[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
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
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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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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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