    [House Hearing, 114 Congress]
    [From the U.S. Government Publishing Office]

                       OPTIONS FOR FEDERAL AVIATION
                  ADMINISTRATION AIR TRAFFIC CONTROL REFORM

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

                                    (114-11)

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                                    AVIATION

                                     OF THE

                                  COMMITTEE ON
                       TRANSPORTATION AND INFRASTRUCTURE
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 MARCH 24, 2015

                                   __________

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                 Committee on Transportation and Infrastructure

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                 COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                      BILL SHUSTER, Pennsylvania, Chairman

    DON YOUNG, Alaska                    PETER A. DeFAZIO, Oregon
    JOHN J. DUNCAN, Jr., Tennessee,      ELEANOR HOLMES NORTON, District of
      Vice Chair                         Columbia
    JOHN L. MICA, Florida                JERROLD NADLER, New York
    FRANK A. LoBIONDO, New Jersey        CORRINE BROWN, Florida
    SAM GRAVES, Missouri                 EDDIE BERNICE JOHNSON, Texas
    CANDICE S. MILLER, Michigan          ELIJAH E. CUMMINGS, Maryland
    DUNCAN HUNTER, California            RICK LARSEN, Washington
    ERIC A. ``RICK'' CRAWFORD, Arkansas  MICHAEL E. CAPUANO, Massachusetts
    LOU BARLETTA, Pennsylvania           GRACE F. NAPOLITANO, California
    BLAKE FARENTHOLD, Texas              DANIEL LIPINSKI, Illinois
    BOB GIBBS, Ohio                      STEVE COHEN, Tennessee
    RICHARD L. HANNA, New York           ALBIO SIRES, New Jersey
    DANIEL WEBSTER, Florida              DONNA F. EDWARDS, Maryland
    JEFF DENHAM, California              JOHN GARAMENDI, California
    REID J. RIBBLE, Wisconsin            ANDRE CARSON, Indiana
    THOMAS MASSIE, Kentucky              JANICE HAHN, California
    TOM RICE, South Carolina             RICHARD M. NOLAN, Minnesota
    MARK MEADOWS, North Carolina         ANN KIRKPATRICK, Arizona
    SCOTT PERRY, Pennsylvania            DINA TITUS, Nevada
    RODNEY DAVIS, Illinois               SEAN PATRICK MALONEY, New York
    MARK SANFORD, South Carolina         ELIZABETH H. ESTY, Connecticut
    ROB WOODALL, Georgia                 LOIS FRANKEL, Florida
    TODD ROKITA, Indiana                 CHERI BUSTOS, Illinois
    JOHN KATKO, New York                 JARED HUFFMAN, California
    BRIAN BABIN, Texas                   JULIA BROWNLEY, California
    CRESENT HARDY, Nevada
    RYAN A. COSTELLO, Pennsylvania
    GARRET GRAVES, Louisiana
    MIMI WALTERS, California
    BARBARA COMSTOCK, Virginia
    CARLOS CURBELO, Florida
    DAVID ROUZER, North Carolina
    LEE M. ZELDIN, New York

                                      (ii)

                            Subcommittee on Aviation

                    FRANK A. LoBIONDO, New Jersey, Chairman

    DON YOUNG, Alaska                    RICK LARSEN, Washington
    JOHN J. DUNCAN, Jr., Tennessee       ELEANOR HOLMES NORTON, District of
    JOHN L. MICA, Florida                Columbia
    SAM GRAVES, Missouri                 EDDIE BERNICE JOHNSON, Texas
    CANDICE S. MILLER, Michigan          DANIEL LIPINSKI, Illinois
    BLAKE FARENTHOLD, Texas              ANDRE CARSON, Indiana
    RICHARD L. HANNA, New York           ANN KIRKPATRICK, Arizona
    REID J. RIBBLE, Wisconsin            DINA TITUS, Nevada
    MARK MEADOWS, North Carolina         SEAN PATRICK MALONEY, New York
    RODNEY DAVIS, Illinois               CHERI BUSTOS, Illinois
    MARK SANFORD, South Carolina         JULIA BROWNLEY, California
    ROB WOODALL, Georgia                 MICHAEL E. CAPUANO, Massachusetts
    TODD ROKITA, Indiana                 STEVE COHEN, Tennessee
    RYAN A. COSTELLO, Pennsylvania       RICHARD M. NOLAN, Minnesota
    MIMI WALTERS, California             JOHN GARAMENDI, California
    BARBARA COMSTOCK, Virginia           PETER A. DeFAZIO, Oregon (Ex
    CARLOS CURBELO, Florida              Officio)
    LEE M. ZELDIN, New York
    BILL SHUSTER, Pennsylvania (Ex
    Officio)

                                     (iii)

                                    CONTENTS

                                                                       Page

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

                                   WITNESSES

    Matthew E. Hampton, Assistant Inspector General for Aviation,
      Office of Inspector General, U.S. Department of Transportation:

        Testimony....................................................    15
        Prepared statement...........................................    54
    Douglas Parker, Chairman and Chief Executive Officer, American
      Airlines Group, Inc., on behalf of Airlines for America:

        Testimony....................................................    15
        Prepared statement...........................................    64
    Craig L. Fuller, Vice Chairman, Federal Aviation Administration
      Management Advisory Council:

        Testimony....................................................    15
        Prepared statement...........................................    69
    Paul M. Rinaldi, President, National Air Traffic Controllers
      Association, AFL-CIO:

        Testimony....................................................    15
        Prepared statement...........................................    76
    Robert W. Poole, Jr., Director of Transportation Policy, Reason
      Foundation:

        Testimony....................................................    15
        Prepared statement...........................................    85
        Correction to prepared statement.............................    93
    David Grizzle, Chief Executive Officer, Dazzle Partners, LLC,
      formerly Chief Operating Officer, Air Traffic Organization,
      Federal Aviation Administration:

        Testimony....................................................    15
        Prepared statement...........................................    94
    Dorothy Robyn, Airlines/Aviation Consultant, formerly Principal,
      The Brattle Group:

        Testimony....................................................    15
        Prepared statement...........................................   102

                           SUBMISSIONS FOR THE RECORD

    Hon. Rick Larsen, a Representative in Congress from the State of
      Washington, submission of the following:

        Unanswered Questions Regarding Possible Reform of the
          Nation's Air Traffic Control System........................     5
        Bullet Background Paper on Department of Defense Policy Board
          on Federal Aviation (PBFA) Response to Discussion Regarding
          Privatization of U.S. Air Traffic Control Services.........    11

                            ADDITIONS TO THE RECORD

    Ed Bolen, President and Chief Executive Officer, National
      Business Aviation Association, written statement...............   113
    Thomas L. Hendricks, President and Chief Executive Officer,
      National Air Transportation Association, written statement.....   119
    Russell McCaffery, Dean of Transportation Programs, Broward
      College, written statement.....................................   122
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

     OPTIONS FOR FEDERAL AVIATION ADMINISTRATION AIR TRAFFIC CONTROL REFORM

                                  ----------

                            TUESDAY, MARCH 24, 2015

                      House of Representatives,
                              Subcommittee on Aviation,
                Committee on Transportation and Infrastructure,
                                                        Washington, DC.
        The subcommittee met, pursuant to notice, at 10:01 a.m., in
    room 2167, Rayburn House Office Building, Hon. Frank A.
    LoBiondo (Chairman of the subcommittee) presiding.
        Mr. LoBiondo. Good morning. Thank you for coming. The
    committee will come to order.
        Before we get started on the business of the committee this
    morning, I want to express from myself, Mr. Larsen, Mr.
    Shuster, and Mr. DeFazio our deepest condolences to the victims
    and families of those who lost their lives in the crash of
    Germanwings flight 9525 in southern France.
        We do not have a lot of details. We know it was a terrible
    tragedy. We will be closely monitoring the investigation.
    Aviation safety has and will always continue to be a top
    priority of this subcommittee.
        Over the last year, the subcommittee has held a series of
    roundtables and hearings on the state of our Nation's air
    traffic control system and identifying the challenges the FAA
    has faced in modernization and NextGen implementation. While we
    are currently enjoying the safest air traffic control system in
    the world, we should be striving to also be the most efficient
    that we can be. Historically, the United States has been the
    leader in aviation. However, the record is mixed on where we
    stand today.
        For decades, policymakers and stakeholders have almost
    unanimously recognized the need to modernize our radar-based,
    World War II-era ATC system. The FAA has been attempting to
    modernize the system since 1981. The DOT Office of Inspector
    General, the Government Accountability Office, and numerous
    bipartisan Federal airline commissions found that FAA's
    progress with delivering planned NextGen capabilities has
    encountered a number of delays, cost increases, and failure to
    provide promised benefits to the traveling public and industry
    stakeholders.
        In testimony before this subcommittee last year, DOT
    Inspector General Scovel warned that NextGen implementation
    costs for Government and industry, initially estimated at $20
    billion for each, could double or even triple, and that NextGen
    implementation may take an additional decade, something I do
    not believe any of us believe is acceptable.
        While stakeholders unanimously support NextGen, they have
    been unable to agree on how to address these well-documented
    implementation obstacles. As Chairman Shuster has stated, the
    committee has an historic opportunity to drive the
    institutional change needed to ensure that we have the very
    best ATC system in the world.
        Three years of Federal budget disputes have included the
    FAA's decision in April 2013 to furlough 10 percent of its air
    traffic controller workforce and nearly close 149 contract
    towers to meet sequester-driven budgetary cuts, the partial
    shutdown of the FAA in August 2011, and schedule delays and
    cost overruns that continue to plague FAA's modernization and
    NextGen implementation efforts.
        These are distressing realities, but may be just the
    impetus needed to drive change--specifically, whether it is
    time to transform and/or transfer the air traffic control
    function of the FAA, currently managed by the Air Traffic
    Organization.
        The United States is the only developed country whose ATC
    system can become a political football, frequently held hostage
    to Federal budget disputes like the sequester, which threatens
    not only the ongoing operations of the ATC system, but also the
    successful implementation of NextGen. I believe, and I know
    Chairman Shuster believes, that unless we reform our ATC
    system's governance and funding structures, we risk failure in
    implementing NextGen and its full benefits to the country.
        While there may not be consensus among stakeholders yet on
    the type of model that the U.S. should pursue, there is a
    growing consensus that comprehensive financing and governance
    reforms are needed. Furthermore, there is an acknowledgment
    that we are not fully using FAA assets and expertise readily
    available, including the FAA flagship Technical Center in my
    district, to their fullest to solve these vexing issues. We can
    and must do better.
        I look forward to hearing from our witnesses their thoughts
    on different opinions and options for reform of our Nation's
    air traffic control system. Let me emphasize that ensuring we
    continue to have the safest aviation system in the world will
    drive the ATC reform debate in the months ahead.
        As the subcommittee seeks to address these longstanding
    obstacles to ATC modernization and NextGen implementation in
    the next FAA reauthorization bill, there are questions that we
    need to address at today's hearing. Does the United States have
    the best governance and funding structure in place to deliver
    the most efficient, most modern ATC system while ensuring the
    safest system in the world? Have the ATC models used by other
    countries enhanced safety and efficiency, and if so, can the
    best attributes of these models be adopted by the United States
    without adversely impacting safety?
        And before I recognize Mr. Larsen for his comments, I 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. Without objection, so ordered.
        Now I would like to recognize Mr. Larsen for any opening
    remarks.
        Mr. Larsen. Thank you, Mr. Chairman. Turn your phones off,
    please. Thanks. Thanks for calling this hearing to explore
    alternatives to FAA air traffic management. I appreciate the
    continued bipartisan cooperation as we move towards a timely
    FAA bill.
        Today we are going to hear from witnesses with a variety of
    ideas about how to improve efficiency and certainty in the
    management of our Nation's airspace. I welcome any discussion
    of what we need to do to keep our airspace the most efficient
    and safest in the world.
        But before we address that, we do have to ask that basic
    question: What is the problem we are seeking to fix? The GAO
    reported last year that 71 of 76 aviation stakeholders said the
    air traffic control system is very to extremely safe.
        Today no one would argue the airline industry as well is
    the healthiest it has ever been due largely to the efforts of
    the industry and the FAA to improve efficiencies over the last
    decade. The International Air Transport Association projects
    airlines worldwide, in fact, are expected to make a collective
    $25 billion profit in 2015.
        IATA also suggests that U.S. carriers would continue to set
    the standard for financial performance, with the highest profit
    margins worldwide. That is good news since a healthy airline
    industry is critically important for international
    competitiveness.
        We are also living in the safest period in aviation history
    in the U.S. Every day, U.S. airlines safely transport about 2
    million passengers around the country. And with the important
    safety improvements that Congress mandated following the tragic
    Colgan Air crash in 2009, the aviation system is getting even
    safer.
        At the same time, NextGen implementation has faced hurdles.
    And I want to be clear: FAA is making progress. In fact, GAO
    reported last year that only 5 of 76 aviation stakeholders said
    they had little to no confidence in the FAA's ability to
    implement NextGen.
        At this time last year, we were uncertain when we would see
    a plan for implementing DataComm. Now, in response to a tasking
    by Chairman LoBiondo, the FAA has a plan, with industry
    support, to implement DataComm. At this time last year we were
    uncertain about the path forward for performance based
    navigation, or PBN procedures. Now, again in response to our
    tasking, the FAA has a plan, with industry support, to
    accelerate PBN procedure implementation. And the list goes on.
        Airlines are making money. The system is safe. And the FAA,
    with close congressional oversight, is making progress on
    NextGen. So the question has to be asked, what is the problem
    we are trying to tackle when we talk about reforming our air
    traffic control system?
        Well, when I talk to 10 stakeholders, I hear about 20
    different problems. When I talk to even just 1 stockholder
    about proposed solutions, such as a private corporation model,
    I immediately think of at least 14 issues, including: What
    bargaining protections would apply to employees in the new
    entity? Would employees maintain Federal benefits?
        How would the new organization work seamlessly with the FAA
    to move NextGen forward? What kind of liability insurance would
    the new entity have? How would the new entity coordinate with
    the Department of Defense in time of crisis? And would small
    communities be guaranteed service as the new entity gains
    efficiencies by closing towers?
        Mr. Chairman, with your permission I would like to enter,
    with unanimous consent, another 57 questions I have, for a
    total of 63 questions, into the record.
        Mr. LoBiondo. I thought the limit was 60.
        Mr. Larsen. Make it 60. You pick the three you do not want.
        Mr. LoBiondo. Without objection, so ordered.
        [The information follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Larsen. Thanks. So I want to make sure that we are all
    clear on whether we should address many problems with one
    solution or whether we should be addressing these problems
    individually. We must make sure the FAA authorization is not a
    science experiment because with 2 million passengers in the
    skies on any given day, we must remember what is at stake if we
    make changes to our safe air traffic control system.
        If we resolve to go big in this bill with significant air
    traffic reforms, we have to do it methodically, with a clear
    statement of the problem that we are trying to solve and a
    clear understanding of how to solve it without compromising
    safety in any way.
        Finally, I want to note something that is not a surprise to
    anyone here. We have 6 months to pass an FAA bill. There are
    many issues to address with ATO reform. I do not think any of
    our witnesses will tell us today that the diverse interests in
    this industry are coalescing around a single proposal.
        Without that happening, I find it difficult to foresee an
    on-time FAA authorization bill if we tackle this topic. If
    stockholders want to push for a proposal, they need to put
    something on the table or risk heading us down the chaotic path
    of multiple short-term FAA bills, as we have had before the
    most recent authorization. That will only contribute to reform
    proponents' claims about the damaging impacts of unstable and
    unpredictable funding.
        And I am hopeful we can make progress on these issues
    today. And before that, I would as well like unanimous consent
    to enter in the record DOD Policy Board on Federal Aviation in
    response to discussion regarding privatization of U.S. air
    traffic control services, essentially, a DOD statement of
    issues they would like to address should we move forward on any
    planned privatization, commercialization, or whatever other
    term we want to give it.
        Mr. LoBiondo. Without objection, so ordered.
        [The information follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Larsen. With that, I yield back. Thank you.
        Mr. LoBiondo. I would now like to recognize Chairman
    Shuster.
        Mr. Shuster. Thank you, Chairman LoBiondo, for holding the
    hearing today. And let me start off with what Mr. Larsen has
    pointed out. We have got 6 months to act, and to everybody that
    knows Washington, pressure is a great thing for us to have
    here. It energizes us and gets us going to work. So that
    pressure is there, and we need to make sure we take advantage
    of it.
        Over the past 2 years we have held numerous meetings,
    listening sessions, roundtables, and hearings on the FAA's
    efforts to modernize our safe yet increasingly obsolete ATC
    system. We have also seen reams of GAO reports and inspector
    general's reports on the FAA's most recent ATC modernization
    initiative on NextGen.
        The bottom line is that after three decades of various
    modernization attempts, billions of dollars have been spent and
    we are nowhere near where we need to be. While the FAA has
    spent approximately $6 billion to date on NextGen, passengers,
    shippers, and aircraft operators have seen few benefits. In
    fact, ATC delays are up at 13 of the 20 largest airports, and
    domestic flights take longer now than they did in 1977.
        As our system approaches 1 billion passengers per year,
    under these circumstances two things will happen. One, every
    day at the airport will seem like the day before Thanksgiving.
    And two, we will lose our lead in aviation. Neither outcome is
    acceptable.
        Let me emphasize that it is not an indictment of the FAA's
    leadership team, or the air traffic controllers, who are the
    best in the world. It is an indictment of a governance and
    financing structure that is broken beyond repair.
        The underlying problem is that air traffic control is a
    high-tech service. The customers are companies and individuals
    who pay good money for the services they are provided. It is
    not a business. It is a vast Government bureaucracy.
        As a Government agency, the FAA is simply not set up to
    determine risks, pursue the most cost-efficient investments,
    manage people to produce the best results, reward excellence,
    or punish incompetence like a normal business. In the same
    amount of time that we have pursued NextGen at the FAA in the
    last 10 years, Verizon has upgraded its wireless system not
    once, not twice, not three times, but four times in the last 10
    years.
        During this discussion, some have raised the questions of,
    ``What problem are we trying to solve?'' and ``Why should we
    try to do this now?'' Those are fair questions.
        To answer what we are trying to solve, I would say that we
    are not just trying to solve a procurement problem or a human
    resources challenge. Past Congresses have tried to address
    narrow problems, but have little to show for it. The FAA has
    not really changed or gotten better.
        What I want is for the United States to have the safest--
    and let me emphasize safest--most cost-effective, most
    technologically advanced ATC system in the world, bar none. We
    are not there and we will never get there on the current path.
    We have to step up to the broader challenges of getting it
    right and keeping America the leader.
        And to answer ``Why now?'', air traffic control levels have
    declined by 15 percent since 2007, but the FAA and its budget
    have gotten larger. This is the right time to act. We have the
    breathing room and the imperative to get ourselves on course.
        The only answer is transformational reform that will ensure
    that the ATC service provider operates like a business, with no
    degradation in safety levels. It has been done before. In the
    past 20 years, 50 countries have successfully separated the ATC
    service from the aviation safety regulator.
        They have taken different approaches, but with similar
    results--ATC systems have been modernized, safety levels have
    been either maintained or improved, service quality has been
    improved in most cases, and costs have generally been reduced.
        I believe the United States, with all of our talent,
    energy, and resources, can do just that or better. Given the
    size and complexity of our national airspace, we need to look
    at lessons learned and the best attributes of other countries
    and apply them to the United States.
        The idea of reforming our system is not new. Bipartisan
    Federal aviation commissions during the Reagan and the Clinton
    administrations who have looked at it tried to tackle these
    issues. And no matter what course we take on air traffic
    control reform, we need to ensure that safety will not be
    compromised.
        I look forward to hearing from our panel, and our panel
    today is very distinguished, many, many years of service to the
    industry, many years of looking at this problem. In fact, Mr.
    Poole said to me when I saw him back there, he said, ``I hope I
    am prepared today.'' He has been preparing for 30 years for
    this hearing.
        [Laughter.]
        Mr. Shuster. As well, everybody on the panel has multiple
    years of experience here. And so for those of you new to the
    committee, you should really look at the backgrounds on these
    folks. These are truly the experts. They know the problems.
    They have the solutions. And we need to work with them to try
    to make sure that we do what is good for this country, do what
    is good for aviation in America and the world.
        Thank you, and I yield back.
        Mr. LoBiondo. Thank you.
        Mr. DeFazio?
        Mr. DeFazio. Thank you, Mr. Chairman. I think it is clear
    we all have a common objective here. We want to maintain and
    improve upon the safest air traffic control system in the
    world. But we want to make it more nimble in terms of adopting
    new technology procurement moving forward.
        But what is the major problem we are trying to solve? Well,
    I would say the 2-week partial shutdown of the FAA in the
    summer of 2011, when Congress and this committee failed to
    reauthorize the FAA; budget sequestration that caused
    furloughs, a hiring freeze, flight delays--that was a mess; the
    shutdown of the entire Government.
        So the number one priority is to protect the FAA and Air
    Traffic Organization from Congress. Now, that is a tough task,
    but here we are. Let's see how we could tackle that. How can we
    protect it from the United States Congress?
        Well, probably you could say, let's keep it the way it is,
    but let's give it mandatory spending authority. Move it off-
    budget. Right now we are only 9 percent short of self-funding.
    We can probably figure out where to get that 9 percent or save
    that 9 percent. And then, like five pages in this book of
    agencies and authorities that are exempt from sequestration,
    let's exempt it from sequestration. OK. That is one way to do
    it.
        But that does not necessarily solve the bureaucracy
    problems. Past reorganizations dictated that the FAA would have
    its own procurement system. They essentially adopted the rules
    of the Federal procurement system. It would be substantially
    out from sequential levels of review at the Secretary's office
    and OMB and everywhere else. Those things came to naught, for a
    number of reasons.
        So that past attempt at reform failed. We have bureaucratic
    problems that are apparent that are not easily dealt with. We
    have facilities that need to be consolidated or moved, and
    Congress often gets directly involved in that. So that could be
    solved with a BRAC process. You could look at trying to enforce
    those personnel reforms, but probably will not get there.
        So then we could look at an independent Government agency,
    truly independent, with a board of directors or advisors and an
    Administrator. We could look at a Government corporation; one
    of the witnesses here today has that in his testimony, and he
    is not officially representing the MAC, but that seems to be
    perhaps where they are headed.
        And people say, well, look. What is your example? The
    Postal Service? Well, not exactly. But then again, you forget
    that the reason the Postal Service is losing money today is
    because the United States Congress told them they have to
    prepay healthcare for 75 years. If we told an airline they had
    to prepay their employees' healthcare for 75 years, they would
    say, ``You are nuts. We cannot do that. Nobody can do that.''
    Well, we are making the Postal Service do it. So they are
    actually making money.
        They are not the best example. We need a 21st-century
    Government corporation model, and there is not one to point to.
    We would have to create it. That is a lot of work. And then we
    have advocates of a private not-for-profit, looking at Nav
    Canada, which has many enviable attributes.
        But there are a number of questions that arise if we move
    outside the Government sphere, independent agency, or
    Government corporation. One is, how do you value the assets and
    how are they going to pay for them? We have both physical
    assets and then spectrum, which the FAA does not have. It is
    not their asset. It is actually an FCC asset, which through the
    NTIA is annually licensed to the FAA. If you were to put that
    up for auction, it would be worth many, many billions of
    dollars. So you have got an asset issue.
        What about safety? Some advocates say, ``Well, we will
    leave safety with the Government. We will leave certification
    with the Government.'' Wait a minute. I thought certification
    was a big problem. Well, that means we are going to have to fix
    that. And then how is certification going to oversee the new
    air traffic system if they are separated? They say it works
    elsewhere. Yes, maybe it can work here, but I have concerns
    about that.
        What about airport funding? We have massive needs. There is
    tremendous resistance to any increase in a PFC. But under this
    model, AIP would go away, so I do not know exactly how
    commercial airports would exist. I guess they would go to the
    European model, which is massive increase in landing fees,
    which I think would receive some resistance from some parts of
    the aviation community.
        Pension arrangements were already raised by my colleague
    here. One member of the panel told me upfront, ``No, they are
    going to go to defined benefit.'' Well, I do not think that
    would go over with the air traffic controllers. So we have some
    disagreement there.
        And then there is something that we stumbled over last
    Friday, and I will be asking very exacting questions about
    this. Because of a recent court ruling by the DC Circuit
    reinforcing a court ruling from 1936 that the Government cannot
    delegate regulatory authority, and actually one of the briefs
    actually mentions air traffic control, there is a question of
    constitutionality here. And I would not want to spend a lot of
    time on something that ends up not being constitutional, create
    it and then have to see a future Congress very messily
    reintegrate it.
        So a lot of questions to be answered, and I think we have a
    common goal, as I said at the outset. We want to reinforce the
    safest system in the world. We want to make it more nimble in
    procurement, less bureaucratic, provide better service to all
    of its aviation customers and stakeholders, and what is the
    best way to do that? And I look forward to hearing from the
    panel. Thank you, Mr. Chairman.
        Mr. LoBiondo. Thank you, Mr. DeFazio. Thank our witnesses
    for being here today.
        Our first witness today is Mr. Matt Hampton, assistant
    inspector general for aviation at the United States Department
    of Transportation. Thank you for being here. We are looking
    forward to your comments.

     TESTIMONY OF MATTHEW E. HAMPTON, ASSISTANT INSPECTOR GENERAL
     FOR AVIATION, OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF
     TRANSPORTATION; DOUGLAS PARKER, CHAIRMAN AND CHIEF EXECUTIVE
     OFFICER, AMERICAN AIRLINES GROUP, INC., ON BEHALF OF AIRLINES
     FOR AMERICA; CRAIG L. FULLER, VICE CHAIRMAN, FEDERAL AVIATION
     ADMINISTRATION MANAGEMENT ADVISORY COUNCIL; PAUL M. RINALDI,
     PRESIDENT, NATIONAL AIR TRAFFIC CONTROLLERS ASSOCIATION, AFL-
     CIO; ROBERT W. POOLE, JR., DIRECTOR OF TRANSPORTATION POLICY,
      REASON FOUNDATION; DAVID GRIZZLE, CHIEF EXECUTIVE OFFICER,
      DAZZLE PARTNERS, LLC, FORMERLY CHIEF OPERATING OFFICER, AIR
      TRAFFIC ORGANIZATION, FEDERAL AVIATION ADMINISTRATION; AND
         DOROTHY ROBYN, AIRLINES/AVIATION CONSULTANT, FORMERLY
                      PRINCIPAL, THE BRATTLE GROUP

        Mr. Hampton. Chairman Shuster, Chairman LoBiondo, Ranking
    Member DeFazio, Ranking Member Larsen, and members of the
    subcommittee, thank you for inviting me to testify today. At
    the request of this subcommittee and the full committee, we are
    examining how FAA's organizational and financing structure
    compares with other countries.
        My testimony today will focus on the four countries we
    examined: Canada, the United Kingdom, Germany, and France. I
    will briefly describe how they organize and finance their air
    transportation systems as well as how they develop and
    implement new technologies.
        The four countries we examined have adopted a range of
    organizational structures, but they share some common
    characteristics. The four countries have commercialized their
    air navigation services to improve operations, cost-
    effectiveness, and the execution of capital projects.
        Each of the four countries we examined have separated air
    traffic management from the safety regulator. They have
    organized their air navigation systems into independent air
    navigation service providers, commonly referred to as ANSPs. In
    addition, each service provider is self-sufficient, financed
    primarily through cost-based user fees. They also have the
    ability to finance their modernization efforts by issuing long-
    term bonds and other debt instruments. All four share a common
    commitment to cost control and to reducing cost to airspace
    users. Some have been more successful than others.
        Now I would like to turn to how the service providers
    modernize and implement new technologies. We found that none of
    the four countries embark on large-scale modernization projects
    such as the NextGen transformational programs that FAA is
    pursuing today. Instead, they develop technology incrementally
    and rely on commercial off-the-shelf systems. This is a
    function of their size, complexity of the traffic they manage,
    and the number of facilities they operate.
        Foreign air traffic service providers such as Canada and
    the U.K. have experienced some success incorporating new
    technologies to reduce controller workload and enhance
    productivity through data link communications and the
    implementation of electronic flight strips.
        In addition, Canada, the U.K., and to some extent Germany
    also sell technologies including controller automation systems
    to other countries. It is worth noting that Nav Canada relies
    heavily on in-house capability. They also rely on joint
    ventures, and they follow a very disciplined cost-benefit
    approach to acquisitions, with a focus on near-term return on
    investments.
        Now I would like to touch on some matters that should be
    considered going forward.
        As Congress explores options to change FAA's structure,
    there are several differences between the U.S. aviation system
    and other countries, including size and complexities. As was
    recently noted, airports are financed very differently outside
    the U.S. There is no comparable $3.5 billion Airport
    Improvement Program outside the U.S.
        In addition, none of the foreign service providers we
    examined conduct the level of research and development that FAA
    does on air traffic management systems or have access to NASA
    or DOD research. This has important implications for NextGen
    going forward.
        Without question, how FAA is organized and financed is a
    policy call for Congress. There are several important lessons
    that deserve attention from other nations' experiences to date.
        First and foremost is safety oversight. While studies show
    that safety has not been impacted, a robust safety workforce
    with sufficient expertise is needed to provide oversight of the
    air traffic entity. Given the size and complexity of the U.S.
    system, careful thought must be given to the development of the
    safety paradigm for the U.S. system.
        Second, other nations faced several challenges
    transitioning to the new system, particularly related to
    transferring Government workforces to the new air traffic
    service provider. These issues took time to resolve and
    included resolving different labor issues.
        Finally, financial considerations are important, including
    determining which assets should be transferred to the new
    entity as well as assigning their appropriate value.
        Mr. Chairman, this concludes my statement. I would be happy
    to answer any questions you or other members of the
    subcommittee may have.
        Mr. LoBiondo. Thank you, Mr. Hampton.
        Our next witness today is Mr. Doug Parker, chairman and CEO
    of American Airlines Group, on behalf of Airlines for America.
    Thank you for being here.
        Mr. Parker. Thank you, Mr. Chairman. I am Doug Parker,
    chairman and CEO of American Airlines, but also vice chairman
    of Airlines for America. I am here today in that capacity. We
    certainly appreciate the opportunity to participate in the
    committee's examination of potential air traffic control reform
    solutions.
        As we broaden the FAA reauthorization discussion, there has
    never been a better time for reform. At last, through the
    leadership of this committee and support on both sides of the
    aisle, we have both the intent and the political will to
    transform the U.S. air traffic control system.
        For years we have said we cannot continue to run the same
    ATC system the same way as it has been since the 1950s and
    expect different results. A string of reports from Presidential
    aviation commissions, DOT inspector general, the GAO, and
    independent private sector experts all show FAA's ATC
    modernization efforts have been plagued by significant cost
    overruns and delays, calling into question the FAA's ability to
    deliver under the existing funding and governance structure.
        Now, this is not a criticism of the FAA's current
    leadership. They are a great group that is working very hard
    and has delivered recent pockets of progress. We commend
    Administrator Huerta, Deputy Administrator Whitaker, and
    Assistant Administrator Bolton for their leadership. We believe
    the problems lie not with their leadership but with the
    constraints and the built-in impediments of the current
    governance and funding structures.
        We believe fundamental reform presents significant
    opportunities for improving our system. And like many of you,
    we recognize there are risks associated with major reform.
    Indeed, there are those who suggest change is hard and there is
    insufficient will, both politically and within the industry, to
    tackle something of this magnitude. We disagree with the
    skeptics.
        Other countries have successfully taken it on, and we have
    the benefit of learning from their combined experience. The
    risks can be mitigated. Of far greater concern is the much
    larger risk of doing nothing. It is in all of our best
    interests to determine the most effective, fact-based solutions
    that will work for stakeholders and provide the ``step change''
    improvements needed for our ATC system long term.
        To make an informed comparison to our own system, A4A
    undertook research to benchmark and assess the governance,
    financial, and operational performance of the U.S., Canadian,
    and European ATC models. To gain an understanding of best
    practices outside the United States, our evaluation reviewed
    the safety, efficiency, customer service, and NextGen
    implementation performance of those organizations. Our
    conclusion is that to bring our ATC system to where it should
    be today and must be for the future, transformation, not
    renovation, is required.
        We are fortunate to have the safest ATC system in the
    world. We also should be striving to be the most efficient. Our
    airspace is inefficiently managed, and airline passengers pay
    the price.
        Our benchmarking and fact-based assessment of the
    governance, financial, and operational performance suggest some
    basic principles for ATC organization success: first,
    independent, multistakeholder board governance; second,
    effective management incentivized to pursue efficiencies
    without unnecessary constraints hampering their decisionmaking;
    third, a fair self-funding model based on the cost of ATC
    service; and fourth, the ability to manage capital to allow
    speedier technological modernization.
        With these principles in place, ATC can operate like a
    business, with long-term funding and governance certainty.
    Clear organizational accountability to stakeholders and users
    of the system drives effective and efficient operations and
    decisionmaking. A self-funded, cost-based financing model frees
    the system from the annual appropriations process and ensures
    stable and predictable funding that allows for access to
    capital markets. And funding not consistently held up by
    sequestration will also enable long-term planning.
        Our work to date shows a commercialized, nonprofit type of
    governance structure would deliver the greatest benefits for a
    reformed ATC entity because the commercial structure would
    continue to put safety first while driving value for all
    stakeholders. And to be clear, under any and all scenarios,
    first and foremost, the FAA must retain the role as safety
    regulator.
        We believe various models already in place in key
    international airspace provide valuable insight to help us
    transform best global practices into a U.S. system that
    acknowledges our complexity and operating environment. We
    believe we should be focused on holistic changes in governance,
    structure, funding, and accountability that will facilitate the
    development of a world-class ATC organization.
        We should do it by using the best technology and best
    practices to deliver the safest and most efficient air traffic
    infrastructure in the world. We have the technology and the
    opportunity. We are doing a disservice to our customers and the
    flying public by not acting.
        We need to stop the endless circular discussion of need,
    and act by seizing this opportunity to create an ATC system our
    passengers, our economy, and businesses across America expect
    and deserve. Thank you very much.
        Mr. LoBiondo. Thank you, Mr. Parker.
        Our next witness today is Mr. Craig Fuller, vice chairman
    of the Federal Aviation Administration's Management Advisory
    Council.
        Thank you for being here.
        Mr. Fuller. Mr. Chairman, Ranking Member Larsen, members of
    the committee, I am Craig Fuller. I am actually a general
    aviation pilot of over 40 years of active flying, but I am not
    here to represent any segment of the aviation community. I
    really come here as a member of the FAA's Management Advisory
    Council.
        This council was formed in 1996 by the Congress to give the
    Administrator advice and counsel on management concerns. And
    this Administrator, Administrator Huerta, when we convened for
    the first time as a group last January 2014, asked us to dive
    rather deeply into the question of what were the impediments to
    going forward, and specifically in the context of
    reauthorization.
        I have submitted a statement for the record. I would like
    to give you just a very brief background and respond to some of
    the good questions that were asked in the opening statements.
        We do not, on the Management Advisory Council, have a
    recommendation to make or a consensus that we have arrived at
    yet. I will talk about a concept that the working group and the
    members of the MAC have looked at carefully.
        Our first step last year was actually to talk to about 30
    different stakeholders to understand, going forward, what
    impediments they saw, and then to talk to the leadership inside
    the FAA. As a working group, the MAC members participated in
    this activity, and the full MAC was briefed during our meetings
    on what we found.
        What we found has been actually shared here today in many
    ways. First and foremost, the question was asked, is the best
    funding structure in place today? I think our answer is clearly
    no, that in fact, the funding structure does not provide the
    continuity of funds, does not provide the flexibility of funds,
    does not provide the ability to do capital investments that are
    necessary to go forward. So the funding structure is a serious
    concern.
        The other concern that we heard and was touched upon is the
    whole certification and regulatory area. As a matter of fact,
    this was the area that probably more groups talked about
    indepth than anything else. Whether it is a third-class medical
    concern, the ability to have designees doing examinations; the
    manufacturers are concerned about the speed with which part 23
    rewrites get done--across the board, this was a concern.
        Now, safety has been delivered to us through certification
    and regulation very successfully for many years. But neither
    inside the FAA nor in the community is there a sense of
    satisfaction about the way this is operating, and that is a
    fundamental issue that I think has to be dealt with over the
    course of this discussion.
        I believe all MAC members, I can say safely, are not
    satisfied with the status quo. I believe all MAC members think
    there is a better path forward, and I know all of us appreciate
    the leadership of this committee, Chairman Shuster, calling for
    bold action and ideas. And I think all of us on this panel come
    with ideas because we want to improve the status quo.
        In the course of our deliberations, we talked with some of
    the groups here today. We talked to people who were looking at
    taking the Air Traffic Organization outside of the FAA. We
    looked at Nav Canada. I have been to Canada. We looked at some
    of the other countries that have done this.
        The distinct difference between us and those countries is
    size. Somebody from the National Business Aviation the other
    day said, ``In New Zealand there are 17 business aircraft.'' In
    Canada there is about 10 percent of the air traffic we have. As
    you heard, the amount of research, the work that is developed
    in the United States and shared throughout the world just makes
    us different.
        So while there are many merits--you are going to hear more
    about them--to a businesslike operation of ATO, the working
    group has come to focus on a concept where the entire FAA would
    be put into a Federal corporation. This gets to the question of
    what is bold and doable.
        If the entire FAA goes into a Federal corporation, the
    employees stay in the Federal Government. The revenue streams
    continue to flow in there through a transition period. A
    separate board of Governors, as was described for ATO, a group
    of stakeholders, would be the governing body for this and would
    deliver the businesslike methodology for operating not just the
    ATO but the safety and the certification areas as well.
        There would need to be a chief safety officer. These
    people, some of them, would need to be appointed by the
    President, confirmed by the Senate. The Congress would continue
    to have to have interaction, but not at the level that exists
    today, in order to deliver an FAA process that is simply more
    efficient and operates with the continued safety we have
    enjoyed.
        This is a concept that we look forward to spending time
    with the community discussing. It is a concept we would like to
    have further dialogue with the committee and the committee
    staff about. Again, I thank you for the opportunity to share
    the work that is in progress at the Management Advisory Council
    at the FAA. I look forward to your questions.
        Mr. LoBiondo. Thank you, Mr. Fuller.
        Our next witness today is Mr. Paul Rinaldi, president of
    the National Air Traffic Controllers Association.
        Welcome.
        Mr. Rinaldi. Thank you, Mr. Chairman. Thank you for the
    opportunity to testify today at this important hearing as we
    lead into a new FAA reauthorization bill.
        The FAA and the National Airspace System are experiencing a
    transition period. We all have a stake in the National Airspace
    System of this country. It is an economic engine which
    contributes $1.5 trillion annually to our gross domestic
    product and provides over 12 million American jobs.
        Currently we run the largest, safest, most efficient, most
    complex, most diverse airspace system in the world. Our system
    is incomparable, unequaled, and unrivaled by any other country.
    The United States airspace system and the FAA is considered the
    gold standard in the world aviation industry. And yet the
    reality is in order to keep this honor, we need a change.
        Currently we face many challenges in responding to the
    given problems of unstable budgets, including but not limited
    to the inability to finance long-term projects, the inability
    to grow the National Airspace System for new users, the
    inability to modernize our aging infrastructure.
        And currently we are struggling in maintaining proper
    resources and staffing at our busiest air traffic control
    facilities. The FAA lacks a central staffing distribution
    system that has led to some of our busiest facilities in the
    country approaching critical staffing. This is a giant concern
    for us.
        The air traffic controllers are the backbone of the
    National Airspace System, maintaining the safe and orderly flow
    of aircraft across the United States. In addition, we are
    contributing our expertise to modernize our system through
    NextGen projects. And we provide all the on-the-job training
    for all new hires.
        This requires our facilities to be appropriately staffed.
    An understaffed facility can barely keep its positions open for
    the day-to-day operation, never mind train our controllers on
    new technologies and procedures for NextGen or train our new
    hires that walk through the door.
        Understaffing our facility will ultimately delay
    modernization projects. Simply put, this is bad business, to
    understaff our business facilities in the country, and yet the
    FAA continues to do it every day. This will eventually cause
    major delays within our system.
        The upcoming FAA reauthorization bill must address a lack
    of predictable, stable funding stream for our continuous,
    hypercritical aviation operation. We understand that addressing
    the stop-and-go funding problems that we have all experienced
    may lead to the examination of a potential structural change
    for the FAA. We believe it is time to look at a structural
    change for the FAA.
        But such structural change or reform must be carefully
    examined to prevent the unintended consequences from negatively
    affecting the safety and the efficiency of the National
    Airspace System. Every stakeholder in the National Airspace
    System should all work together to ensure the United States
    continues to be the leader in the global aviation community.
        Any reform must be mission-driven, with safety and
    efficiency first and foremost; must have a process to provide a
    stable, predictable funding stream to adequately support the
    air traffic control services, staffing, hiring, training, long-
    term modernization projects, along with preventive maintenance
    and ongoing modernization to our physical infrastructure, which
    is aging.
        Any change must allow for continued growth in our system
    and must be a dynamic system that continues to provide service
    to all segments of our aviation community. We do not want to
    take a step backwards. In essence, any change we make needs to
    be precision-like so that we do not interrupt the day-to-day
    operation of this National Airspace System.
        Mr. Chairman, our National Airspace System is an American
    treasure. We cannot continue to shortchange it. Aviation is
    uniquely an American tradition. We need to make appropriate
    changes to secure the funding of our system and a proper change
    for the governance structure of this system so that we will
    continue to grow aviation in this country, allow the
    integration of new users like UAVs and commercial space
    programs, and give us the competitive edge to continue to be
    the leader in the global aviation community.
        Mr. Chairman, I thank you for your time, and I look forward
    to answering any questions you may have.
        Mr. LoBiondo. Thank you, Mr. Rinaldi.
        Our next witness today is Mr. Bob Poole, director of
    transportation policy for the Reason Foundation.
        Thank you for being here.
        Mr. Poole. Mr. Chairman, thank you very much for having me
    today. I have been studying the air traffic control system for
    more than three decades, and I have published widely on the
    subject. Today I am a member of two working groups developing
    proposals for air traffic restructuring, the Business
    Roundtable Group and the Eno Center Group.
        I agree with many other observers about the fundamental
    problems with the Air Traffic Organization the way it is
    governed and funded. I would put it this way: we have basically
    three problems. Number one, unstable, uncertain funding--
    everybody agrees on that; number two, a governance model with
    so many different overseers that it diverts significant ATO
    management time away from its customers and onto the overseers;
    and third, an organizational culture that is very status quo-
    oriented that hampers innovation.
        My focus today is going to be on the organizational
    culture, based on this study that was commissioned by the
    Hudson Institute--about innovation in aviation, in air traffic
    specifically.
        I looked at seven disruptive innovations and how the ATO
    handled them: digital communications; GPS-based landing system;
    GPS-based surveillance, in other words ADS-B; performance-based
    navigation; real-time weather data; remote towers; and facility
    consolidation. In each of these seven, the ATO is far more
    cautious than corporatized ANSPs overseas.
        My findings about the status quo culture went through
    extensive peer review by many people with extensive knowledge
    inside and outside of the FAA. They agreed with my five
    proposed causal factors.
        Number one, the self-identity of the ATO as a safety agency
    rather than as a technology user. That is because the ATO is
    embedded within the FAA, whose mission is safety, obviously.
    The companies that produce innovations are regulated at arm's
    length by the FAA, and so they are the ones that are free to
    think outside the box, come up with things knowing that they
    are regulated by the FAA. That is the way ANSPs operate in
    other countries today.
        Number two, loss of technical expertise. Under civil
    service and with a status quo culture, it is very hard for the
    ATO to keep top-notch engineering and software talent. The best
    go to the private sector. So requirements for new systems end
    up being defined by contractors, not internally by the
    organization.
        Number three is loss of management expertise. For some of
    the same reasons, ATO has trouble attracting and keeping top-
    notch program managers that you need to drive big technology
    implementations on time and on budget.
        Number four is excessive oversight. Because it is spending
    taxpayers' money, the ATO must be held accountable to numerous
    Governmental overseers, including all 535 Members of Congress.
    That consumes, believe me, huge amounts of management time.
        And number five, lack of customer focus. Because the ATO
    gets its funding from Congress, it really acts as if Congress
    is its main customer rather than the aviation community that it
    is intended to serve. Corporatized ANSPs overseas are freed
    from those problems.
        So to change the status quo culture, we need to do three
    things.
        First, we need to organizationally separate the ATO from
    the safety regulator so that it is at arm's length, just like
    the technology firms that are out there.
        Second, change the funding system; instead of having the
    users of the system pay taxes to the Government, getting all
    the money into the Government budget process, they need to pay
    fees and charges directly to the provider, the new ATO. That
    would refocus ATO's attention on its customers.
        Third, a governance model that is driven by the people who
    are paying the bills: the customers and other stakeholders.
    They should be doing the oversight rather than all the
    different ones in Government today.
        There is a lot of evidence the overseas ANSPs are getting
    better performance and higher productivity. The largest two
    independent studies are these that I refer to in my
    organizational testimony. One is an academic book-length study.
    The other was a peer-reviewed study done with three
    universities.
        A major finding from this study is that: ``The
    commercialization models have resulted in significant cost
    reductions, dramatic improvements in modernization, and major
    improvements in service quality while improving safety.
    Commercialized ANSPs exhibit three main strengths: sensitivity
    to customer needs, agility in reaching a decision, and ability
    to carry it through.''
        Finally, which organizational form is best? I and a number
    of researchers have concluded that a nonprofit corporation
    approach really is best. The way we could do that in this
    country is with a federally chartered not-for-profit
    corporation comparable in structure to the U.S. Red Cross, the
    U.S. Olympic Committee. It would also have the characteristics,
    essentially, of a user co-op, which we have a number of in
    aviation and elsewhere.
        That is my best conclusion after many decades of studying
    this as a path forward. It is also the organizational form that
    is being recommended by the Business Roundtable Group. Thank
    you very much.
        Mr. LoBiondo. Thank you, Mr. Poole.
        Our next witness today is Mr. David Grizzle.
        Thank you for being here today. Mr. Grizzle, you are
    recognized for your statement.
        Mr. Grizzle. Good morning. My passion to see Congress
    embrace transformational change in air traffic control is the
    result of my long career in aviation--22 years at Continental
    Airlines in various senior executive positions, and 4\1/2\
    years at the FAA, mostly as the chief operating officer of the
    Air Traffic Organization with very able coworkers.
        I firmly believe that taking air traffic control completely
    out of Government and creating an independent not-for-profit
    that values safety, efficiency, and access is the only means to
    assure a more stable future for controllers, a more efficient
    and larger system for the users, and a more reliable system for
    consumers.
        Multiple times over the last 20 years, Congress has
    expressed its frustration with the performance of the FAA and
    its inability to modernize its equipment. In the Air Traffic
    Management System Performance Act of 1996, Congress gave the
    Administrator sweeping new powers to govern the agency with
    less external interference, almost in a nongovernmental way.
    Specifically, the Administrator was to be the final authority
    in personnel matters through previously granted powers to
    design a personnel management system outside of the
    restrictions of title V.
        The Administrator was given equally broad powers with
    respect to acquisitions, again with previously authorized
    authority that was to have improved the agency's timeliness and
    cost-effectiveness in acquisitions by removing the FAA from the
    application of the Federal Acquisition Regulations.
        To put an even finer point on its intentions, Congress
    provided that the Administrator was not required to submit for
    approval or even seek the advice of the Secretary or any other
    person at DOT on those matters where the Administrator had
    final authority.
        Still not satisfied with air traffic control performance, 7
    years later Congress created the Air Traffic Services
    Committee, a Presidential-appointed, Senate-confirmed board to
    oversee the system. The committee was to approve ATC's
    strategic and modernization plans and all acquisitions over
    $100 million. The committee was also supposed to approve the
    hiring of the COO and make budget recommendations.
        As chief operating officer, I saw vividly what came of
    Congress' best intentions to create a governance structure
    still within the Federal Government that respected the peculiar
    needs of the unforgiving, critical operation of air traffic
    control. The results have not been favorable.
        In human resource management, every significant personnel
    matter is submitted to the Department of Transportation for
    review, notwithstanding the provisions of the 1996 Act. Whether
    a change in compensation, the appointment of senior management,
    the extension of a controller contract, or the restoration of
    pay for employees following the furloughs of 2011 and 2013, the
    Department and often other entities reviewed our decisions, and
    they were always delayed, frequently modified, and sometimes
    reversed.
        The FAA has continued to undervalue human capital,
    resulting in our once again having a prospective shortage of
    controllers, technicians who lack certifications, and many new
    supervisors who have been on their jobs for over a year with
    absolutely no management training. And the FAA's personnel
    management system in both design and effect is almost
    indistinguishable from title V, from which it was to have been
    separated.
        Procurements continue to be grindingly slow, specifications
    were and continue to be inexpertly determined, and major
    programs which at the time of their conception were too massive
    and vastly exceeded the technological visibility of their
    planners continue to be behind schedule and over budget. And
    this does not occur because our contractors are rapacious or
    our program managers unskilled. It occurs because the system
    was never designed to support a high-performance operation like
    air traffic control.
        Finally, you might ask, what happened to the Air Traffic
    Services Committee that was supposed to bring oversight from
    highly knowledgeable and diversely experienced individuals? Its
    vacancies have not been filled in a decade. It has not convened
    in years, and therefore certainly has not reviewed any air
    traffic modernization plans, approved any major acquisitions,
    or made any budget recommendations, as provided in its enabling
    statute, which is the law to this day.
        The last 20 years, most of which were times of budgetary
    plenty, teach us that political governance cannot provide the
    oversight, guidance, and even continuity of attention necessary
    to support a critical and technology-intensive operation like
    air traffic control.
        Based on my experience and the failed half measures of the
    past, I believe that our only solution is one that entrusts air
    traffic governance and stewardship to individuals who
    understand and value the needs of the users, employees, and
    passengers of the system, who have a continuing interest in and
    appreciation for this critical operation, and who are outside
    of even the political appointment process.
        Thank you for the opportunity to testify today. I am happy
    to respond to your questions and provide further detail on my
    statement.
        Mr. LoBiondo. Thank you, Mr. Grizzle.
        Our next witness today is Ms. Dorothy Robyn.
        Thank you for being here today.
        Ms. Robyn. Good morning. Thank you for the opportunity to
    testify.
        Secretary Foxx several weeks ago gave a speech at the Aero
    Club, and he referred to ``the graveyard of administrations
    that have tried to make game-changing moves to reform air
    traffic control.'' If you are wondering why I am here this
    morning, it is because my name, along with others, is on one of
    the headstones, the one marking the Clinton administration's
    failed effort to corporatize air traffic control.
        [Laughter.]
        Ms. Robyn. I brought with me the vacuum tube, the very
    vacuum tube, that Vice President Gore used to hold up whenever
    he spoke about the need to reinvent air traffic control, which
    he did often. The FAA was then the largest purchaser of vacuum
    tubes in the U.S. They acquired them from Bulgaria and the
    Czech Republic because they were no longer produced here.
        I developed such strong views on this issue, such a passion
    for it, that I continued to speak and write about it after I
    left the Clinton administration. I wrote a Brookings report in
    2008. I was in the Obama administration for 5 years, away from
    this issue, but I have reengaged in the debate as an
    independent member of the Eno Foundation's NextGen Working
    Group.
        Let me make three points this morning, and in doing so, try
    to respond to a couple of the things that I have heard this
    morning. First of all, air traffic control, the operation of
    the air traffic control system, is not an inherently
    governmental activity. Now, although that is not the
    controversial statement that it was 20 years ago when we
    proposed corporatization of air traffic control, I want to be
    clear about what I mean by that.
        Air traffic control is a complex, safety-critical endeavor,
    but it is operational in nature. It does not require the kind
    of policy judgments or tradeoffs that only a Government entity
    can make.
        By contrast, the regulatory side of the FAA is inherently
    governmental. As with the Federal Railroad Administration,
    NHTSA, the Food and Drug Administration, FAA regulation
    requires policy judgments and tradeoffs that are at the heart
    of what it means to be a Government agency.
        Now, historically, the air traffic control operator and the
    safety regulator were seen as so inextricably linked that the
    operation was assumed to be inherently governmental. We know
    that is not the case, and we know that in part from the 50
    countries that have separated them.
        In fact, safety experts worldwide are now unanimous in
    saying that the regulator should be separate from the operation
    it regulates so as to avoid a conflict of interest on the part
    of the regulator. The United States is one of the only advanced
    industrial countries in which air traffic control is still both
    operated and regulated by the same agency. So in sum, operation
    and regulation should be separate. And second, FAA safety
    should remain in a traditional Government agency.
        My second point: Precisely because air traffic control is
    not inherently governmental, our current approach to managing
    it is highly problematic. And I think this is the answer to the
    question that Congressman Larsen and Congressman DeFazio
    raised--what is the problem?
        Simply stated, and I have been saying this for 20 years,
    the problem is air traffic control is a 24/7, capital-
    intensive, high-tech service business trapped in a regulatory
    agency that is constrained by Federal budget and procurement
    measures, burdened by a flawed financing system, and
    micromanaged by Congress and the Office of Management and
    Budget.
        On the governance side, as a traditional Federal agency,
    the FAA simply cannot manage what amounts to a business. To
    paraphrase James Carville, ``It's the incentives, stupid.'' As
    one example, FAA management views you all, views Congress, as
    the customer, not the users of the system, because you hold the
    purse.
        On the financing side, the incentives are every bit as
    flawed. Excise taxes create perverse incentives for the users
    of the system, who do not pay directly for what they consume.
    It also creates flawed incentives for the FAA, and it denies
    the FAA the sort of user feedback that a normal business gets
    from its customers.
        And because the Federal Government lacks a capital budget,
    agencies must fully fund capital investments upfront out of the
    annual appropriation process, which is completely at odds with
    what it takes to maintain a capital-intensive system like air
    traffic control.
        So this clash of cultures, the fundamental mismatch between
    governance and financing in the system that we have, is in my
    view the problem and to blame for the issue.
        Third, to address the governance problem, Congress needs to
    move the ATO outside of the traditional Government bureaucracy
    so that it can operate like a business. You have heard about
    the three different models this morning--a Government
    corporation, a user-owned cooperative or stakeholder
    cooperative, and a for-profit entity that is regulated, rate-
    of-return regulation.
        I have a strong preference for the user cooperative model
    because it achieves a very elegant alignment of economic
    incentives. The stakeholders manage the system with heavy,
    heavy involvement by the users. Therefore, they have a natural
    incentive to keep costs low and to invest in capital at the
    optimal level. And I think Nav Canada's record is superb
    because it has that alignment of incentives right. That is
    absolutely critical.
        The NATS model for profit, rate-of-return regulation, is
    problematic. You have to set up a regulatory apparatus. There
    is an incentive for the regulatee to over-invest in capital.
    The nonprofit corporation, it works well in other countries. My
    great concern is that it would be impossible to pull off in
    this country because the context is different, that it would be
    impossible to have a politically insulated Government
    corporation in this country. Do I have time left? Yes? Let me
    address the issue of spectrum because I think I have raised
    that issue and maybe created a monster.
        Mr. Shuster. Actually, you have gone over.
        Ms. Robyn. Have I gone over? Oh, I am sorry.
        Mr. Shuster. You have gone over 2 minutes. You do not have
    2 minutes left.
        Ms. Robyn. Sorry. I will stop there.
        Mr. Shuster. Excuse me, Mr. Chairman, for interjecting.
        Mr. LoBiondo. No. Thank you. We will maybe get to some more
    of this.
        I would like to recognize Mr. Shuster.
        Mr. Shuster. I am anxious to get to my question, so I am
    sorry I did that.
        [Laughter.]
        Mr. Shuster. But let me just say, talking about hitting the
    nail on the head, you are spot on. And first I want to just
    clarify, what you said to address Mr. DeFazio's direct
    question, which Mr. DeFazio always has good questions and
    always tough questions, but we are not considering delegating
    the safety and regulatory oversight to a Government corporation
    or to another entity. We are discussing the delegation of a
    service function.
        And we have had many examples of that in the Federal
    Government. I might add many of them are poor examples, but you
    learn from mistakes as you do from success. So as we move
    forward, let's look at those poor examples and make sure we do
    not make the same mistakes.
        We have seen the DOT reports, the IG reports, the GAO
    reports, talking about the governance and financing reforms
    that other countries have done throughout the world. This is a
    yes or no question because as I look at this panel, I tried to
    do the math. There is probably close to 200 years' experience
    on this panel dealing with the ATC question.
        So the yes or no question is: Due to the size of our
    airspace--and that is the big question; everybody says we are
    too big, we cannot do things the way other countries do, which
    we cannot; there are a lot of hurdles and challenges--but yes
    or no, can we scale this, the various reforms that have taken
    place around the world, to the airspace that is our size?
        Just go down the list. Yes or no? I know there are a lot of
    things in there, but it is basically at the core of the
    question. Can we achieve this?
        Mr. Hampton. Yes.
        Mr. Parker. Yes.
        Mr. Fuller. I hesitate because----
        Mr. Shuster. You have been in Government too long, Mr.
    Fuller.
        Mr. Fuller. I have been out a long time, though. It is the
    point that was made--the size makes the transition period much
    more difficult.
        Mr. Shuster. I do not doubt that. But is it possible? Do
    you believe, done well, is it possible?
        Mr. Fuller. I think you have more problems separating it by
    itself than keeping it together.
        Mr. Shuster. Mr. Rinaldi?
        Mr. Rinaldi. It is challenging, and I am not----
        Mr. Shuster. I get all that. It is a yes or no. So far, two
    of you have failed the test.
        Mr. Rinaldi. I think yes, we can. Anything we set our minds
    to do, we do.
        Mr. Poole. Yes.
        Mr. Grizzle. Unquestionably yes.
        Mr. Shuster. I think you have already answered the
    question. OK. That being said, I believe we can also. I believe
    we can, too.
        And now the question directly to Mr. Parker: You have spent
    a career in the airline industry. You have merged a couple of
    airlines. Doing this, can you take your experience from--you
    have 90,000 employees. You have dealt with safety concerns. You
    have dealt with technology. You have dealt with financing. You
    have dealt with human resources concerns. Can you talk about
    your experience in doing something like this? Again, it is
    difficult, but can you address that directly?
        Mr. Parker. Sure. Absolutely. Thank you. We have indeed
    gone through a number of complex projects over time, and this
    would be another one. What I know is when it comes time to get
    large projects done, you need the team to focus on the vision,
    not the obstacles.
        Making sure the obstacles are addressed is certainly
    important. You need people to make sure that all the details
    are ironed out and the obstacles are not ignored. But you
    cannot focus on the obstacles. The way you get things done is
    focusing on the vision, And that is what this committee is
    trying to do. We applaud that. That is how we get through
    things.
        Now, there are certainly problems that will come about. But
    our job is to make sure that we look to the future and not live
    in the past and make sure we are doing the right things. That
    is what we have certainly been able to accomplish through
    mergers. Obviously, they are difficult.
        But at the end of the day, you fight through the
    difficulties to make sure that you are moving forward, that is
    what needs to happen here. We are still living with a system
    that is much worse than we can do. We need to move forward.
        And what we have seen, as we have worked through projects,
    to your question, is that once you do that and you work
    through, you end up with something much, much better. I could
    go on for a long time about how our companies are much better
    off because of the challenges we have worked through, and no
    telling where they would be had we not done that.
        So this is certainly manageable, and indeed, I would argue
    in some cases, easier to manage because we are not talking
    about integration of two separate ATC systems. It exists. We
    are just talking about changing the governance and the funding
    to make sure that it can actually operate efficiently because
    it certainly cannot operate efficiently under the current
    structure.
        So I have no doubt that with the right attitude and
    philosophy, that the obstacles could be overcome, and that we
    will be much better off shortly thereafter. And the challenges
    are worth taking on.
        Mr. Shuster. I think a very important point that we should
    take note of is that you made the point that you were merging
    two different entities, which is extremely different cultures.
    We are taking a culture, we are taking an organization, and
    setting it aside, and it is basically intact. We are trying to
    make it better.
        Mr. Parker. Absolutely.
        Mr. Shuster. So I think that is one of the things we all
    should take away from this. This is challenging, but it is no
    more challenging than what you have done in your career.
        I yield back.
        Mr. LoBiondo. Mr. DeFazio?
        Mr. DeFazio. Thank you, Mr. Chairman.
        Mr. Fuller, you said that safety certification loomed large
    in your interviews. So under the model I am hearing here,
    safety certifications stay with the Government. Who would pay
    for it? The Government, I assume? If we can get an answer
    quickly.
        Mr. Fuller. Yes.
        Mr. DeFazio. Yes, the Government would pay for it. OK. Is
    that going to solve the certification issue problems?
        Mr. Fuller. Actually, I think if you change the culture,
    you will go a long way to solving the certification problems,
    and the $15 billion the FAA spends, most of which comes from
    people using the system, would be the revenue from which you
    would pay for both ATO and----
        Mr. DeFazio. Yes. But your model is, you move it over. But
    their model is, it stays with the Government.
        Mr. Fuller. As I understand, yes. That is correct.
        Mr. DeFazio. So anyone who disagrees, who is advocating the
    private corporation, the Government is going to pay for safety
    and certification. Quickly, Mr. Poole?
        Mr. Poole. Yes. And this would----
        Mr. DeFazio. Yes. We got it. We are good.
        Mr. Poole. Yes.
        Mr. DeFazio. So that is left over here without a funding
    source. So that is subject to all the vicissitudes, to all the
    problems we talked about, sequestration and all that. And
    certification has been identified as a huge issue, so we would
    still have to reform that, and we would have to figure out how
    to fund it.
        Let's go on to the Airport Improvement Program. Now, I know
    there is going to be a little--it is $3.35 billion a year.
    About half goes to GA, half goes to commercial. As I understand
    the model of A4A, we would not fund the commercial side, and
    you would fund GA out of excess revenues. So you are
    anticipating excess revenues in the vicinity of $1.6 billion a
    year. Is that right, Mr. Parker?
        Mr. Parker. I believe that is correct. Yes, sir.
        Mr. DeFazio. And then how are we going to fund the
    commercial side? You might have noticed that A4A is a little
    resistant to PFCs or PFC increase, and we are going to take
    away AIP, which is $1.6 billion a year.
        You say they can borrow, but what is their funding stream
    if they cannot have an increased PFC and they lose AIP? And
    what happens to small and mid-sized airports who would have to
    charge--even if they could charge a PFC, it would drive people
    away?
        How are we going to pay for that? Or are we going to say,
    the Government will continue to pay for AIP? Anybody got an
    answer on that? Mr. Poole, is the Government going to continue
    to pay for AIP under your model?
        Mr. Poole. It is certainly up to Congress. But I think----
        Mr. DeFazio. So we would have to find $1.6 billion more.
        Mr. Poole. Yes.
        Mr. DeFazio. We are going to take safety certification,
    $1.6 billion, but we no longer have the revenue stream because
    that has gone over here and we have changed all that. So that
    is a bit of an issue.
        Now, Mr. Grizzle, when I talked to you--now, Mr. Rinaldi, I
    think your folks are kind of in favor of defined benefit plans.
    Right? Yes?
        Mr. Rinaldi. That would be correct.
        Mr. DeFazio. Are they interested in a defined contribution
    plan as a transition?
        Mr. Rinaldi. Not necessarily.
        Mr. DeFazio. Mr. Grizzle, you advocate a defined
    contribution in the future.
        Mr. Grizzle. Only for employees hired after the closing
    date.
        Mr. DeFazio. So then you are going to create a transition.
    Let me talk about a transition problem we have. And everybody
    points to problems with the Postal Service; I have got a reform
    bill. And Congress is a big problem.
        And one of the problems is when we transferred just from
    one Government program to another, CSRS to TSP, the Postal
    Service overpaid, according to consultants, between $9 billion
    and $15 billion, some say $20 billion, for that transition.
    They have been unable to get the Federal Government to honor
    that and return the money to the Postal Service so it could go
    into a fund and be used for other purposes.
        So now we are talking about we are going to bifurcate the
    system. We are going to transfer Government employees to a
    private corporation. And somehow, we are going to fund that,
    and that is not going to be as problematic as TSP to CSRS, so
    that will be easily done.
        They will somehow continue to earn Federal benefits. New
    people will go into a defined contribution. As the workforce
    shrinks, there is obviously less and less and fewer people to
    lobby to continue the defined benefits for the people who are
    in there, and somehow, the private corporation is paying for
    it. I do not see how that is going to work. But that is just
    another minor issue.
        Now, the valuation of assets, this is an interesting one
    because Ms. Robyn talked about the FAA's asset of spectrum.
    Well, again, as I pointed out, it is the FCC's by the NTIA, and
    they pay a very subsidized price, 2 million bucks a year to use
    it. And we are selling spectrum at very high prices.
        Now, we have had some experience. This is the spectrum that
    is used. The allegation is it is being used very inefficiently,
    and we can parcel it up and sell some of it off, and somehow,
    those benefits would go to the private corporation and not to
    the taxpayers of the United States. I think there would be some
    disagreement in Congress over that.
        But if you look here, this little dot, that is where
    LightSquared wanted to go, right here. And then we found out,
    oh, my God, it is going to wipe out our GPS. That is a problem.
    So it got blocked.
        Now, actually, this is not being particularly--from experts
    I have talked to--inefficiently used, plus some of it is
    intermingled with military, and all of it seems to be vital.
    Maybe there is some way you can parse it down a little bit, but
    when we tried to parse it here, people said, oh, my God. We are
    going to lose GPS.
        So are you anticipating that the Government will give the
    spectrum to the private corporation and allow them perhaps to
    consolidate some of it and then sell it, and nothing would flow
    to the Federal treasury?
        Ms. Robyn. No. Absolutely not. And if I created that
    impression, no. It is unfathomable to me that Congress would
    direct NTIA to do that.
        Mr. DeFazio. Right.
        Ms. Robyn. The spectrum, by the way, it is not the FCC's.
    It is the Federal Government's.
        Mr. DeFazio. Well, it is the people, the FCC, et cetera.
        Ms. Robyn. And NTIA manages it on behalf of----
        Mr. DeFazio. But if you notice, the most recent auctions
    are going for 20 times what was estimated. This is very
    valuable.
        Ms. Robyn. Oh, no, no, no. What the FAA has is incredibly
    valuable.
        Mr. DeFazio. Then we have the rest of the assets. Can
    anyone put a value on the rest of the assets? Delta did, but it
    was a ballpark number. I do not know if anybody else can. On
    the physical assets?
        Mr. Grizzle. There are no clear benchmarks that you can
    look to. But when you take account of the contingent
    liabilities associated with them, the value may not be that
    high.
        Mr. DeFazio. But we did have a report. Mr. Hampton, is it
    not true in Canada they undervalued the asset?
        Mr. Hampton. Yes. At the time the assets were transferred
    to Nav Canada, they were sold for over $1 billion. But the
    auditors came 2 years later and found that the assets were sold
    for 60 percent less than their true value. So our point is an
    accurate value for the assets.
        Mr. DeFazio. I have been on the Committee on Natural
    Resources most recently and spending a lot of time there. And I
    have tried to do some very meritorious land transfers, where
    the Federal agencies support it. The private entity supports
    it. We can never get to there because of the valuation issue.
    How are we going to deal with this? Who is going to value it?
        Mr. Grizzle. We looked at the cost accounting system. We
    came up with some numbers, and I do not want to give you an
    estimate. It is in the billions of dollars at FAA, and I think
    it would be very important to get an accurate assessment of
    what the assets would be at FAA before any move be made.
        Mr. DeFazio. So just in summary--thanks, Mr. Chairman--we
    are going to create a new entity that is going to be able to
    raise in excess of $1.6 billion a year to pay for GA's AIP. We
    will make the Federal Government either pay or not pay
    continuing commercial AIP. Big problem for small and mid-sized
    airports. And if we do not let the big airports raise their
    PFC, then, well, they are going to have a big problem, too.
        So we have got that. And we are going to amortize the
    asset. And we are going to somehow take over the pension plan.
    And we are going to continue to pay all the current employees
    with a defined benefit plan under Federal, but then somehow we
    are going to transition into a tier 2 of people who are getting
    defined contributions.
        I think, Mr. Chairman, there are some issues here that we
    need to discuss. I do not think we are going to get it done in
    this hearing. But I would hope we can have some meaningful
    discussions. I want to make changes, and dramatic changes. But
    the things that people point to here are things that could be
    solved.
        We do not have to take a 38-year-old model that is screwed
    up with the Postal Service. I mean, A, it is not losing money
    except for Congress. But B, we did give them a bad governance
    structure. We can figure out these problems and create a real
    21st-century Government corporation that does not have all
    these transition problems. That is my opinion. But I am keeping
    my mind open. Thank you, Mr. Chairman.
        Mr. LoBiondo. Thank you, Mr. DeFazio.
        For Mr. Grizzle and Mr. Poole, we have talked about--a
    little order here, Mr. Capuano, please.
        Mr. Capuano. He can have my time. He did good.
        Mr. LoBiondo. You can always count on Mike.
        For Mr. Grizzle and Mr. Poole, we have talked about a lot
    of different aspects of this. There is one particular aspect
    that I am very interested in hearing your take on. The FAA
    clearly is responsible for research, development, and
    innovations that are critical to air safety and to our air
    superiority, if we can use that term. Almost all of that work,
    or a great deal of that work, is done at the FAA Tech Center
    that happens to be in my district.
        So if we were to separate ATO from the FAA into whatever it
    may be--a Government corporation, public-private partnership,
    et cetera--how do you see us doing this? What role would the
    Tech Center play? How would the FAA handle this R&D component?
        Mr. Grizzle. Thank you. I think the Tech Center is one of
    the most underutilized assets in the Federal Aviation
    Administration. I think only with the alignment of incentives
    that you can have when you have a private enterprise
    controlling that tremendous asset will you be able to deliver
    from the Tech Center the true productivity that it is capable
    of.
        Consistently, projects have been begun at the Tech Center
    and then left to go fallow. There is no incentive for people to
    actually develop projects at the Tech Center, and so things are
    begun and then they are stopped. And highly profitable
    enterprises are not even begun there because there is no
    incentive on the part of anyone who is there to actually begin
    those models.
        Mr. LoBiondo. Mr. Poole?
        Mr. Poole. If I can add just one example, the Tech Center
    pioneered the development and testing simulation of remote
    tower concepts, and then basically the FAA dropped the ball.
    Nothing has happened. And it has been picked up in Europe, and
    they are now way ahead of us in remote towers even though the
    pioneering original work was done at the Tech Center.
        Mr. LoBiondo. Mr. Hampton, do you believe that the ATC
    models used by other countries have enhanced safety and
    efficiency? And if so, can the best attributes of these models
    be adopted by the United States without adversely impacting
    safety?
        Mr. Hampton. The studies over the years, including the GAO
    and most recently a study by the MITRE Corporation, clearly
    show that the transition to a commercialized entity does not
    impact safety.
        Mr. LoBiondo. Anybody else on the panel want to comment on
    that at all? No?
        [No response.]
        Mr. LoBiondo. Mr. Larsen?
        Mr. Larsen. Thank you. My first of 63 questions for the
    panel.
        Mr. Parker, I do not know if you have seen the document, so
    if you cannot take it too far, then do not. But it had to do
    with the Department of Defense's statement. Have you all
    looked, at A4A, what requirements are necessary to ensure that
    a new ATO provider provides continuous services and support to
    the Department of Defense? Have you looked at that particular
    question?
        Mr. Parker. I am not certain, sir. But I know the answer to
    the question will be absolutely.
        Mr. Larsen. Yes. Well, perhaps you can help us out, through
    A4A, how you would approach that.
        Mr. Parker. We will do that.
        Mr. Larsen. And Mr. Fuller, in the MAC did you have a
    chance to look at that?
        Mr. Fuller. We have not.
        Mr. Larsen. All right. So I have placed it into the record.
    It is a bullet point paper from the DOD, and it talks about
    some of their outstanding issues.
        Mr. Hampton, has IG looked at that at all?
        Mr. Hampton. No, we have not. But DOD is unique in the
    sense that they are both an air traffic service provider and a
    consumer. And I think the DOD and security concerns would have
    to be factored into any change.
        Mr. Larsen. Right. Good. Thanks.
        Mr. Rinaldi, would you expect any new organization to
    provide collective bargaining rights and retain Federal
    benefits and pensions?
        Mr. Rinaldi. Say that again, sir?
        Mr. Larsen. Would you expect that any new ATO organization,
    or I guess AT organization, would provide collective bargaining
    rights and retain Federal benefits and pensions?
        Mr. Rinaldi. Absolutely.
        Mr. Larsen. And have you had discussions with other
    stakeholders about that?
        Mr. Rinaldi. Preliminary, yes.
        Mr. Larsen. Preliminary, yes?
        Mr. Rinaldi. Yes.
        Mr. Larsen. Can you give me a flavor of the result?
        Mr. Rinaldi. No definitive answers, that is for sure.
        Mr. Larsen. Excuse me?
        Mr. Rinaldi. No definitive answers at this point, but
    preliminarily we have had those discussions, yes.
        Mr. Larsen. All right. Great.
        Mr. Poole, in your comments, on page 6, this gets to some
    of the comparison of the numbers.
        Mr. Poole. Yes, sir.
        Mr. Larsen. So I will give you a little time to get there.
    It has got the table and the cost per IFR flight hours.
        Mr. Poole. Yes.
        Mr. Larsen. So it certainly shows that of the three that
    have reported, the U.S. is a higher number, no doubt. But from
    2011 to 2014, the increase in the U.S. was 4.9 percent while
    Nav Canada was 14.4 percent and New Zealand is a 22-percent
    increase over that same period of time.
        Did you look at, rather than the absolute numbers, why
    there is a much lower rate of increase in the U.S. versus the
    other two?
        Mr. Poole. I have not looked at that, but----
        Mr. Larsen. Based on your 30 years of experience, would you
    have some idea about why, in those last four data points, it
    would be so much less for the U.S.?
        Mr. Poole. The data are cost per IFR flight hour. So flight
    hours have not been increasing that much, but costs due to
    investment in new technologies and things, which both New
    Zealand and Canada have been doing pretty extensively, that may
    account for it. That is only a hypothesis because I have not
    looked in detail why that changed.
        Mr. Larsen. That is fine. Maybe you can get back to us,
    give us a better idea of if there is anything different or new
    happening in the last several years or is this an anomaly. That
    would be helpful, at least for me, to figure out.
        Mr. Poole. Yes.
        Mr. Larsen. Mr. Grizzle, I want to make sure that airports
    around the country--certainly we have the resources to do
    infrastructure. Right? Build the projects? One version of the
    BRT's--I am sorry, Business Roundtable's--term sheet called for
    eliminating the AIP grants for large, medium and small hub
    airports and allowing them to collect a higher passenger
    facility charge instead.
        How high would that PFC cap need to be in order for small
    hubs to offset their loss of AIP funds? Do you have an estimate
    of that?
        Mr. Grizzle. I do not think it is a realistic option for
    some of the smaller hub airports in the first place. They
    simply do not have a self-help option with respect to
    collecting PFCs that would adequately cover their capital
    costs.
        Mr. Larsen. So can you expand on that? What would it mean
    for medium-sized or larger hubs?
        Mr. Grizzle. I think that a solution needs to be designed
    that looks at the relatively limited number of funding options
    that we have. Keep in mind that the entire FAA currently
    receives a very generous general fund support. And going
    forward, the different constituent parts of what is now the
    single FAA will continue to need to receive general fund
    funding.
        Mr. Larsen. Would you assess that the airports consider the
    funding from the general fund very generous?
        Mr. Grizzle. I do not know.
        Mr. Larsen. I do.
        [Laughter.]
        Mr. Larsen. So Mr. Parker, some proponents of reform have
    suggested that airports should be allowed to charge a higher
    PFC--right? And we have had this discussion before--to make up
    for an expected shortfall.
        How would the airlines approach, not necessarily the PFC
    side; I do not want to really get into that debate, but in
    terms of the reorganization and how airport construction would
    be funded, how that would be approached under a different
    system given the organizational changes an ATO would bring?
    Have you thought through that side of things?
        Mr. Parker. Well, nothing here that we are talking about, I
    think, would change the funding of airports. The funding of
    airports would continue to take place through bond financing
    and landing fees and the same structure that is done today.
        We are just talking about the funding for the ATO itself.
    So anyway, I do not believe there would be any expected change
    to how airports are funded.
        Mr. Larsen. Yes. All right. Thank you all very much, and I
    yield back.
        Mr. LoBiondo. Thank you.
        Mr. Mica?
        Mr. Mica. Thank you, Mr. Chairman. And thank you to both
    Chairman LoBiondo, the ranking member, Mr. DeFazio, and Mr.
    Shuster. We have come a long way having this hearing.
        I was talking to one of the staffers as we started. I saw
    Mr. Oberstar's picture up there, and I remember my first, 23
    years ago, hearing on reform of FAA, and actually trying to get
    better technology in place. Things do not change much. And I
    remember that first hearing.
        And then a year later, we had another hearing. And the
    people were giving the same testimony--just give us more money
    and all these changes are right around the corner. In fact, I
    asked one of the witnesses if he had heard of the movie
    ``Groundhog Day.'' That was a year later. And then we did it
    every year. And here we are on reform again.
        And I have tried just about everything. I tried
    reorganizations when I was chairman of the Subcommittee on
    Aviation. We put in place a COO. Russell Chew did a great job,
    I thought. There are some people in the audience who worked for
    FAA who came back after they worked for them and told me that
    basically, the agency is dysfunctional. And I have had to
    understand that it does have problems operationally.
        Back to Ms. Robyn. She said 20 years ago recommended taking
    the ATO out. And we have talked about it. Well, today I propose
    we do something about it. I have a draft bill. You want to give
    them the draft bill? I think the time to stop talking is over.
    Time to act.
        This is a draft bill that would turn air traffic control
    over to the stakeholders, the air traffic controllers, the
    airlines, and other stakeholders. This is a discussion draft.
    Mr. Chairman, how long are you going to keep this record open?
    How long? Two weeks? Could you do it? OK. We will keep the
    record open. I ask unanimous consent that the record be left
    open.
        And each of the witnesses, I would request that you read
    the discussion draft--this is a draft; it is not Mica's final
    word--and then recommend what you would like to see change. And
    I will put a deadline of the--how about tax day, April 15th?
    And I am going to submit this legislation on the 16th, so I
    will give you up to that time.
        So the time to stop talking----
        Mr. Larsen. Mr. Chairman, before I decide whether I am
    going to----
        Mr. Mica. And I gave you a copy.
        Mr. Larsen. I would like to know which year.
        Mr. Mica. This year.
        Mr. Larsen. Thank you.
        Mr. Mica. 2015, tax day, the 15th of April. I am also
    distributing it to Members. I welcome their suggestions.
    Because the time to stop talking now. It is time to start
    acting. Some of you, I have taken people up to see Canada. It
    is not everything we want. You try to take the best of the
    different systems.
        But it is time. And I have seen what they have done. They
    have one-tenth. Their technology is better. The treatment of
    their air traffic controllers is better. Most people do not
    realize it, but their air traffic controllers take a quantum
    leap. They already control all their traffic.
        If you go from Europe from the Northeast across the
    Atlantic, they are controlling your aircraft. And there are big
    gaps in that that they will fill because they are going to be
    on the next generation of air traffic control before we are. We
    cannot even make a decision to do that.
        So the time to stop dickering around is over. Here is a
    draft. We can put anybody else's name on it--LoBiondo, Shuster,
    Larsen. In fact, we will welcome everybody who wants to. But
    this is the best discussion we have had in the 23 years I have
    been here.
        We have got to act, and we have got to act boldly, and we
    have got to do it right. We have had the safest system. My
    heart and prayers go out with the Europeans today; they lost an
    aircraft. I saw Jim Coon. I see Sharon Pinkerton every day. We
    woke up, and when we finished our job, we were pleased that we
    had the safest system.
        And we have reacted. We reacted in inspections, when we
    went to self-reporting and the at-risk basis rather than just
    show up on every Tuesday and inspect. We reacted with Oberstar
    on commercial aircraft--I am sorry, with commuter aircraft and
    did that safety bill.
        So now it is time to act on reorganizing our air traffic
    control system. Didn't you propose this 20 years ago or say we
    should look at it, Ms. Robyn?
        Ms. Robyn. Yes.
        Mr. Mica. Yes. And most of you testified in favor. And
    people worry about the other things--R&D, certification, tech.
    If you take air traffic control and we give it to the
    stakeholders, then we can concentrate on all those important
    other things.
        And Mr. Parker, I want to talk to you about US Airways and
    American Airlines, whose records do not mesh. And I will give
    you a personal anecdote about that. Can I get additional time?
        Mr. LoBiondo. We will go to round 2.
        Mr. Mica. I will be back. Thank you.
        Mr. LoBiondo. Thanks.
        Ms. Brownley?
        Ms. Brownley. Thank you, Mr. Chairman.
        Mr. Parker, what evidence does Airlines for America have
    that spinning off the air traffic functions of FAA would
    improve FAA's ability to advance NextGen?
        Mr. Parker. Well, the proof we have is the experience we
    have seen as it exists, which has not gone well. The
    fundamental reason, we believe, is the governance structure.
    And as has been well stated by others on the panel, this is a
    commercial function that is run through a political
    organization, and that creates all sorts of problems for the
    organization, not the least of which is no real sense of
    looking forward and funding capital in the future.
        Look, let me try this. I was explaining this to our team
    the other day. The anecdote that is maybe easiest for people to
    understand is to think about if we ran our airlines the way the
    ATC is run, we would not make decisions to invest in the
    future, just like they do not. It is not a management problem;
    again, it is a structure problem.
        But simple things such as whatever it was, 10 or 15 years
    ago when airlines started investing in gate readers as you
    enter the aircraft, those were capital decisions that were hard
    for airlines to make at the time. We were one of those.
        But what we knew is it was a lot of capital upfront, but it
    would speed up the process for getting people onto the
    airplane. That investment was made. It has now been made by all
    of us. You see it everywhere in the airports. But it never
    would have been made at the FAA because they would not have
    made that decision.
        There is still an agent there, collecting, making sure,
    scanning the ticket. It is not fewer people, just much more
    efficient. You do not have seat duplications. You board the
    airplane much more quickly. We do not have old paper tickets.
    We do not need to process those. The existing people are much
    more efficient. The flow-through is much more efficient.
        And if you take that to the next level, now we are moving
    to, with existing technology, improving the technology, taking
    it to the point where people with their iPhones, with bar codes
    use that on those gate readers. You cannot even make the next
    step in the FAA world because you never made the first
    investment. That is the problem.
        And we have a structure that is so exceptionally important
    to commerce, which is the air traffic control system, that we
    are not letting move with the rest of the world. And it is the
    structure that creates the problems.
        Ms. Brownley. Thank you.
        Mr. Fuller, do you have any concerns in terms of the
    separation of the implementation of NextGen?
        Mr. Fuller. I think the essential concern is the disruption
    that is created with an air traffic system that handles the
    most diverse, complex, and largest air traffic in the world.
    And putting the entire FAA into a Federal corporation does not
    forever foreclose the possibility that some elements of that
    would be spun off.
        But it would allow for all the attributes that have been
    described here--a board of stakeholders--to carefully consider
    what is really a very important synergistic relationship
    between the safety and certification teams and the air traffic
    control teams.
        This is what comes through when you talk to the people in
    the leadership of the FAA today. And while there are a lot of
    things to criticize in the past, it is worth noting that I
    think today's FAA, through the work of all of us who have been
    involved in the NextGen Advisory Committee and RTCA, I think
    there are better understood priorities, better developed
    metrics for success, and more attention to what the
    stakeholders really need as operators in the system.
        My concern, when you look at Canada or any of the others
    where there is a 12- to 24-month formal transition period and
    in some cases many years of transition, is that we would freeze
    the progress we are making in this very important area. So a
    Federal corporation with the entire group held together allows
    us to continue to make that process but to actually govern and
    run the organization, as people have said, in a more
    businesslike way.
        Ms. Brownley. Thank you.
        And Mr. Hampton, in your examination of the foreign
    entities and Nav Canada, have any of those entities taken on or
    embarked on the kind of large-scale modernization projects like
    NextGen?
        Mr. Hampton. Generally, no. Their business model takes a
    very incremental approach with a very near-term view on
    investment. Three of the service providers we looked at,
    though, are working on SESAR, a NextGen-similar program in
    Europe. They are developing similar technologies, so that is
    similar to a NextGen umbrella.
        But by and large, the air traffic service providers we
    looked at take a very smaller approach to acquisitions, very
    much less ambitious.
        Ms. Brownley. Thank you. I yield back.
        Mr. Shuster. Would the chairman yield for a minute on that
    question? Is that not the similar approach that Verizon takes,
    incrementally investing so they are able to turn over in 10
    years four times what the FAA has not even been able to do one
    time? Can somebody answer that for me?
        Mr. Grizzle. Yes. In fact, we are only in the position of
    having to do NextGen as a massive project because we have
    failed to renew our technology incrementally over time. Keep in
    mind that when our en route automation system is completed, it
    will have been completed with technology that was spec'd 10
    years ago. And when our terminal automation system is completed
    in 2018, it will have been spec'd 18 years previously.
        And there is no work being done at all on a combined
    automation platform, which is what we must have if we are going
    to begin to manage the airspace in a modern way.
        Mr. Shuster. That is a strength, not necessarily a
    weakness, by doing it that way.
        Mr. LoBiondo. Mr. Hanna has left, I guess. Mr. Hanna has
    left.
        Mr. Curbelo?
        Mr. Curbelo. Thank you, Mr. Chairman, for your leadership
    on this issue. And I also want to thank Chairman Shuster for
    laying out the bold vision of reforming the FAA and modernizing
    it. And I want to thank all the panelists for their testimony.
        Mr. Parker, I want to thank you for American Airlines'
    commitment to Miami; representing Florida's southernmost
    district, we certainly appreciate all the jobs and
    opportunities that the airline offers our community. And I also
    want to commend you on the progress of the merger.
        I was talking to Armando Codina earlier today, who was on
    the former AMR board, and we were remembering how you had
    promised that the merger would be in the best interests of all
    the stakeholders--debt holders, shareholders, employees,
    communities like Miami, and passengers. And by most accounts,
    you have kept your word. So thank you very much.
        Mr. Parker. Thank you very much.
        Mr. Curbelo. A question for you. In prior air traffic
    control reform debates, the airlines advocated for a cost-based
    financing system to shift some of the funding burden to
    corporate general aviation operators. Is this a significant
    factor in your support for a cost-based financing system today?
    In other words, do you think more users should contribute to
    funding the air traffic control operation?
        Mr. Parker. It is not a significant piece of my testimony,
    and thank you for asking. To be quite clear, the A4A position
    is not a position about trying to reduce or shift our tax
    burden. We have said that despite the fact that commercial
    aviation does pay more than its fair share, that is fine.
        The benefits here are so great. Our advocacy here is not
    because we want to see a shift in the burden. Indeed, we have
    said we are willing to continue to pay what we are paying today
    even though the system will become more efficient and we are
    already paying more than our fair share.
        So this has nothing to do with shifting burden. It has
    everything to do with trying to compel all of you to do the
    right thing and to get this extremely important commercial
    enterprise into a much more commercial environment so that it
    can succeed. And if that means we have to pay more than our
    share, if that means that we continue to pay more than our
    share, that is perfectly fine because the benefits are going to
    accrue to all of us.
        Mr. Curbelo. Thank you, Mr. Parker.
        Mr. Rinaldi, I have spoken with several of the employees of
    the MIA air traffic tower there, and they are currently working
    on a program called OAPM, which is a complete redesign of the
    airspace from Jacksonville to Orlando all the way down to
    Miami. These new routes are being designed with the latest GPS
    technology to allow for more efficient flow of air traffic.
        One concern that they do have is regarding the need to
    train new air traffic controllers as staffing levels have
    decreased. Over the past year, MIA has lost about 15
    controllers alone due to retirements, and will lose even more
    over the next several months. It takes 2 to 3 years to fully
    train a new air traffic controller.
        As air traffic at MIA in Florida continues to grow, safety
    is our number one priority. Can you talk about the need to
    maintain a steady workforce of well-qualified air traffic
    controllers, maybe in the context of this proposed change of
    the air traffic control operation? Do you think the models
    being discussed would alleviate this situation?
        Mr. Rinaldi. Absolutely. Thank you for the question. This
    is a great question, and it is one of the issues that keeps me
    up late at night. And I said in my opening that currently our
    busy facilities--Miami, Dallas, New York, Houston, Chicago--are
    experiencing staffing levels that are approaching uncomfortable
    for all of us.
        Controllers are working 6-day work weeks, extended
    workdays. Fatigue is entering into our work environment while
    the NTSB is telling us to reduce fatigue in our work
    environment.
        We have tried to work collaboratively with the FAA for the
    last 2\1/2\, 3 years and take some recommendations that came
    out of the National Academy of Sciences, along with an
    independent review panel that I think David Grizzle was part of
    commissioning when he was COO, and to really focus on real
    numbers for our facilities, not only to staff the day-to-day
    positions but to actually work on modernizing our system.
        It takes the expertise of the controllers at the very core
    level to develop these procedures, along with the pilots, so
    that these procedures work very well and seamlessly in and out
    of Miami or wherever we have done it. We have been very
    successful in Houston, where we turned on OAPM, which is what
    we call that OAPM; we call it OAPM.
        Very successful in Houston, where we turned on 60-plus new
    procedures with a flip of the switch. And in north Texas, we
    also did it in Dallas. American Airlines seems to be very happy
    with it; 80-plus new procedures. Flipped it on. Optimal descent
    approaches, burning less fuel, very carbon-friendly for the
    environment. It is what we would like to do throughout the
    country except our staffing prohibits from us doing it.
        Mr. Curbelo. Thank you, Mr. Rinaldi.
        My time has expired. Thank you, Mr. Chairman.
        Mr. LoBiondo. Thank you.
        Mr. Lipinski?
        Mr. Lipinski. Thank you, Mr. Chairman.
        Mr. Rinaldi, I want to hear your perspective on the effects
    some of these models may have on stakeholders. I am sure you
    know that the CEO of the privatized air navigator service
    provider in Ireland remarked last week that: ``The tendency in
    some countries is to favor commercial flights over
    noncommercial flights and large aircraft over small aircraft as
    part of the natural selection process.''
        Do you see this as a potential risk in the different models
    that have been talked about today?
        Mr. Rinaldi. Thank you, sir. Great question. We have had a
    lot of conversations around first come, first served is what we
    currently work under today. Obviously, if we have a small
    moving Cessna and a fast jet behind them, we sidestep them out
    and bring the Cessna back in on the approach.
        But there is a lot of talk around best serve as we move
    towards NextGen technology. And we would be against any type of
    operation that would prohibit or shrink the aviation system.
    Our future aviators are out there at these small-level
    facilities, and that is where our pilots and our controllers
    are going to come from.
        Mr. Lipinski. And do you have any concerns with moving away
    from the current revenue structure?
        Mr. Rinaldi. Well, I think, as I said in my opening, the
    current revenue structure is broken--23 extensions of the last
    FAA reauthorization bill, partial shutdowns of the FAA, full
    shutdown of the Government, and sequester. It is not conducive
    for us to modernize our system, run our day-to-day critical
    operation, and at the same time grow aviation in this country,
    which is an economic engine.
        I think we actually have to find a predictable, stable
    funding system. That is our main problem as we move forward, a
    predictable, stable funding system so that we can enhance the
    National Airspace System and continue to be the world leader.
        Mr. Lipinski. I think we all can agree with that. We want
    to make sure that we do not have any detrimental effects on any
    portions of aviation.
        I want to ask Mr. Fuller: You outlined a Government
    corporation concept, which I think goes beyond what a lot of
    others are talking about here, taking in everything, all of the
    functions right now from the FAA. I have concerns that this
    Government corporation could move to save money by possibly
    consolidating facilities or mothballing equipment as we move to
    a satellite-based system, which could harm some of the smaller
    airports.
        If this corporation does take over the regulatory and
    certification, I am concerned that this would delay fixing the
    regulatory and certification structure that seems to have a
    hard time keeping pace with the rapidly increasing changes that
    are occurring.
        So it does concern me that this will happen. Can this
    Government corporation do these things in ways that the current
    structure seems to have a difficult time with? Or do you not
    see the possibility of having a detrimental impact on these
    functions, slowing them down even more and perhaps compromising
    safety?
        Mr. Fuller. You raised several very important questions.
    First I want to say that I hope that people understood the
    importance of the moment in time. And Mr. Parker, by talking
    about the need for the community to collaborate, not penalize
    one segment over another, I think is exactly why some of us are
    optimistic that a group of stakeholders could come together--
    much like the NAC has done for NextGen--but a group of
    stakeholders could come together and make these decisions in a
    rational way so that the way in which you collect money--which
    honestly, in 6 months, I do not think you can solve.
        I think a corporation could address those issues with the
    stakeholders present. I think the trauma that is caused to some
    in the regulatory certification process, the dysfunctionality
    that has been referred to, I think can be solved, again by a
    group of stakeholders governing, hiring a CEO Administrator and
    having the ability to fire them, to set the metrics, to set the
    goals.
        I think that is precisely the way in which you would begin
    to change the culture in this bureaucracy. It is a process that
    the Administrator has started. But continuing to stay within
    the structure that involves DOT, OMB, the White House, the
    Congress, it is very difficult.
        So for all the reasons stated that ATO could be improved by
    this group of collaborative stakeholders, I think it would be
    more successful addressing the certification and regulatory
    side as well with a single corporation.
        Mr. Lipinski. Well, I have concerns. Obviously there are
    issues that need to be dealt with. And it would be great if it
    worked out in the way that you described. I have concerns about
    how exactly this would be structured and if it really would
    fulfill these functions in such an efficient manner as you
    state here.
        But I am over time, so I yield back.
        Mr. Fuller. It is why we need more dialogue on this, to
    refine it. And we look forward to continuing that process.
        Mr. LoBiondo. Mr. Zeldin?
        Mr. Zeldin. Thank you, Mr. Chairman.
        Mr. Rinaldi, I recently had the pleasure of visiting the
    New York Center in Ronkonkoma. It is just a few blocks outside
    of my district, but there are 300 air traffic controllers who
    do reside in the First Congressional District. I have had the
    chance to speak to them, and I have also met with constituents
    in my district who are attending FAA-accredited college
    aviation programs, as well as some military veterans who have
    aviation experience.
        They were previously on track to become air traffic
    controllers until the FAA recently changed their traditional
    recruitment process. They used to favor the graduates of the
    FAA-accredited college aviation programs or the military
    veterans with aviation experience.
        Now all applicants must first pass a biographical
    questionnaire, a pass/fail test in which the FAA has not
    released the scoring metrics or each applicant's actual score.
    One young man I met with attended an FAA-accredited college
    aviation program on Long Island, has excellent grades, and is
    the model applicant to become an air traffic controller. He did
    not pass the biographical assessment.
        Does this biographical assessment actually improve aviation
    safety? What has been your experience with it? What am I
    supposed to be telling constituents who are going through a
    program to become an air traffic controller, and when they get
    to the point of applying, they are not passing this
    biographical assessment?
        Mr. Rinaldi. Thank you for the question. First and
    foremost, you need to tell that individual and any other
    individual that talks to you about getting hired by the FAA
    they have 1 week. It started yesterday. It is open, a
    continuous bid, USAJOBS.gov, or the Web site, where they will
    have to take a BQ again, the biographical questionnaire.
        The first BQ we had significant problems with because the
    first thing, when the agency started administering, and this is
    the way we are going to weed out or cull the list of
    applicants, we asked them--we read up on what BQ was. It is
    science. Well, have you validated with a large group of
    incumbents? The only one who represents a large group of
    incumbents would be us, and it was not validated. Therefore, we
    did have deep concerns about that.
        Since then they have worked with us. We have worked on
    validating the BQ. It is science. I am not going to argue with
    any scientist. I am not sure if it is going to work. But for
    getting hired, I think now is the perfect opportunity to tell
    those constituents of yours to apply for those jobs and get out
    there. It is only going to be open for 5 days.
        Recently they had an open bid for anyone who had continuous
    experience of 52 weeks. Those were direct hires out of the
    military. We applaud the agency for doing that. We worked
    collaboratively with them to get that bid out there. We want
    qualified candidates going through the academy so the pipeline
    gets into our facilities so we can get healthy and we can
    modernize our system.
        Mr. Zeldin. Mr. Fuller, would you like the opportunity to
    comment?
        Mr. Fuller. Actually, that is an area outside of my
    expertise. I appreciate the problem.
        Mr. Zeldin. Thank you, Mr. Rinaldi. Is there anyone else
    who wishes to comment on the biographical assessments?
        [No response.]
        Mr. Zeldin. I just got sworn in at the beginning of
    January. I have been kind of surprised by the amount of
    constituents who have come to me explaining that they are
    having these issues with biographical assessment. So if we can
    keep an open line of communication to get your comments here in
    the coming weeks with the current open enrollment process.
        Mr. Rinaldi. I think it is a big concern. The FAA said that
    in order to get hired, you need to go through these certified
    college programs. And then last year, we closed the academy
    because of sequester in 2013, and as we rolled out of that,
    they decided to change the hiring process.
        It was a deep concern of ours, that we were going to not
    have a steady flow of qualified candidates getting through the
    academy. So I would love to keep that dialogue open with you,
    sir.
        Mr. Zeldin. All right. Thank you. And just on behalf of
    those constituents going through that program, I just have a
    tremendous amount of compassion for the fact that they--this is
    their goal. This is their dream at the end of college, to have
    that opportunity to work in the New York Center or one of your
    other locations. And they are studying hard, getting great
    grades. Hopefully we can find a place for them in the FAA.
        Mr. Grizzle. Keep in mind, sir, that we are still training
    controllers in the FAA the way we have for the last 20 years.
    Most of your constituents who are in an air traffic control
    program will be using more modern technology than what they
    will find available to them for their training once they arrive
    at the FAA.
        And that is one of the reasons that we have not been as
    nimble as we should have been in terms of revising our hiring
    structure to make it more satisfactory to all the
    constituencies that are looking at the types of controllers
    that we are producing.
        Mr. Zeldin. Yes. I appreciate that. My time has expired.
    But again, it is just the biographical assessment that is
    disqualifying people who are otherwise well-qualified.
        Mr. LoBiondo. Ms. Norton?
        Ms. Norton. Thank you very much, Mr. Chairman.
        I would really like to get a conversation going between Mr.
    Rinaldi and Mr. Parker. But first I have to ask Mr. Rinaldi,
    this loss in air traffic controllers, what was that loss due
    to?
        Mr. Rinaldi. Well, it is mandatory retirement when we reach
    our mandatory retirement age. But really, the staffing crisis
    was exacerbated by the the sequester of 2013, which shut down
    the academy on March 1. It was planned on opening up on October
    1, but for the Government being shut down, full Government
    being shut down, the agency never got around to opening----
        Ms. Norton. So are these people taking early retirement,
    the ones that are--``lost'' is different from retirement, of
    course.
        Mr. Rinaldi. Well, the losses are from retirements. And
    they are taking the legitimate retirements that they have
    earned.
        Ms. Norton. Yes. Well, I am very worried. My first standard
    when I get on an airplane--I do not know anything about
    airlines, but I just want to get there safely.
        Mr. Rinaldi. Absolutely.
        Ms. Norton. So I was interested, Mr. Rinaldi, because you
    had a fairly objective, when I looked at your testimony,
    rundown of the different models. And there are some--you do not
    say which model to choose.
        Mr. Rinaldi. Rightly so.
        Ms. Norton. And so that is why I find it fairly objective.
    And since you represent the controllers, Mr. Parker is an
    airline executive, and there is some meeting of the minds--not
    entirely--but Mr. Parker says a nonprofit-type governance. And
    by the way, I do not fault any of you for throwing up your
    hands and saying, ``Let anybody run it except the Government.''
        [Laughter.]
        Ms. Norton. Anybody who will do something other than these
    annual appropriations or no appropriations. Shame on the
    Government. So if I were you, I would be saying, let's get rid
    of you and get stable funding and somebody who will run an
    airline or help us run an airline correctly.
        But I notice that Mr. Rinaldi looked at several types of
    providers. And he noted that the Germans have taken over their
    structure with some beneficial results; that in the U.K. they
    do not have a single provider any more because they had to put
    one of the airports up for bid, I guess, because the other one
    could not take it on.
        So I looked at the new Canada model because that is the
    nearest to a not-for-profit model. And what really interested
    me was that you pointed out--again, you do not take a
    position--about the difficulty in just looking at other models.
    And that is what I always do; let's see how it worked there,
    and they maybe we can superimpose it here.
        Also run with user fees, you say, Mr. Rinaldi, difficult to
    apply. And then you compare the United States with Canada, and
    you blew my mind. The United States controls 132 million
    flights annually, Canada 12 million; 21 centers in the United
    States, 7 in Canada; 315 towers here compared to 42 in Canada.
    We run the busiest airports; they are way down the line.
        I would like both of you to indicate whether that at
    least--well, first let me say, do you consider that that not-
    for-profit approach would, more likely than the others, put
    safety first even if safety costs more?
        Mr. Rinaldi. Thank you for reading the testimony. And yes,
    it is mind-boggling that we have 8 of the top 10 in the world
    airports and 16 out of the top 30 in this country, where Canada
    has one, number 15, which is Toronto.
        But that said, I think the Canadian model is intriguing and
    it is very interesting. I love their collaboration that they
    have from the glass up, is what we would talk about as a
    controller, where the controllers and the engineers are working
    together, developing requirements of what equipment would
    actually help them enhance the safety and efficiency of their
    system.
        They are actually doing NextGen from the glass out, as
    opposed to the FAA pushing it down. I think it is very, very
    interesting. I think the equipment that they have, because it
    is developed with their own controllers and their own
    engineers, I am not ashamed to say I am envious of. Some of the
    equipment we have, it is antiquated and it is absolutely
    ridiculous.
        And our training ways, what David said, is absolutely true.
    I recently saw them at an ATM Congress where they walk around
    with an iPad where the controllers are getting their mandatory
    briefings via iPad. We are still reading paper and checking
    each other, months and months to make sure that we are
    certified to get on position.
        So there are a lot of things in Canada I find intriguing.
    But my biggest concern: Is it scalable? Is it scalable to the
    size of this system? And we also want to make sure that we
    continue the diversity of our system, which is providing
    services to rural America where they need aviation services. So
    those are the concerns I have when I look towards Canada.
        The German model is very interesting. And you know what?
        Mr. LoBiondo. Try to finish up, if you can, please.
        Mr. Rinaldi. Can I finish? Yes. The German model to me is
    very interesting because they actually competitively outbid the
    U.K. model for their own airport in their own country because
    they are not focused on profit.
        Mr. LoBiondo. Thank you.
        Mr. Rokita?
        Mr. Rokita. I thank the chairman. I would say that, as a
    regular user of the system, there would be every once in a
    while that I myself wanted to bang the gavel on a controller.
        [Laughter.]
        Mr. Rokita. No, no, no. You guys are great. I really
    appreciate it. And I appreciate the work and the leadership of
    the chairman here today and the committee as a whole. As a new
    member of the committee, I feel obviously a newcomer to the
    work that has been done prior, and I am excited to hear the
    testimony today, and feel like I stand on the shoulders of
    many. And I am ready to make some good changes to the system.
        I have been here the whole hearing, listened to all
    testimony. I may have missed a few pieces; I apologize if I am
    repeating anything. But I thought, according to Mr. Hampton's
    testimony, the auditor general of Canada made a report that it
    did not properly value the air traffic control services. How do
    we ensure proper valuation if we ever did move to such a
    system?
        Mr. Hampton. Yes, sir. Thank you for the question. When the
    assets were transferred from the Canadian Government to Nav
    Canada, the valuation of the assets was significantly
    undervalued, by about 60 percent.
        So to prevent that from happening, we would need an
    accurate and a fair assessment of the assets of whatever is
    transferred to the organization that would be put in place if a
    change is made in the United States. FAA would have to do some
    work to perform a proper evaluation of whatever would be
    transferred to the new air traffic entity.
        Mr. Rokita. Thank you. Does anyone else want to react to
    that? Mr. Poole, I don't know if you want to----
        Mr. Poole. A couple perspectives on that. The more that the
    new entity is required to raise in financing to pay for it, the
    more costly it is going to be for the users. So there is a real
    question there, and I take David Grizzle's point, that when you
    actually look at the obsolescence of a lot of the facilities
    and technologies, there are going to be some real judgment
    calls as to what the proper, real value is and whether there is
    a net value there at all.
        There is a value in having the right to be the monopoly
    provider, definitely. But that is going to be a very subjective
    thing to determine. So I think that----
        Mr. Rokita. But not impossible to determine? And the
    stakeholders as a whole, you are all ready to jump in and
    tackle that particular challenge?
        Mr. Poole. Well, I think that is the challenge that we are
    all going to have to----
        Mr. Parker. Yes.
        Mr. Poole. Yes? OK. Definitely.
        Mr. Rokita. The airline says yes.
        Mr. Grizzle?
        Mr. Grizzle. Absolutely. I think that it is a doable task
    and should be done.
        Mr. Rokita. Thank you. Now, if I understood right--I
    appreciate Mr. Fuller being here--all of you being here, but
    Mr. Fuller, a Federal Government corporation, or a Federal
    corporation, I think is what you are recommending. An I don't
    know--an example of that would be Amtrak. I don't know if that
    word has been used here at this hearing, but that would be an
    example of what you are talking about.
        Mr. Fuller. There are many, many examples. I think you
    would have to find the path that works for aviation. You have
    got operating units from Saint Lawrence Seaway, Tennessee
    Valley Authority. We have looked at--the State of California
    runs a whole university system as a separate entity.
        Mr. Rokita. Got it. Got it. Did MAC consider the co-op
    arrangement or the nonprofit arrangement, as Mr. Poole and Ms.
    Robyn indicate?
        Mr. Fuller. Yes. We had the advantage and the opportunity
    to talk at some length with David Grizzle, with Bob Poole. And
    so we did look at it. And again, it goes to the question of how
    do you best make the transition? We are not saying in the
    future that a Federal corporation that contains all of FAA
    would foreclose the possibility of spinning out ATO. But what
    is bold and doable this year, we think, is keeping it together
    with a stakeholder group that could decide how best to finance
    and structure the organization going forward.
        Mr. Rokita. Thank you.
        Mr. Fuller. I say ``we,'' and I want to say it is the
    working group and the MAC who has developed this. And it is a
    proposal still very much under discussion with stakeholders and
    others.
        Mr. Rokita. So the inverse of that very same question to
    Mr. Poole and Ms. Robyn. What about the Federal corporation?
    What about what Mr. Fuller is saying directly?
        Ms. Robyn. Can I just be clear on what he is proposing?
    Because I am kind of speechless. He is proposing to corporatize
    the safety side of the FAA along with the operation. We are all
    proposing, I think, corporatization of the air traffic
    operation.
        Mr. Rokita. Assume he was just talking about----
        Ms. Robyn. But he is not.
        Mr. Rokita. But assume he was, a Federal corporation for
    the services.
        Ms. Robyn. Yes. No, that is--I think we are all----
        Mr. Rokita. Oh, I thought I heard you to say you were for a
    co-op.
        Ms. Robyn. Well, I think--it is a corporation. Yes. It is a
    private corporation as opposed to a Government corporation.
        Mr. Rokita. I want to get to some granularity here on what
    you particularly prefer.
        Mr. Poole? Final 10 seconds.
        Mr. Poole. Yes. I think that the nonprofit corporation has
    greater insulation from the problems that we are trying to
    solve of the micromanagement, oversight----
        Mr. Rokita. And you propose a cooperation nonprofit?
        Mr. Poole. The basic----
        Mr. Rokita. Or a hybrid?
        Mr. Poole. Yes. They are pretty much synonymous. What Nav
    Canada--they do not call themselves a user co-op, but in
    effect, that is basically what it is. And I think that has the
    best--as Professor Robyn's testimony stated, the best alignment
    of incentives to ensure good performance.
        Mr. Rokita. My time is expired. And yielding back, I would
    say, at least with regard to certification, when you look at
    the problems with part 23 and the delays and all that, I think
    Mr. Fuller has a point, at least with regard to certification,
    which is not necessarily safety. I yield.
        Mr. Shuster [presiding]. Thank you, Mr. Rokita. I have
    heard twice about the undervalue of the assets, and it took 2
    years after for the Government to figure it out. I don't know
    if anybody knows the answer to this, but is that because Nav
    Canada used a different accounting system and accurately was
    able to value these things? Because we know with Amtrak, as was
    mentioned, they have no idea what their assets are because
    their accounting system is so screwed up.
        Mr. Hampton. No, sir. I will get back to you. I just think
    it was the speed of the effort of the transaction.
        Mr. Shuster. Mr. DeFazio, you want a second round?
        Mr. DeFazio. Thank you, Mr. Chairman.
        Let's step back a moment. As I figure, the airlines and
    their customers contribute about 94 percent of the current
    revenues. And so I can assume that those revenues are going to
    flow to the new ATO. So that is $12.8 billion in revenues. But
    if you are not assuming AIP, although you say you will give
    excess money to GA airports, so I'll figure that in, I will say
    you are taking half of AIP.
        So you are going to assume, then, costs of about $10.8
    billion, and you have got $12.8 billion in current revenue. So
    there is $2 billion there, so you do not have to get
    efficiencies to pay for anything.
        But then the Government ends up with the other half of AIP
    for small, medium, and large airports. The Government ends up
    with certification, and it ends up with safety. All that comes
    to about $5 billion if we assume that GA is funded by your
    excess revenues.
        So part of the reason we are here is Congress is not
    ponying up the money, and we are subject to sequestration, and
    we are subject to all this other stuff going on. So how the
    hell are we going to come up with stable funding of $5 billion
    a year with no tax revenue? The remaining revenues would be GA
    gasoline, GA jet fuel, and shippers. So that creates way less
    than $1 billion.
        So we are assuming that the Government is going to pony up
    $4\1/2\ billion general funds indefinitely, not subject it to
    sequestration, so we can have a good certification safety
    system and we can continue to have small and mid-sized airports
    and large airports.
        How are we going to deal with that? Mr. Poole, do you
    assume PFCs, that airports will--will they go the European
    model? And how will that work for small/mid-sized? We are going
    to do this with exorbitant landing fees? Is that how we are
    going to pay for it?
        Mr. Poole. I do not think so. I think what we really--we
    are at a juncture here where we are looking at something as big
    as the transformation of the ATC system.
        Mr. DeFazio. Right. But let's just----
        Mr. Poole. We have got to----
        Mr. DeFazio [continuing]. Get to the numbers. To the
    numbers, please. Since everybody is here because the Government
    will not meet its obligations, how are we going to assume that
    it is going to meet the $4\1/2\ billion? What are the revenue
    sources?
        Mr. Poole. If I may, if we wipe out the existing user
    taxes, there needs to be a big negotiation between the airport
    community and the airline community to figure out an answer to
    that question. My guess is that it should be some combination
    of a new AIP tax that would cover at least part of the cost;
    and possibly, depending on what the airlines and the airports
    negotiate, an increase in PFCs.
        Mr. DeFazio. So is A4A willing to have that discussion? I
    have not been able to get it going so far.
        Mr. Parker. A discussion of?
        Mr. DeFazio. With the airports about the potential--I
    propose two different things. You could have a second tier;
    since I was one of the creators of it, you could have a second-
    tier PFC in which the airlines would be more significantly
    involved. They would not have veto power, but it would be more
    like your leaseholds.
        Or we could separate the big airports--that saves a bunch
    of money--and allow them to have a higher PFC. But we have got
    to pay for that somehow. And if you do not want to have a
    dramatic increase in landing fees, how are we going to pay for
    that?
        Mr. Parker. Well, again, as it relates to the ATC system,
    we currently are paying--and have agreed we will continue to
    pay--the same amounts we pay today. And those exceed the cost
    of the ATC system.
        Mr. DeFazio. Yes--well, no, sir. But if I point it out,
    actually the costs you are assuming are $3 billion less than
    the revenues that currently flow from the airlines. So you are
    leaving the Government with that extra $3 billion in costs
    without a revenue source.
        I am parsing this up in a way--if we are going to fund AIP,
    and we are going to fund the safety, and we are going to do
    certification, that is $4\1/2\ billion or so. And your
    revenues, the other things you are assuming of the current
    system, are less than the revenues you currently contribute.
        Mr. Parker. Yes. Congressman, we need to work through this
    one. Nothing in what we are trying to propose assumes that the
    airlines are going to be paying less into the system than they
    pay today. So to the extent those projects are being funded
    and----
        Mr. DeFazio. Well, then, could we not agree that AIP should
    go with the system? AIP should move over and you should fund
    AIP; that takes away some of our burden. And then maybe in some
    of the models that were talked about in some of the testimony,
    maybe you should be contributing to help us pay for the
    certification system, like the pharmaceutical companies pay
    money to help get faster certification of new drugs.
        Because you have got an extra couple of billion bucks here,
    if you assume the same level of fees you have now and you get
    savings because you are going to be more efficient, you have
    maybe got $3 billion or $4 billion. So you could help us with
    our stability issues over here.
        Otherwise we are just saying, we are trying to solve the
    problems of sequestration, and I have not even looking at the
    Republican budget. I do not know what it does to FAA. I know it
    reduces spending on highways by 99 percent next year. I don't
    know what it does to the FAA. So it is kind of a problem.
        So I am just trying to say, there are some things here that
    need--OK. And let me go one other quick issue because I am
    going to ask American Law Division: Has anybody examined
    indepth the 1936 case, the recent DC Circuit Court ruling, the
    remand by the Supreme Court which found that--it overturned the
    Circuit because the Circuit upheld the 1936 ruling that says, a
    private entity cannot have regulatory power.
        The American railroads said--they used ATO. They said,
    ``Well, air traffic is definitely a regulatory power,'' in
    their argument that was upheld by the Circuit Court. The
    Supreme Court said no. Despite everything, because Congress
    meddles so much with Amtrak, including talking about regulating
    food service, that is inherently governmental.
        So it has been set back, but the standing is still there.
    You cannot delegate a regulatory function to a private entity.
    It is still there. Has anybody looked at that in great depth
    and can disprove that? And I am going to ask American Law, and
    you could help me direct the question if you have looked at it.
        Mr. Shuster. The gentleman's time is expired.
        Mr. DeFazio. Thank you, Mr. Chairman.
        Mr. Shuster. I would like the panel to address it because
    as I said earlier, we are not talking about taking the safety
    and regulatory elements out of Government. We are talking about
    a service, a provider of service.
        Mr. DeFazio. Yes. That is what I just said. There was my
    point. If it is going to stay with Government, how are we going
    to fund it?
        Mr. Shuster. Well, your funding question, we absolutely
    have to figure out those numbers. There is no question about
    that. But the ATC performs a service, and the FAA still
    maintains, in our view--I know there are others who want to
    take it out, but it remains with the Government.
        Ms. Robyn or Mr. Grizzle or Mr. Poole, one of you want to
    directly address that?
        Mr. Grizzle. There are only four feasible sources of
    funding for the combined operation that is now within the FAA:
    the general fund; user fees; self-help, i.e., a PFC; and some
    new tax. I am confident that the stakeholders, with your
    instructions, will be able to come up with a solution that
    adequately funds the three parts of the FAA with the four
    available sources of revenue that are theoretically available.
        Mr. Shuster. Thank you, Mr. Grizzle.
        Ms. Robyn?
        Ms. Robyn. The general fund, Congressman DeFazio, funds
    safety now. So I think that is not a change. Right. So that
    seems like a red herring to me.
        Mr. DeFazio. No. What I was telling you is the revenues
    that are going away are larger than the duties that are being
    assumed. So the Government now has to contribute more general
    fund to meet those current obligations. That was the point I
    was making.
        Ms. Robyn. Yes. But I think the issue is AIP----
        Mr. DeFazio. We get the general fund now, but we got
    sequestration and you already heard----
        Ms. Robyn. Right. Yes. And I would endorse your concept of
    a user charge along the lines of the FDA. I think that is an
    option that should be on the table.
        Mr. Poole. I just wanted to point out that if you look at
    the historical figures for the last 15 years, the average
    percentage of FAA budget coming from the general fund has been
    22 percent. And that basically--that pretty much covers the
    safety regulatory functions.
        And you can consider it as being also partly the public
    interest part of AIP that is serving the smaller, remote
    airports. So that ought to continue, albeit I am open, too, to
    having the potential of fees for faster certification, which is
    actually happening today in the U.K. because they have revised
    their regulatory certification system in addition to
    corporatizing NATS as the ATC provider.
        Mr. Shuster. Thank you, Mr. Poole.
        Mr. Costello?
        Mr. Costello. Thank you, Mr. Chairman. Thank you all for
    being here. I had the opportunity to read all of your testimony
    and hear most of it this morning. And before I ask a question
    of Mr. Parker and then of Mr. Rinaldi, in all of your written
    testimony clearly, a steady, predictable funding stream with
    flexibility, I believe was also the word you used, is at the
    top of the list.
        And it begs in me the question: How much does that
    challenge actually exacerbate some of the structural challenges
    and reforms that are being sought? Or stated differently, if
    the funding stream were there, would some of this discussion
    not have the velocity or the intensity that we are having?
        I would also add, when we are talking about short-term
    funding, sequestration, shutdowns, what the cost is in real
    dollars to the aviation industry. And in fact, if we did not
    have that--which you actually need a little bit--you would
    probably still need more money, but which you need a little bit
    less more money because of some of that cost. And so I will
    leave that lingering out there if we have time within my 5
    minutes.
        Mr. Parker, as a CEO, accepting the premise that we have
    now moved to a self-financed public-private partnership or
    Government corporation or independent nonprofit entity,
    whatever it is, share with me the benefit to your company.
    Share with me from a CEO perspective--share with me the public
    benefit that you feel inures as a result of that structural
    change.
        Mr. Parker. Thanks. First off, a more efficient
    organization, which could do more things for the same amount of
    dollars; but bigger than that, a reduction in air traffic
    control delays, a much more efficient and much better use of
    automation to reduce delays around this country, which are only
    going to get worse, not better, and that will be reduced
    through a more efficient system.
        And that is by far the largest benefit of all this, is
    taking what is, I agree, a complex system, and making it more
    efficient. I would argue, actually, that the complexity argues
    for this to be done more so than a less complex system.
    Complexity is where automation and creativity and innovation
    can actually make bigger advances.
        So anyway, we all suffer, and I think not all of us realize
    how much. We suffer due to an antiquated ATC system. And it is
    simply going to get worse, and by moving it to a more
    commercial structure, that would not be allowed to happen.
        Mr. Costello. Thank you.
        Mr. Rinaldi, let's talk about the FAA's modernization
    program and the FAA more generally, and whether and to what
    extent it includes air traffic controllers as they are
    developing the NextGen technologies, as well as speak more
    generally about the air traffic controllers' inclusion in FAA
    reform efforts; and if you have some concerns relative to that,
    maybe some suggestions as to where you would like to see more
    cooperation or more involvement.
        Mr. Rinaldi. Thank you, sir. Currently we are working very
    collaboratively with the FAA when it comes to modernization.
    But I often get reminded, as seats change amongst the FAA
    leadership, it is almost like you have to reinvent the wheel.
    And someone said ``Groundhog Day.'' We actually have to bring
    them back up to speed exactly where we were 6 months ago, 10
    months ago, or 12 months ago to actually keep the projects
    going.
        Knock on wood, hopefully by the end of this month we will
    cross the finish line on ERAM which, as David Grizzle pointed
    out, was spec'd out at 2004/2005. And we are finally crossing
    the line now--we did not get involved in the modernization of
    ERAM, which is our 20 en route centers across the country,
    until early 2010, is when we started to get involved, because
    they had a $2 billion program that actually was not tracking
    airplanes across the sky, and it was actually shutting down our
    radar scopes for NextGen technology.
        So being involved is not only important, it is essential to
    being successful in modernization.
        Mr. Shuster. Thank you very much. And I want to thank the
    panel. Again, Mr. DeFazio, as I said earlier, always asks the
    tough questions, and that has always been from the outset the
    funding. How do we figure it out? And I believe we will figure
    it out, how to get there, especially when you have got a panel
    like this with almost 200 years or more than 200 years
    experience. And there are other people around the country who
    are able to help too.
        I really appreciate you taking the time today, and I think
    many of you, if not all of you, have been before a roundtable,
    a listening session. And we are doing that because this issue
    is extremely difficult.
        But I think, as many of you said here today, the time is
    ripe for us to do something like this. I believe there is a
    will out there. When you have the different groups sitting at
    the table talking about the same thing--and again, finding a
    solution is what this is all about.
        And remind me, Mr. Parker said he is here trying to help do
    the right thing, thank you for that. Good luck with that, too.
    But it reminded me of what Winston Churchill said about
    America. ``America always does the right thing after it has
    exhausted every other option.''
        [Laughter.]
        Mr. Shuster. So hopefully over the last 20 years we have
    exhausted all the options and we are finally getting to the
    place where we are going to do the right thing. So again, thank
    you all very much for being here today. Appreciate it. And the
    hearing is adjourned.
        [Whereupon, at 12:19 p.m., the subcommittee was adjourned.]
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