[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
__________
Printed for the use of the
Committee on Transportation and Infrastructure
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available online at: http://www.gpo.gov/fdsys/browse/
committee.action?chamber=house&committee=transportation
_____________
U.S. GOVERNMENT PUBLISHING OFFICE
93-853 PDF WASHINGTON : 2015
_______________________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].
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.]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[all]