----
    Mr. Bedford. Thank you.
    Mr. LoBiondo [continuing]. But we are trying to be 
respectful of the other Members' time, as well. And if we need 
to, we will come back in a round two if you want to continue.
    Mr. Bedford. Thank you.
    Mr. LoBiondo. Mr. Nolan, you are recognized.
    Mr. Nolan. Thank you, Mr. Chairman. I want to thank the 
panel for their candor and their testimony here. It has been 
very interesting and enlightening.
    Mr. Chairman, first I would like to ask unanimous consent 
that a statement by Bob Anderson, the mayor of International 
Falls, Minnesota, the coldest spot in the Nation, be included 
in the record.
    Mr. LoBiondo. Without objection, so ordered.
    [The information follows:]
    
    
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    Mr. Nolan. And then, secondly, I would like to ask 
unanimous consent that a statement by our former chairman and 
our colleague, Jim Oberstar, also be inserted into the record.
    Mr. LoBiondo. Without objection, so ordered.
    [The information follows:]
    
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Nolan. Thank you, Mr. Chairman. I will yield the rest 
of my time, and if my questions don't get answered I will 
pursue them at the end of the hearing. Thank you.
    Mr. LoBiondo. Mr. Nolan, we thank you. Mr. Daines, you are 
recognized.
    Mr. Daines. Thank you, Mr. Chairman. I have some questions 
for Mr. Sprenger. Mr. Sprenger, thank you for coming to 
Washington to testify. You truly have set a great example as 
leading a successful airport management model. I thought the 
metrics you shared were very impressive. And I guess I am a 
little bit biased, given that is my home airport, Bozeman, 
Montana. My mom and dad moved to Bozeman in 1964. I went to 
kindergarten through college there, and I have really watched 
the transformation of what has happened there, at that airport.
    And I also want to compliment you on the tremendous service 
provided to our community and the economic driver. As was 
mentioned earlier, we were able to build a company there in 
Bozeman that virtually started from nothing to 1,100 employees 
with 17 offices around the world, a product with 33 languages. 
I managed Asia Pacific with offices in Tokyo and Sydney, 
headquartered and living in Bozeman, Montana, because I had an 
airport I could get in and out of every week. That business 
capitalized at $1.8 billion. So we built a large business. Had 
it not been for Montana State University there supplying 
graduates, as well as universities across Montana, and a great 
airport, we could not have done it. It is as simple as that. So 
thank you.
    Mr. Sprenger. Thank you.
    Mr. Daines. I was struck by the metric you shared on the 
cost per enplanement, that CPE number of sub-$3. And when I 
looked at your testimony, the average profit per passenger, the 
airlines, is about $4.13, as I saw from the 2013 numbers. 
Obviously, that is a pretty--$4.13 is a pretty small number. 
And keeping your numbers sub-$3 on the CPE, very, very 
impressive. How did you do that, and what recommendation would 
you give to other small airports?
    And, by the way, for those who have not been to Bozeman 
Airport, when you see these low-cost numbers, I can tell you 
that Bozeman Airport is one of the nicest airports in the 
world, and I have been to most of them. It is an amazing 
airport, in terms of the quality of service, the ambience. And 
that is why a lot of folks come in and out of there.
    But explain to us how you achieved these incredibly 
efficient numbers.
    Mr. Sprenger. Well, one of the first parts on the cost side 
is maintaining our personnel costs. Personnel costs are one of 
the biggest costs that we have at the airport. And our full-
time equivalent employees is about 31. We think sometimes one 
of the benefits of being a growing airport is that we started 
small, and we have tried to remain small, especially on the 
staff side. So, being able to maintain those costs has been an 
important part.
    But, like I mentioned earlier, as equally important is 
generating the revenue from other sources, and relying on that 
revenue, and not just increasing your costs--because you can 
also increase the cost to the airlines; that is a conundrum 
that I think many airports get into. And we don't do that. We 
very much focus on continually lowering our airline cost per 
enplanement, quite honestly, because we are competing against 
every other airport in the country for seats. And you know, one 
of the only things that we can do to compete is to have our 
costs low.
    Mr. Daines. Yes. And you would think--I guess Bozeman is a 
smaller airport, but you are the busiest now in Montana. And, 
congratulations, it looks like you are going to hit a million 
passengers in 2014. Impressive growth.
    Mr. Sprenger. Thank you.
    Mr. Daines. And a lot of those passengers come in July and 
August, I know, when there is a certain thing called a trout 
that seems to be running around the streams of Montana. I was 
fly-fishing in Montana before Brad Pitt ruined it for the rest 
of us, I have said.
    But let me ask you this. In your testimony you discuss the 
role of--a contract tower plays at the Bozeman Airport. Could 
you elaborate further on this point?
    Mr. Sprenger. Well, we are a contract tower program 
airport. And it has worked extremely well for us, from the 
standpoint it got us a tower when we would not have been able 
to justify a tower 15 years ago. The challenge now is that we 
have grown to become a small-hub airport, and the contract 
tower program is really designed for the smaller airports 
around the country, and there is really no mechanism for the 
FAA to really allow airports to grow into either a Federal 
tower, or shrink from a Federal tower to a contract tower.
    And that means that, for us, there are airports of 
comparable size that have substantially more services than what 
we do. And we have a staffing level of only five controllers 
and one manager to really accommodate 18 hours a day. It 
creates challenges when we have periods of time during the day 
where we may have 80 landings or take-offs in an hour.
    Mr. Daines. Mr. Sprenger, I am running out of time. I am 
going to ask you. If you were to give us one recommendation--
one or two--for the FAA and for this committee that would help 
make your life easier--trying to do here--of running one of the 
most efficient airports in America, in terms of CPE, what would 
that be?
    Mr. Sprenger. Have services commensurate with the size of 
the airport so that, as you grow, you get more services. As you 
shrink, you accordingly have services that are appropriate for 
your size.
    Mr. Daines. OK. Thank you. I am out of time, Mr. Chairman. 
Thank you.
    Mr. LoBiondo. OK. Thank you, Mr. Daines. Now we go to Mr. 
Bucshon.
    Dr. Bucshon. Thank you, Mr. Chairman. I will use a few 
health care analogies. I was a heart surgeon before I came to 
Congress. And I think--I am very interested in the pilot pay 
issue, because I had a young man from my district that came in 
who was a pilot for a regional airline, and we discussed this 
issue.
    And, you know, I do kind of see it in the context of 
medical training, also. I mean, you know, you don't come right 
out of medical school and do open heart surgery. You don't 
probably come right out of college and, you know, immediately 
fly a 747, you know, across an ocean. And so, I do agree with 
the free market approach to that. And it appears to me, as long 
as young people are willing to take a job for, whatever, 
$24,000 a year, as long as that supply-demand balance is there, 
people will continue to--you know, the pay will be an issue.
    But it is like residency training programs. You know, when 
you get out of medical school, your pay is not consistent with 
a practicing physician. And I do see it as a--you know, a 
stepping stone to advance to a higher level.
    I mean--and then that--the other issue is the--I was really 
curious about what--the difference between the captain and Mr. 
Bedford said about training, and talking to Mr. Hanna about 
this issue, you know. In medicine, if you do multiple, multiple 
hernia surgeries, it doesn't qualify you eventually to be a 
heart surgeon. You actually have to do things that--you know, 
you have to advance and do more advanced training that gets you 
there. That seems like a similar analogy.
    That is why I am wondering, Captain, why is there a little 
disagreement, you know, under the--kind of an undercurrent of 
disagreement about the training qualifications between Mr. 
Bedford, maybe the airlines, and what the pilots see?
    Mr. Moak. Just real quick, I have two slides I would like 
to show that answers this, if I could bring them up, if 
available. And one of them is actually a compliment to Mr. 
Bedford's company. And if we could pull them out quickly, I 
think it would help illustrate it.
    The first one is just to show you the economic part really 
quickly. And this gives you an idea--if you could, hold up the 
fuel one.
    [Slide]
    Mr. Moak. This gives you an idea of what has happened over 
the last few years on a barrel of fuel. It completely--it has 
gone up so much that it covers the entire cost of a pilot. Now, 
companies can't control this variable, OK? They can control 
pilots costs. Economics are the biggest problem for small 
communities.
    [Slide]
    Mr. Moak. The second slide, the second one, is simply a 
proactive action by Republic Airways. And this is an ATP ad 
where, for approximately $70,000, after you have gotten some 
certificates, Republic Airways will give you an interview. They 
actually show up and they do the right thing, they are out 
there recruiting pilots, and trying to get their qualifications 
in this program. That type of proactive action is--we need more 
of that.
    So, I think the difference we--I will speak for me. A 
difference that we are seeing here is I believe we are kind of 
beating around that this is an economic issue that the market 
has changed, that if we don't adapt we are going to fail. And 
we got to focus on the primary driver. Now, near-term, some 
properties may be having this problem. But I can't force pilots 
to work for reduced wages, nor would anybody want that.
    And, back to your original question on heart surgeons, we 
have people in the room today and people that I believe, when a 
customer buys a ticket--when they buy a ticket, they expect the 
same quality operation from start to finish. And if you are 
getting your heart or brain--and I guess, in my case, brain 
surgery--done, you want to make sure that you have the person 
that has been----
    Dr. Bucshon. Yes. Let me just say I am in full agreement 
that pilots are--these pilots are underpaid, because they have 
the trust of the flying public, and the--you know, and when you 
do step on an airplane, you don't really think that one pilot 
is going to not be quite as good as another pilot. I mean it--
for every level of flight, the pilot has to be really good, 
because people's lives are on the line, you know, if you mess 
up.
    But I am also not one that believes that we can fix prices 
for whatever employment there is. You know, you can't--so it 
has to be some sort of a--to get the pilot pay, it has to be 
some sort of supply and demand issue to get the pilot pay up, 
and that may mean, if there is a--you know, if there is a 
developing shortage of pilots--and I think there probably is, 
because there is--health care providers are in shorter supply, 
too--that eventually those wages will have to go up because of 
sheer competitive forces. And I think it is a very difficult 
situation. All of us also may be--some of the school teachers 
that are teaching our kids we feel, I feel, are underpaid for 
what they do. But that is just the market.
    So, what do we do about it? Mr. Bedford, do you have any 
comments?
    Mr. Bedford. Yes, Congressman, I do. Part of the challenge 
we have--and I would appreciate Captain Moak's feedback on 
this--is, you know, we are in an organized labor situation. On 
multiple occasions we have actually tried to increase first 
officer pay by over 25 percent. And it has been--essentially, 
our union won't allow us to do it. And it is hard to square the 
circle when your union says, ``Our employees, you know, need 
more money,'' and yet they won't let us pay them more money. So 
I would very much be interested in Captain Moak's, you know, 
just expertise as to why, you know, labor unions actually 
reject pay increases when----
    Dr. Bucshon. Thank you. My time has expired, so I think we 
can finish this later on. Thank you, Mr. Chairman.
    Mr. LoBiondo. OK. Mr. Graves, you are recognized.
    Mr. Graves. Thank you, Mr. Chairman. My question is for Mr. 
Bedford. The pilot shortage has been something I have been 
looking at for a long time, and qualifications. And I would 
like for you to expand a little bit, too, on--you know, Mr. 
Dillingham talks about the number of pilots that are out there. 
And I am a recent ATP and I have got 3,500 hours, so I fall 
into that category.
    Mr. Bedford. Are you available?
    [Laughter.]
    Mr. Graves. But I am not qualified to do that. And you just 
held up that--reminded me, that slide that was held up, you 
know, advertisements for the ATP school. Nothing against the 
ATP school, but you can go on a one-day course, pay your $295, 
pass your ATP test the next morning for part 121, and you know, 
and we have got guys out there that are, you know, young, just 
building time, that is all they are doing, building time to 
1,500 hours to take that, you know, one-day ATP course. And 
then, hopefully, jump in the right seat. But you and I both 
know that they are not qualified.
    And I would like you to expand on that a little bit, 
because I know pilots out there--in fact, we got combat pilots 
that are 22 years old, going into combat at 300 hours. And it 
is about the decisionmaking qualities that they have. It is all 
about the decisionmaking mentality that they have. You know, I 
know pilots that are not ATPs, they are commercial, they are 
crop dusters, and I would much rather step into an airplane 
with them than I would--there is guys out there that have 
20,000 hours that I wouldn't fly, if my life depended on it. 
And it does. That is the bottom line.
    We both know what it is about. It is about cockpit resource 
management, it is about how you handle yourself in the 
airplane, it is about how you make that decision. Would you 
expand on that just a little bit, on what you consider 
qualified pilots? Because I am so damn frustrated about this 
arbitrary figure that we put in out there, when it comes to 
just as long as you got 1,500 hours you are going to be good 
enough to fly. And that is just simply not the case. And now we 
have a pilot shortage, because we don't have the folks that you 
are talking about that really have what it takes to, you know, 
to fly passengers for hire. I would be very interested in you 
expanding on that, Mr. Bedford.
    Mr. Bedford. Thank you, sir. Yes. Well, I agree with you 
completely, you know. Arbitrary rules are very generally 
unproductive. And, to clarify, Republic Airways is not in 
support of any repeal of FAR 117. So----
    Mr. Graves. I am.
    Mr. Bedford. Well, look, I believe crewmembers do need 
adequate rest, and we should all play by the same rules. Having 
said that, again, training is--the quality of training takes 
precedent over the quantity of flight time.
    And I think, to answer your question in terms of military 
time, we don't see--I certainly understand why military pilots 
receive the best training in the world, and they perform at a 
high and proficient level, even with limited flight time. Those 
pilots aren't coming, though, into the industry. We talk about 
potential military pilots coming in. And, potentially, a guy 
who is landing a fighter on a carrier coming out with 300 hours 
is still considered unqualified to fly under the current 
statute. It is crazy. We are going to ask that guy to now go 
get another 500 hours of flight time, flying in a single-engine 
airplane in a fair weather environment, before we can consider 
him a candidate.
    There are only 24 universities that have been approved, as 
far as I know. Maybe there have been a few more added since 
then. None of them are 2-year aviation programs. So the 
reduction to 1,250 hours is a farce. It doesn't even exist. 
There is no way to take advantage of that.
    So, again, you know, we had a rulemaking process. The 
industry, including ALPA--we are on the same page on this--were 
simply ignored by the FAA. I would urge this subcommittee to 
strongly ask the FAA to reconsider how it implemented the rule. 
And I am only talking about the experience requirements, and 
not the flight and duty time limitations.
    So, again, I think we should be focused on quality and 
capability and proficiency. And, again, if there is an airline 
out there that is putting nonqualified--although they may be 
statutory qualified, but they are not proficient, not 
professional, not safe, and I think that is what we had at 
Colgan Air--those airlines have no business being in the 
industry.
    Mr. Graves. Mr. Moak, real quick.
    Mr. Moak. Congressman Graves, you are an accomplished 
pilot. I flew off aircraft carriers, flew fighters off aircraft 
carriers. We have the best training, some of the best training 
in the world, where they are coming out with 250 hours and are 
flying our young men and women into combat overseas. So what 
you focused on is a very good point: training, and oversight 
after training.
    I believe what the committee had done and what the process 
led to was a proxy for--with hours as a substitute for some 
training. As you know, before, there were people that were 
coming in with very reduced hours, getting an ATP, and going 
right into the right seat of these airlines, some at very 
reduced wages. That is what was trying to be corrected here.
    But your focus on training is spot on. I am with you on 
training. And we need to stay vigilant on training. You could 
have 2,000 hours or 20,000, like you said, without proper 
oversight, without proper training. It is not a safe operation.
    Mr. Graves. Thank you, Mr. Chairman.
    Mr. LoBiondo. Mr. Davis?
    Mr. Davis. Thank you, Mr. Chairman, and thanks to each of 
you for being here today. I would like to first start with Mr. 
Moak. Thanks again. Good to see you again.
    You proposed restored loan guarantees for college students 
undergoing flight training programs. This is a concept that 
really interests me. I have Parkland Community College in my 
district. And under the leadership of their president, Tom 
Ramage, a good friend of mine, they are going to assume control 
of the aviation program that was once at the University of 
Illinois. We want to continue to explore ways and policies that 
will help future pilots succeed.
    What other innovative means do you think could be employed 
to recruit students interested in becoming pilots?
    Mr. Moak. You know, we have--Congressman, we have the same 
challenges that is confronting, you know, STEM in the United 
States. We need to stay focused on getting young men--and I 
want to emphasize women--into our profession. And the Air Line 
Pilots Association, we are partnering with universities and 
pushing this hard, but we are being very mindful of the cost of 
education today.
    The future is going to be on these young people going 
through, graduating, and then progressing to a job and a 
career. And so, anything that we can do in that respect, 
anything this committee can do, or the Congress can do, we are 
all for.
    Mr. Davis. Well, thank you very much. Mr. Bedford, you 
mentioned, just in your last response, about our military 
members, our servicemembers can fly hours upon hours, mission 
upon mission, land multimillion-dollar aircraft on aircraft 
carriers, and have to come back and get 500 more hours of 
certification, did you say?
    Mr. Bedford. It depends on how many hours, Congressman, 
they actually leave the military with. But, yes, it is possible 
for a highly proficient military pilot to leave the service 
with less than 750 hours, and he would be required under 
statute to make up the difference before he would be eligible 
for a restricted ATP.
    Mr. Davis. On average, how often does that happen?
    Mr. Bedford. I think today we are seeing very few military 
pilots actually coming in to the commercial airline business.
    So, one of the challenges we have is the--you know, 
commercial airline business is a seniority-based opportunity. 
And as a previous congressman had mentioned, you know, people 
come into the profession, looking at it as a career investment. 
And that career starts with building experience at regional 
carriers, and then they generally matriculate to mainline. And 
that is the same path that most military pilots would take, as 
well.
    Mr. Davis. OK. Well, I am interested. Now, you brought up a 
very interesting point that I didn't expect and wasn't on my 
prepared list of questions. I would be happy to work with you 
and the others on the panel to try to address that issue, so 
that our heroes can come back and fill this airline pilot 
shortage.
    Mr. Sprenger, while I have some time left, you did start to 
talk a little bit about the contract tower program. I have 
numerous contract towers in my district in central Illinois. 
And you know, you got into it a little bit, but can you tell me 
how the contract tower program helps you retain your air 
service? And also how it promotes safety?
    Mr. Sprenger. Sure, Congressman. Without the contract tower 
program, we would not have a tower. And if we didn't have a 
tower, our airlines would struggle to operate at our airport 
with the frequency that they currently have. We would not have 
grown to the point where we are without the contract tower 
program.
    When we look at--the struggles that we are at now is that 
the contract tower program isn't built for scale. And so, as an 
airport grows larger, we are still at the scale of a much 
smaller airport.
    Mr. Davis. One more question for you, Mr. Sprenger. And I 
know you have experience with the Small Community Air Service 
Development Program, and coming up with your local 
contributions. From your testimony, I gather that the local 
buy-in is a key component to your success. And what, if any, 
changes would you recommend to make that program more effective 
for airports like you to use?
    Mr. Sprenger. The key, I think, is exactly what you said, 
Congressman. It has to have local contribution and buy-in. If 
the community isn't behind it and supportive of it, it is going 
to be a difficult struggle, all together. When the community 
does have the buy-in and is participating financially, they 
have a vested interest in its success.
    Mr. Davis. Well, thank you. And one last question. Mr. 
Mann, according to an MIT report released last year, domestic 
departures declined by more than 21 percent at small airports 
between 2007 and 2012, but less than 9 percent at our large-hub 
airports during the same period. What do you think--why do you 
think there is such a large discrepancy between the large and 
the small airports? Is it just price, or what other ideas?
    Mr. Mann. It is primarily a price and the nonstop 
destinations, and the fact that it is so easy for people in our 
community to drive to the larger airports. Charlotte is, like I 
said, the sixth largest airport in the country. It is just over 
an hour drive away. And they are just a tough competitor.
    I think our--what we need to do in the local community, 
though, is to get our costs in line and make a business case to 
the airlines to serve our market. And I can tell you our 
example is when we got more service, and got our costs in line, 
the airlines did bring capacity back, and we started seeing the 
customers come back to our airports. So, again, I think it is--
for us it comes back to local control and having a willing 
airline that is willing to take a risk with us.
    Mr. Davis. Well, thank you. If I had more time, Mr. 
Chairman, I would yield back.
    Mr. LoBiondo. Mr. Meadows?
    Mr. Meadows. Thank you, Mr. Chairman. Thank each of you. 
Some of you, welcome back, it is good to see you again.
    Mr. Mann, let me start with you. I had the pleasure of 
flying into your airport here just a couple of weeks ago. I 
have a good friend in Asheville who sends his regards--Lou. 
You--it has been talked about that you created competition, or 
allowed for some additional competition among carriers. One, is 
that the case? How did you do that? And how did it benefit, I 
guess, you know, the airport and the community there?
    Mr. Mann. Well, primarily, it was, again, getting our costs 
in line and then making a business case for the new air 
service. It really came down to the fact that we were not 
competitive. And so we had to go out to both airlines, after we 
got our costs in line.
    One of the things that we saw with Delta, and we made the 
business case when encouraging competition, we made the case to 
Delta that, if you are going to drive--if our customers--half 
our market drives to Charlotte. If those guys are going to 
drive to Charlotte, they are going to get on US Airways and 
American Airlines. And so, Delta, you are going to lose all 
those customers.
    And so, we were able to quantify what that loss would be. 
And if they, again, just added a little bit of capacity at a 
fairly competitive price, that they would pick up that market 
share and fill the planes up. They agreed to do so. And they 
are running about an 84-, 85-percent load factor on market. But 
again, it was making a business case with Delta Airlines 
primarily that said if you bring the aircraft here you can make 
money in our market. And they--again, to date they are very 
happy with what they are doing in our market.
    And again, it has not hurt US Airways in Charlotte. I mean 
those folks were on the road, and now they have an option to 
fly out of the local community. And, again, that is a win-win 
for economic development, the folks that don't have to spend 
that 1\1/2\ hours on the road. And, again, the airline can 
still make money in our market.
    So I really think it comes down to making a business case. 
And, again, Delta had not really thought about the fact that 
they were going to lose--that they were just losing market 
share by not adding--we are talking 100 seats a day. Very 
simple to fill that up, when you have 500,000 people driving up 
the road.
    Mr. Meadows. All right. So let me go on in terms of the 
competitiveness, and let's talk a little bit about unfunded 
mandates and about compliance costs and what happens, because 
it seems like there is a plethora of compliance issues that 
come up, and they expect both you, Mr. Sprenger, and you, Mr. 
Mann, to figure out ways to implement those. And that would go 
at the expense of operational expenditures and capital 
expenditures to meet those compliance things.
    How do we best deal with that, and how do we control that, 
in terms of those additional unfunded mandates that have been 
placed on small and rural airports?
    Mr. Mann. The most recent challenge we had was the--with 
the TSA wanting to get out of the exit lane business. That was 
going to be a significant hit to our bottom line. And we had 
already put technology in place to handle that. And so it was 
an issue out there where, if they would have just accepted the 
technology for that exit lane, it wouldn't have--it was an 
unfunded mandate, potentially, but we couldn't get TSA to 
accept the technology.
    So I think airports are trying to be creative, we are 
trying to do smart things out there, and our regulatory bodies 
are putting up road blocks for us. And my point is we have 
enough challenges that, when we find solutions, we need 
partners in the FAA and the TSA to work with us and say, yes, 
we think that can work. Make it a pilot program, if you need 
to, but that is really where we need to go.
    The other part is the regulations on airport revenue, 
parking lot revenue. We ought to be--we ought to have the 
flexibility to use that local revenue to do what we think is in 
the best interest of our local economy.
    Mr. Meadows. So the revenue use policy to have greater 
flexibility there, in terms of how to implement that.
    Mr. Mann. That is--that would be key. Also, the land use. 
But, yes, the revenue use policy really is antiquated. It needs 
to be modified. And, again, let us in the community do what is 
best with our airline partners and our community to grow the 
business.
    Mr. Meadows. So what you are saying is that you came up 
with a few options with regards to TSA that would not sacrifice 
safety, and could have been a more cost-efficient way to 
implement it, and yet you couldn't get a sign-off from TSA to 
do that.
    Mr. Mann. That is correct.
    Mr. Meadows. So how often does that occur?
    Mr. Mann. Well----
    Mr. Meadows. Not specifically just with TSA, but with any 
Federal agency.
    Mr. Mann. It happens all the time. I mean with our revenue 
use policy, I mean, daily. If we wanted to do an airline 
incentive right now, which we did not need to do in Columbia, 
but if we wanted to, we could not have used our money to 
partner with a specific route, a specific airline. There is 
just complications that are there that, again, prohibit us from 
being more successful than what we would be.
    Mr. Meadows. All right. Thank you, Mr. Chairman.
    Mr. Davis [presiding]. Thank you. I would like to recognize 
Mr. Larsen for 5 minutes.
    Mr. Larsen. Dr. Dillingham, what would you see as a key 
contributing factor to the growth in the total--I mean per 
passenger--EAS subsidies, as a result of your report?
    Dr. Dillingham. Mr. Larsen, I think that the fact that they 
are--the increased number of communities that are a part of 
EAS, that certainly is a major factor. The other factor is 
something that the other panel has mentioned, in terms of the 
price of fuel has quadrupled over the last several years, which 
also contributes to the subsidy cost, as well. So those two 
factors are the key factors that contribute to the increase in 
cost.
    Mr. Larsen. Would the fuel be more of a contributor to the 
per-passenger than----
    Dr. Dillingham. Yes, sir.
    Mr. Larsen [continuing]. The EAS subsidy? Yes, OK. Yes, 
sure, Secretary Kurland.
    Ms. Kurland. Thank you, Congressman. There are two other 
factors that I would like to mention. We have seen, in the past 
few years, a number of EAS carriers have gone out of business. 
So the pool has become smaller, in terms of the available 
carriers. We are also seeing a lot of the equipment, the 19- to 
34-seat aircraft, which were the right-sized aircraft for these 
communities, aging and being retired. And so, finding the types 
of aircraft that are going to work has posed challenges, as 
well, and additional expense.
    Mr. Larsen. So, on that point, what is the challenge in 
finding the right-sized aircraft at this point?
    Ms. Kurland. Well, the manufacturers are not making the 19- 
to 34-seaters. So what we are seeing--and Congress did change 
some of the requirements to allow nine-seaters--in many of the 
communities with the shorter haul flights is that the nine-
seaters are working well. In other, larger communities, 50-seat 
RJs are working. But they are more expensive to run, as well. 
So, we don't necessarily have the sweet spot at this point for 
the type of aircraft.
    Mr. Larsen. All right. So I have one more question for 
Secretary Kurland. It is--this issue was brought up earlier, 
but--and unrelated to rural service, but it has to do with the 
NAI application. Can you tell the subcommittee where DOT is in 
the process on the NAI application?
    Ms. Kurland. Congressman, as you know, it is a contested 
proceeding. And so I am not at liberty to comment on it.
    Mr. Larsen. Thank you. Thank you.
    Mr. Davis. Thank you, Mr. Larsen. A couple more questions 
for the panel that I wasn't able to get to during my time 
period, and I would like to start with Secretary Kurland. I 
will remind you I do not have any other committee action going 
on that I am going to ask you about today, like last time.
    So I just want to actually get your opinion. I mentioned in 
the SCASDP program we had a little--somewhat of a discussion 
earlier during my questioning. I appreciated your responses. 
But, Secretary Kurland, can you tell me how important is 
community involvement for this program, and can you give me 
some ideas of how airports can effectively work with IDOT or 
work with USDOT even more so to make it easier for you to make 
a determination?
    Ms. Kurland. Thank you, Congressman, and I appreciate your 
comments.
    Regarding the SCASDP program, both of our airport 
managers--and I compliment them on the great work they have 
done at their airports--have mentioned the importance of 
community involvement. And we have seen that many of the 
successful programs have had community involvement. And we view 
that as a very high priority, where communities are putting 
skin in the game, because that means that they are going to 
support the service. If it is a revenue guarantee, they are 
going to use the service. So that type of support is critical.
    One of the other things that we have learned from some of 
the other reports and--that, you know, the GAO, the IG has 
done, and that we have taken a look at ourselves--is the 
importance before, for example, the implementation of a revenue 
guarantee, that a feasibility study be done so that the 
airport, as much as possible, sets themselves up for success.
    And so, we think that those types of things are important. 
We have also recently, in our recent RFPs, put in an 
opportunity for intermodal funding, to the extent that a 
community was interested in looking at that, as well.
    So I would like to commend Congress in the funding of the 
SCASDP program, in viewing it as a laboratory, in giving these 
communities these airports an opportunity to try new and 
different things. But community support is really critical.
    Mr. Davis. Great, thank you. Dr. Dillingham, do you have 
anything to add?
    Dr. Dillingham. Yes. Just a footnote to that is that DOT is 
maintaining a database of lessons learned from the Small 
Community Air Service Development Program which has benefitted 
communities that are thinking about these innovative 
approaches, what works, why it works, and what they need to do 
to be more successful. So we think that is a good thing for 
improving the effectiveness of the Small Community Air Service 
Development Program.
    Mr. Davis. Great. Does anybody else on the panel have any 
other comments they would like to make on the Small Community 
Air Service Development Program?
    Mr. Bedford. Well, just from my own experience, Congressman 
Davis, committee involvement is essential, and communities 
should have skin in the game, economic skin in the game, in 
order to make sure that they are doing everything that they can 
to support unique air carriers services.
    I agree with everything that Secretary Kurland said with 
the challenges of finding the right aircraft. I think you 
referred to it as the sweet spot, something that, you know, 
frankly, passengers want cabin-class service, you know. And, 
like it or not, there is a certain turbo-prop avoidance factor.
    One thing that hasn't been mentioned here today that I 
think I should at least put on the table is just airport 
crowding in general. What these services need is connectivity 
to the Nation's transportation network. There is rarely enough 
traffic, you know, from small town community to small town 
community. So being able to make connections in large hubs is 
essential for the service to be successful, which means small 
communities need to partner with major airlines.
    The pushback you get is a small airplane consumes the same 
amount of airspace as a wide-body. So, you know, you are 
competing for scarce resources in places like Atlanta and 
Chicago and New York and Philadelphia, you know, San Francisco, 
L.A. And that is a huge problem, I think--well, one of many 
that face the retention of these vital airlines in smaller 
communities.
    Mr. Davis. Right. Well, the hearing is about to end. Does 
anybody on the panel have any issues you would like to discuss 
that we might not have gotten to? Now is your time to go ahead 
and do that.
    [No response.]
    Mr. Bedford. Did I mention a pilot shortage?
    [Laughter.]
    Mr. Davis. Going once, going twice--if there are no further 
questions, I thank the witnesses for their testimony and the 
Members for their participation. This subcommittee stands 
adjourned.
    [Whereupon, at 11:41 a.m., the subcommittee was adjourned.]
  
  
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