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


 
                   OPTIONS FOR FEDERAL AVIATION 
              ADMINISTRATION AIR TRAFFIC CONTROL REFORM

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

                                (114-11)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                                AVIATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 24, 2015

                               __________

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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  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
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 OPTIONS FOR FEDERAL AVIATION ADMINISTRATION AIR TRAFFIC CONTROL REFORM

                              ----------                              


                        TUESDAY, MARCH 24, 2015

                  House of Representatives,
                          Subcommittee on Aviation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:01 a.m., in 
room 2167, Rayburn House Office Building, Hon. Frank A. 
LoBiondo (Chairman of the subcommittee) presiding.
    Mr. LoBiondo. Good morning. Thank you for coming. The 
committee will come to order.
    Before we get started on the business of the committee this 
morning, I want to express from myself, Mr. Larsen, Mr. 
Shuster, and Mr. DeFazio our deepest condolences to the victims 
and families of those who lost their lives in the crash of 
Germanwings flight 9525 in southern France.
    We do not have a lot of details. We know it was a terrible 
tragedy. We will be closely monitoring the investigation. 
Aviation safety has and will always continue to be a top 
priority of this subcommittee.
    Over the last year, the subcommittee has held a series of 
roundtables and hearings on the state of our Nation's air 
traffic control system and identifying the challenges the FAA 
has faced in modernization and NextGen implementation. While we 
are currently enjoying the safest air traffic control system in 
the world, we should be striving to also be the most efficient 
that we can be. Historically, the United States has been the 
leader in aviation. However, the record is mixed on where we 
stand today.
    For decades, policymakers and stakeholders have almost 
unanimously recognized the need to modernize our radar-based, 
World War II-era ATC system. The FAA has been attempting to 
modernize the system since 1981. The DOT Office of Inspector 
General, the Government Accountability Office, and numerous 
bipartisan Federal airline commissions found that FAA's 
progress with delivering planned NextGen capabilities has 
encountered a number of delays, cost increases, and failure to 
provide promised benefits to the traveling public and industry 
stakeholders.
    In testimony before this subcommittee last year, DOT 
Inspector General Scovel warned that NextGen implementation 
costs for Government and industry, initially estimated at $20 
billion for each, could double or even triple, and that NextGen 
implementation may take an additional decade, something I do 
not believe any of us believe is acceptable.
    While stakeholders unanimously support NextGen, they have 
been unable to agree on how to address these well-documented 
implementation obstacles. As Chairman Shuster has stated, the 
committee has an historic opportunity to drive the 
institutional change needed to ensure that we have the very 
best ATC system in the world.
    Three years of Federal budget disputes have included the 
FAA's decision in April 2013 to furlough 10 percent of its air 
traffic controller workforce and nearly close 149 contract 
towers to meet sequester-driven budgetary cuts, the partial 
shutdown of the FAA in August 2011, and schedule delays and 
cost overruns that continue to plague FAA's modernization and 
NextGen implementation efforts.
    These are distressing realities, but may be just the 
impetus needed to drive change--specifically, whether it is 
time to transform and/or transfer the air traffic control 
function of the FAA, currently managed by the Air Traffic 
Organization.
    The United States is the only developed country whose ATC 
system can become a political football, frequently held hostage 
to Federal budget disputes like the sequester, which threatens 
not only the ongoing operations of the ATC system, but also the 
successful implementation of NextGen. I believe, and I know 
Chairman Shuster believes, that unless we reform our ATC 
system's governance and funding structures, we risk failure in 
implementing NextGen and its full benefits to the country.
    While there may not be consensus among stakeholders yet on 
the type of model that the U.S. should pursue, there is a 
growing consensus that comprehensive financing and governance 
reforms are needed. Furthermore, there is an acknowledgment 
that we are not fully using FAA assets and expertise readily 
available, including the FAA flagship Technical Center in my 
district, to their fullest to solve these vexing issues. We can 
and must do better.
    I look forward to hearing from our witnesses their thoughts 
on different opinions and options for reform of our Nation's 
air traffic control system. Let me emphasize that ensuring we 
continue to have the safest aviation system in the world will 
drive the ATC reform debate in the months ahead.
    As the subcommittee seeks to address these longstanding 
obstacles to ATC modernization and NextGen implementation in 
the next FAA reauthorization bill, there are questions that we 
need to address at today's hearing. Does the United States have 
the best governance and funding structure in place to deliver 
the most efficient, most modern ATC system while ensuring the 
safest system in the world? Have the ATC models used by other 
countries enhanced safety and efficiency, and if so, can the 
best attributes of these models be adopted by the United States 
without adversely impacting safety?
    And before I recognize Mr. Larsen for his comments, I ask 
unanimous consent that all Members have 5 legislative days to 
revise and extend their remarks and include extraneous material 
for the record of this hearing. Without objection, so ordered.
    Now I would like to recognize Mr. Larsen for any opening 
remarks.
    Mr. Larsen. Thank you, Mr. Chairman. Turn your phones off, 
please. Thanks. Thanks for calling this hearing to explore 
alternatives to FAA air traffic management. I appreciate the 
continued bipartisan cooperation as we move towards a timely 
FAA bill.
    Today we are going to hear from witnesses with a variety of 
ideas about how to improve efficiency and certainty in the 
management of our Nation's airspace. I welcome any discussion 
of what we need to do to keep our airspace the most efficient 
and safest in the world.
    But before we address that, we do have to ask that basic 
question: What is the problem we are seeking to fix? The GAO 
reported last year that 71 of 76 aviation stakeholders said the 
air traffic control system is very to extremely safe.
    Today no one would argue the airline industry as well is 
the healthiest it has ever been due largely to the efforts of 
the industry and the FAA to improve efficiencies over the last 
decade. The International Air Transport Association projects 
airlines worldwide, in fact, are expected to make a collective 
$25 billion profit in 2015.
    IATA also suggests that U.S. carriers would continue to set 
the standard for financial performance, with the highest profit 
margins worldwide. That is good news since a healthy airline 
industry is critically important for international 
competitiveness.
    We are also living in the safest period in aviation history 
in the U.S. Every day, U.S. airlines safely transport about 2 
million passengers around the country. And with the important 
safety improvements that Congress mandated following the tragic 
Colgan Air crash in 2009, the aviation system is getting even 
safer.
    At the same time, NextGen implementation has faced hurdles. 
And I want to be clear: FAA is making progress. In fact, GAO 
reported last year that only 5 of 76 aviation stakeholders said 
they had little to no confidence in the FAA's ability to 
implement NextGen.
    At this time last year, we were uncertain when we would see 
a plan for implementing DataComm. Now, in response to a tasking 
by Chairman LoBiondo, the FAA has a plan, with industry 
support, to implement DataComm. At this time last year we were 
uncertain about the path forward for performance based 
navigation, or PBN procedures. Now, again in response to our 
tasking, the FAA has a plan, with industry support, to 
accelerate PBN procedure implementation. And the list goes on.
    Airlines are making money. The system is safe. And the FAA, 
with close congressional oversight, is making progress on 
NextGen. So the question has to be asked, what is the problem 
we are trying to tackle when we talk about reforming our air 
traffic control system?
    Well, when I talk to 10 stakeholders, I hear about 20 
different problems. When I talk to even just 1 stockholder 
about proposed solutions, such as a private corporation model, 
I immediately think of at least 14 issues, including: What 
bargaining protections would apply to employees in the new 
entity? Would employees maintain Federal benefits?
    How would the new organization work seamlessly with the FAA 
to move NextGen forward? What kind of liability insurance would 
the new entity have? How would the new entity coordinate with 
the Department of Defense in time of crisis? And would small 
communities be guaranteed service as the new entity gains 
efficiencies by closing towers?
    Mr. Chairman, with your permission I would like to enter, 
with unanimous consent, another 57 questions I have, for a 
total of 63 questions, into the record.
    Mr. LoBiondo. I thought the limit was 60.
    Mr. Larsen. Make it 60. You pick the three you do not want.
    Mr. LoBiondo. Without objection, so ordered.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
       
        
    Mr. Larsen. Thanks. So I want to make sure that we are all 
clear on whether we should address many problems with one 
solution or whether we should be addressing these problems 
individually. We must make sure the FAA authorization is not a 
science experiment because with 2 million passengers in the 
skies on any given day, we must remember what is at stake if we 
make changes to our safe air traffic control system.
    If we resolve to go big in this bill with significant air 
traffic reforms, we have to do it methodically, with a clear 
statement of the problem that we are trying to solve and a 
clear understanding of how to solve it without compromising 
safety in any way.
    Finally, I want to note something that is not a surprise to 
anyone here. We have 6 months to pass an FAA bill. There are 
many issues to address with ATO reform. I do not think any of 
our witnesses will tell us today that the diverse interests in 
this industry are coalescing around a single proposal.
    Without that happening, I find it difficult to foresee an 
on-time FAA authorization bill if we tackle this topic. If 
stockholders want to push for a proposal, they need to put 
something on the table or risk heading us down the chaotic path 
of multiple short-term FAA bills, as we have had before the 
most recent authorization. That will only contribute to reform 
proponents' claims about the damaging impacts of unstable and 
unpredictable funding.
    And I am hopeful we can make progress on these issues 
today. And before that, I would as well like unanimous consent 
to enter in the record DOD Policy Board on Federal Aviation in 
response to discussion regarding privatization of U.S. air 
traffic control services, essentially, a DOD statement of 
issues they would like to address should we move forward on any 
planned privatization, commercialization, or whatever other 
term we want to give it.
    Mr. LoBiondo. Without objection, so ordered.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]     
        
    Mr. Larsen. With that, I yield back. Thank you.
    Mr. LoBiondo. I would now like to recognize Chairman 
Shuster.
    Mr. Shuster. Thank you, Chairman LoBiondo, for holding the 
hearing today. And let me start off with what Mr. Larsen has 
pointed out. We have got 6 months to act, and to everybody that 
knows Washington, pressure is a great thing for us to have 
here. It energizes us and gets us going to work. So that 
pressure is there, and we need to make sure we take advantage 
of it.
    Over the past 2 years we have held numerous meetings, 
listening sessions, roundtables, and hearings on the FAA's 
efforts to modernize our safe yet increasingly obsolete ATC 
system. We have also seen reams of GAO reports and inspector 
general's reports on the FAA's most recent ATC modernization 
initiative on NextGen.
    The bottom line is that after three decades of various 
modernization attempts, billions of dollars have been spent and 
we are nowhere near where we need to be. While the FAA has 
spent approximately $6 billion to date on NextGen, passengers, 
shippers, and aircraft operators have seen few benefits. In 
fact, ATC delays are up at 13 of the 20 largest airports, and 
domestic flights take longer now than they did in 1977.
    As our system approaches 1 billion passengers per year, 
under these circumstances two things will happen. One, every 
day at the airport will seem like the day before Thanksgiving. 
And two, we will lose our lead in aviation. Neither outcome is 
acceptable.
    Let me emphasize that it is not an indictment of the FAA's 
leadership team, or the air traffic controllers, who are the 
best in the world. It is an indictment of a governance and 
financing structure that is broken beyond repair.
    The underlying problem is that air traffic control is a 
high-tech service. The customers are companies and individuals 
who pay good money for the services they are provided. It is 
not a business. It is a vast Government bureaucracy.
    As a Government agency, the FAA is simply not set up to 
determine risks, pursue the most cost-efficient investments, 
manage people to produce the best results, reward excellence, 
or punish incompetence like a normal business. In the same 
amount of time that we have pursued NextGen at the FAA in the 
last 10 years, Verizon has upgraded its wireless system not 
once, not twice, not three times, but four times in the last 10 
years.
    During this discussion, some have raised the questions of, 
``What problem are we trying to solve?'' and ``Why should we 
try to do this now?'' Those are fair questions.
    To answer what we are trying to solve, I would say that we 
are not just trying to solve a procurement problem or a human 
resources challenge. Past Congresses have tried to address 
narrow problems, but have little to show for it. The FAA has 
not really changed or gotten better.
    What I want is for the United States to have the safest--
and let me emphasize safest--most cost-effective, most 
technologically advanced ATC system in the world, bar none. We 
are not there and we will never get there on the current path. 
We have to step up to the broader challenges of getting it 
right and keeping America the leader.
    And to answer ``Why now?'', air traffic control levels have 
declined by 15 percent since 2007, but the FAA and its budget 
have gotten larger. This is the right time to act. We have the 
breathing room and the imperative to get ourselves on course.
    The only answer is transformational reform that will ensure 
that the ATC service provider operates like a business, with no 
degradation in safety levels. It has been done before. In the 
past 20 years, 50 countries have successfully separated the ATC 
service from the aviation safety regulator.
    They have taken different approaches, but with similar 
results--ATC systems have been modernized, safety levels have 
been either maintained or improved, service quality has been 
improved in most cases, and costs have generally been reduced.
    I believe the United States, with all of our talent, 
energy, and resources, can do just that or better. Given the 
size and complexity of our national airspace, we need to look 
at lessons learned and the best attributes of other countries 
and apply them to the United States.
    The idea of reforming our system is not new. Bipartisan 
Federal aviation commissions during the Reagan and the Clinton 
administrations who have looked at it tried to tackle these 
issues. And no matter what course we take on air traffic 
control reform, we need to ensure that safety will not be 
compromised.
    I look forward to hearing from our panel, and our panel 
today is very distinguished, many, many years of service to the 
industry, many years of looking at this problem. In fact, Mr. 
Poole said to me when I saw him back there, he said, ``I hope I 
am prepared today.'' He has been preparing for 30 years for 
this hearing.
    [Laughter.]
    Mr. Shuster. As well, everybody on the panel has multiple 
years of experience here. And so for those of you new to the 
committee, you should really look at the backgrounds on these 
folks. These are truly the experts. They know the problems. 
They have the solutions. And we need to work with them to try 
to make sure that we do what is good for this country, do what 
is good for aviation in America and the world.
    Thank you, and I yield back.
    Mr. LoBiondo. Thank you.
    Mr. DeFazio?
    Mr. DeFazio. Thank you, Mr. Chairman. I think it is clear 
we all have a common objective here. We want to maintain and 
improve upon the safest air traffic control system in the 
world. But we want to make it more nimble in terms of adopting 
new technology procurement moving forward.
    But what is the major problem we are trying to solve? Well, 
I would say the 2-week partial shutdown of the FAA in the 
summer of 2011, when Congress and this committee failed to 
reauthorize the FAA; budget sequestration that caused 
furloughs, a hiring freeze, flight delays--that was a mess; the 
shutdown of the entire Government.
    So the number one priority is to protect the FAA and Air 
Traffic Organization from Congress. Now, that is a tough task, 
but here we are. Let's see how we could tackle that. How can we 
protect it from the United States Congress?
    Well, probably you could say, let's keep it the way it is, 
but let's give it mandatory spending authority. Move it off-
budget. Right now we are only 9 percent short of self-funding. 
We can probably figure out where to get that 9 percent or save 
that 9 percent. And then, like five pages in this book of 
agencies and authorities that are exempt from sequestration, 
let's exempt it from sequestration. OK. That is one way to do 
it.
    But that does not necessarily solve the bureaucracy 
problems. Past reorganizations dictated that the FAA would have 
its own procurement system. They essentially adopted the rules 
of the Federal procurement system. It would be substantially 
out from sequential levels of review at the Secretary's office 
and OMB and everywhere else. Those things came to naught, for a 
number of reasons.
    So that past attempt at reform failed. We have bureaucratic 
problems that are apparent that are not easily dealt with. We 
have facilities that need to be consolidated or moved, and 
Congress often gets directly involved in that. So that could be 
solved with a BRAC process. You could look at trying to enforce 
those personnel reforms, but probably will not get there.
    So then we could look at an independent Government agency, 
truly independent, with a board of directors or advisors and an 
Administrator. We could look at a Government corporation; one 
of the witnesses here today has that in his testimony, and he 
is not officially representing the MAC, but that seems to be 
perhaps where they are headed.
    And people say, well, look. What is your example? The 
Postal Service? Well, not exactly. But then again, you forget 
that the reason the Postal Service is losing money today is 
because the United States Congress told them they have to 
prepay healthcare for 75 years. If we told an airline they had 
to prepay their employees' healthcare for 75 years, they would 
say, ``You are nuts. We cannot do that. Nobody can do that.'' 
Well, we are making the Postal Service do it. So they are 
actually making money.
    They are not the best example. We need a 21st-century 
Government corporation model, and there is not one to point to. 
We would have to create it. That is a lot of work. And then we 
have advocates of a private not-for-profit, looking at Nav 
Canada, which has many enviable attributes.
    But there are a number of questions that arise if we move 
outside the Government sphere, independent agency, or 
Government corporation. One is, how do you value the assets and 
how are they going to pay for them? We have both physical 
assets and then spectrum, which the FAA does not have. It is 
not their asset. It is actually an FCC asset, which through the 
NTIA is annually licensed to the FAA. If you were to put that 
up for auction, it would be worth many, many billions of 
dollars. So you have got an asset issue.
    What about safety? Some advocates say, ``Well, we will 
leave safety with the Government. We will leave certification 
with the Government.'' Wait a minute. I thought certification 
was a big problem. Well, that means we are going to have to fix 
that. And then how is certification going to oversee the new 
air traffic system if they are separated? They say it works 
elsewhere. Yes, maybe it can work here, but I have concerns 
about that.
    What about airport funding? We have massive needs. There is 
tremendous resistance to any increase in a PFC. But under this 
model, AIP would go away, so I do not know exactly how 
commercial airports would exist. I guess they would go to the 
European model, which is massive increase in landing fees, 
which I think would receive some resistance from some parts of 
the aviation community.
    Pension arrangements were already raised by my colleague 
here. One member of the panel told me upfront, ``No, they are 
going to go to defined benefit.'' Well, I do not think that 
would go over with the air traffic controllers. So we have some 
disagreement there.
    And then there is something that we stumbled over last 
Friday, and I will be asking very exacting questions about 
this. Because of a recent court ruling by the DC Circuit 
reinforcing a court ruling from 1936 that the Government cannot 
delegate regulatory authority, and actually one of the briefs 
actually mentions air traffic control, there is a question of 
constitutionality here. And I would not want to spend a lot of 
time on something that ends up not being constitutional, create 
it and then have to see a future Congress very messily 
reintegrate it.
    So a lot of questions to be answered, and I think we have a 
common goal, as I said at the outset. We want to reinforce the 
safest system in the world. We want to make it more nimble in 
procurement, less bureaucratic, provide better service to all 
of its aviation customers and stakeholders, and what is the 
best way to do that? And I look forward to hearing from the 
panel. Thank you, Mr. Chairman.
    Mr. LoBiondo. Thank you, Mr. DeFazio. Thank our witnesses 
for being here today.
    Our first witness today is Mr. Matt Hampton, assistant 
inspector general for aviation at the United States Department 
of Transportation. Thank you for being here. We are looking 
forward to your comments.

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

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