[Senate Hearing 114-294]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 114-294

   FAA REAUTHORIZATION: AIR TRAFFIC CONTROL MODERNIZATION AND REFORM

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

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 19, 2015

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation




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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                   JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi         BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
MARCO RUBIO, Florida                 CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas                      RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska                BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas                  EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska                 CORY BOOKER, New Jersey
RON JOHNSON, Wisconsin               TOM UDALL, New Mexico
DEAN HELLER, Nevada                  JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado               GARY PETERS, Michigan
STEVE DAINES, Montana
                    David Schwietert, Staff Director
                   Nick Rossi, Deputy Staff Director
                    Rebecca Seidel, General Counsel
                 Jason Van Beek, Deputy General Counsel
                 Kim Lipsky, Democratic Staff Director
              Chris Day, Democratic Deputy Staff Director
       Clint Odom, Democratic General Counsel and Policy Director
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 19, 2015.....................................     1
Statement of Senator Thune.......................................     1
Statement of Senator Nelson......................................     3
Statement of Senator Wicker......................................    43
Statement of Senator Peters......................................    46
Statement of Senator Manchin.....................................    49
Statement of Senator Klobuchar...................................    51
Statement of Senator Markey......................................    53
Statement of Senator McCaskill...................................    55
Statement of Senator Blumenthal..................................    58
Statement of Senator Daines......................................    60

                               Witnesses

Hon. Michael P. Huerta, Administrator, Federal Aviation 
  Administration.................................................     4
    Prepared statement...........................................     6
Hon. John Engler, President, Business Roundtable and former 
  Governor, State of Michigan....................................     9
    Prepared statement...........................................    10
Hon. Byron Dorgan, Senior Policy Advisor, Arent Fox LLP and 
  former U.S. Senator from North Dakota..........................    14
    Prepared statement...........................................    15
    Eno Center for Transportation NextGen Working Group--
      Statement of Principles for Air Traffic Control Reform.....    19
Jeffery A. Smisek, Chairman, President, and CEO, United Airlines.    21
    Prepared statement...........................................    23
Paul M. Rinaldi, President, National Air Traffic Controllers 
  Association, AFL-CIO (NATCA)...................................    25
    Prepared statement...........................................    27
Ed Bolen, President and CEO, National Business Aviation 
  Association....................................................    33
    Prepared statement...........................................    34

                                Appendix

Mike Perrone, National President, Professional Aviation Safety 
  Specialists, prepared statement................................    65
Thomas L. Hendricks, President and CEO, National Air 
  Transportation Association, prepared statement.................    68
Response to written questions submitted to Hon. Michael P. Huerta 
  by:
    Hon. John Thune..............................................    69
    Hon. Roy Blunt...............................................    70
    Hon. Deb Fischer.............................................    71
    Hon. Richard Blumenthal......................................    72
    Hon. Brian Schatz............................................    73
    Hon. Cory Booker.............................................    74
    Hon. Tom Udall...............................................    76
Response to written questions submitted to Hon. John Engler by:
    Hon. John Thune..............................................    77
    Hon. Deb Fischer.............................................    78
    Hon. Bill Nelson.............................................    79
    Hon. Brain Schatz............................................    81
Response to written questions submitted to Hon. Byron Dorgan by:
    Hon. John Thune..............................................    81
    Hon. Deb Fischer.............................................    82
    Hon. Bill Nelson.............................................    83
    Hon. Brian Schatz............................................    84
Response to written questions submitted to Jeffery A. Smisek by:
    Hon. John Thune..............................................    85
    Hon. Deb Fischer.............................................    87
    Hon. Bill Nelson.............................................    87
    Hon. Richard Blumenthal......................................    88
    Hon. Brian Schatz............................................    89
    Hon. Cory Booker.............................................    89
Response to written questions submitted to Paul M. Rinaldi by:
    Hon. Deb Fischer.............................................    89
    Hon. Bill Nelson.............................................    90
    Hon. Brian Schatz............................................    90
    Hon. Cory Booker.............................................    92
Response to written questions submitted to Ed Bolen by:
    Hon. Deb Fischer.............................................    92
    Hon. Brian Schatz............................................    92
 
   FAA REAUTHORIZATION: AIR TRAFFIC CONTROL MODERNIZATION AND REFORM

                              ----------                              


                         TUESDAY, MAY 19, 2015

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m. in Room 
SR-253, Russell Senate Office Building, Hon. John Thune, 
chairman of the Committee, presiding.
    Present: Senators Thune [presiding], Wicker, Blunt, Ayotte, 
Fischer, Moran, Heller, Gardner, Daines, Nelson, McCaskill, 
Klobuchar, Blumenthal, Schatz, Markey, Booker, Udall, Manchin, 
and Peters.

             OPENING STATEMENT OF HON. JOHN THUNE, 
                 U.S. SENATOR FROM SOUTH DAKOTA

    The Chairman. Today the Commerce Committee concludes its 
series of planned hearings on reauthorization of the Federal 
Aviation Administration with an examination of the Nation's air 
traffic control system.
    Let me begin by thanking Aviation Subcommittee Chair Ayotte 
and Ranking Member Cantwell for taking us through several 
valuable hearings on the way to this full committee hearing. It 
has been a busy work period and a great deal of progress has 
been made, thanks to their efforts.
    The U.S. Air Traffic Control, or ATC, system involves 
thousands of dedicated air traffic controllers guiding tens of 
thousands of flights safely across the country on a daily 
basis. We can all be proud of the system's safety record.
    At the same time, increasing demand, the need to improve 
efficiency, and changes in technology all underscore the need 
to modernize a system that is still radar-based and operated 
using concepts and procedures developed decades ago.
    Efforts to modernize ATC hardware and software have made 
some progress recently but the long view indicates 
modernization programs have often taken too much time and cost 
too much.
    We have stacks of reports from the DOT's Office of 
Inspector General and the Government Accountability Office 
detailing the implementation delays and cost overruns that have 
plagued these efforts for decades and stymied leadership from 
multiple administrations.
    The most recent and visible initiative in this area is the 
Next Generation Air Transportation System, or NextGen. Before 
NextGen was given a name, the original goal was something 
called ``Free Flight,'' which was expected to result in a 
genuine transformation of the system away from air traffic 
control to air traffic management.
    Taking advantage of GPS for navigation and surveillance was 
at the heart of this idea. As initially envisioned, FAA would 
save money eliminating most radars and airspace operators would 
save time, money, and fuel by choosing their own direct routes.
    But more than 15 years after the FAA began talking about 
Free Flight, we still seem to be more than a decade away from 
anything resembling it. In fact, a recent study by the National 
Research Council concluded that NextGen currently seems to be 
more about incremental programs and improvements rather than a 
transformational change.
    Also, airlines and other operators in the system now feel 
burdened with the expense and effort of implementing changes 
that will not yield direct benefits for them for many years to 
come.
    This situation has led several stakeholders and policy 
makers to question whether the current ATC structure is best 
suited for the tasks at hand. Long-standing difficulties with 
modernization are just one reason to consider reform.
    The system's reliance on annual transportation 
appropriations and the vagaries of the political process make 
long term planning for system capitalization and management of 
the agency's footprint difficult and probably more costly.
    The FAA will always face challenges attracting and 
retaining the talent needed to drive major technological change 
when it must compete with cutting edge businesses in the 
private sector.
    To address these challenges, we must carefully consider if 
there is a better way to deliver ATC services for the traveling 
public and airspace users, and I am open to considering all 
ideas.
    FAA has a great record as a safety regulator, something 
that would certainly continue if air traffic control services 
were moved out of the FAA or government.
    Many countries around the world have undergone such 
transitions with success, and I look forward to hearing from 
our witnesses about what reform of our system might look like 
and how reform could serve the needs of all airspace users.
    To be sure, the matters we discuss today are just part of a 
larger effort on FAA reauthorization where we will address a 
host of other important issues. I am looking forward to working 
with Ranking Member Nelson, as well as Senators Ayotte and 
Cantwell, and other members of the Committee to advance such 
legislation.
    Last, I want to stress that our interests about ATC 
modernization are not focused only on the current leadership 
team at FAA. As I mentioned before, it seems clear there are 
structural limitations that have impeded success over the 
years. I suppose the key question is whether, if we were to 
build an air traffic control system from scratch today, we 
would necessarily conform to the old strictures or strike a 
better path.
    I look forward to this discussion, and now want to turn to 
my colleague, Senator Nelson, the Ranking Member, for his 
opening remarks.

                STATEMENT OF HON. BILL NELSON, 
                   U.S. SENATOR FROM FLORIDA

    Senator Nelson. Thank you, Mr. Chairman. Senator Thune 
joins me to acknowledge the families of those lost on Colgan 
Air Flight 3407. Your presence here is a reminder of how much 
is at stake with the safe operation of our aviation system, so 
thank you for being here.
    Obviously, we have the busiest, the most complex airspace 
in the world, and thanks to the hard work and the dedication of 
the FAA employees, we have an agency that is providing the 
safest, most efficient airspace in the world, yet the negative 
impacts of the uncertainty of the funding and the sequestration 
have led to widespread concern about the funding of Federal 
programs and the Federal operations.
    If you take a meat cleaver approach instead of the scalpel 
approach, the sequester forces irresponsible budget decisions 
in our domestic and defense programs.
    Some of you are going to suggest that the answer is to 
privatize the FAA and air traffic control. This Senator feels 
like we ought to get budget certainty and repeal sequestration. 
If we do not, the situation will worsen when additional budget 
cuts return in 2016.
    The FAA has faced unpredictability for too long. The last 
FAA bill took 4 years and involved 23 extensions and a partial 
FAA shutdown. The good news is that Senator Thune and I are 
working together, we are going to do anything possible to get 
this FAA reauthorization going.
    In the past, because of that uncertainty, because of that 
sequestration, the FAA has had to furlough employees, implement 
a hiring freeze, temporarily close their Academy, and halt a 
lot of the work that I have had the privilege of seeing with 
the Administrator on the NextGen programs.
    This has set the FAA back in its progress to advance air 
traffic control modernization. The conversation about moving 
air traffic control into private not-for-profit entities has 
impact far beyond you witnesses here today.
    Take, for example, the Department of Defense. They share a 
responsibility for controlling airspace with the FAA, and they 
have for more than 65 years. Today, the Department of Defense 
controls about 20 percent of our airspace for civilians as well 
as the military.
    FAA and DOD coordinate activities to ensure our military 
can train warfighters, test new concepts, equipment, and defend 
the Nation. Air defense right here in the continental U.S.
    No other country in the world has the defense assets of the 
U.S., and we must ensure that our defense interests are not 
harmed by removing the government from air traffic control, and 
I can tell you the Department of Defense has visited me, and 
they do not want any of this privatization.
    Look at the airlines. Even the airlines are not in 
agreement. Let me quote from a letter from Delta: ``Rather than 
wasting months of collective energy only to find ourselves with 
a less efficient, less responsive, more bureaucratic-like, 
costlier new monopoly service provider, we should instead focus 
our efforts on achieving real reform in the next authorization 
that brings about tangible benefits for operators and more 
importantly for the traveling public.'' That is Delta.
    Since aviation is the backbone of our U.S. economy, we must 
prioritize air traffic control investments for the good of this 
country.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Nelson. We have a great 
panel today led off by the Honorable Michael Huerta, 
Administrator of the Federal Aviation Administration. He will 
be followed by the Honorable John Engler, who is currently the 
President of Business Roundtable, and of course, a former 
Governor.
    The Honorable Byron Dorgan, Senior Policy Analyst at Arent 
Fox, former colleague of ours from the other Dakota, and also a 
former member of this committee.
    Mr. Jeff Smisek, Chairman, President and CEO of United 
Airlines. Mr. Paul Rinaldi, President of the National Air 
Traffic Controllers Association, and Mr. Ed Bolen, President 
and CEO of the National Business Aviation Association here in 
Washington.
    A great panel, we look forward to hearing from all of you. 
We will start on my left and your right with the Administrator. 
Mr. Huerta, please proceed.

  STATEMENT OF HON. MICHAEL P. HUERTA, ADMINISTRATOR, FEDERAL 
                    AVIATION ADMINISTRATION

    Mr. Huerta. Thank you. Chairman Thune, Ranking Member 
Nelson, members of the Committee, thank you for inviting me to 
speak today about the reauthorization of the FAA.
    The upcoming FAA reauthorization provides us with the 
opportunity to propel our system to the next level of safety 
and to foster the kind of innovative climate that has long been 
the hallmark of our proud aviation heritage.
    This reauthorization has provided a forum for many in 
industry and government to openly discuss possible changes in 
the governance structure of the FAA and to help us create the 
aviation system that will sustain our Nation's economic growth 
well into the future.
    We are open to having this discussion, but we must all 
agree on the most important problems reauthorization should 
fix. In our view, those are budget instability and the lack of 
flexibility to execute our priorities.
    These challenges exist for the entire agency, not just for 
the air traffic control system and the NextGen organization, as 
some have suggested. In addition to finding agreement on the 
problem we are trying to solve, we should agree on finding ways 
to avoid unintended consequences.
    Our ability to deploy NextGen technologies and capabilities 
hinges on interdependencies and relationships within the 
agency. NextGen is more than installing technology in our air 
traffic facilities and on aircraft. It involves the close 
participation of our safety organization to ensure that the 
technology is safe and the controllers and pilots know how to 
use it safely.
    We believe that any decision about governance must take 
into account these issues so that we may best serve our nation 
and the flying public.
    Some have argued for change saying the FAA has not 
delivered on air traffic modernization. I would argue that the 
FAA has already made major progress in modernizing our airspace 
system through NextGen.
    We completed the installation of a more powerful technology 
platform with our new high-altitude air traffic control system, 
known as ERAM. This system will accommodate the applications of 
NextGen and allow controllers to handle the expected increase 
in air traffic efficiently.
    Last year, we finished the coast to coast installation of 
the ADS-B network that will enable satellite-based air traffic 
control.
    On a parallel track, through our collaboration with 
industry, we identified key priorities in implementing NextGen 
air traffic procedures. We now have more satellite-based 
procedures in our skies than traditional radar-based 
procedures. We have created new NextGen en routes above some of 
our busiest metropolitan areas, saving millions of dollars in 
fuel, decreasing carbon emissions, and cutting down on delays 
in each city.
    In addition to these improvements, we have set clear 
priorities on delivering more benefits in the next three years. 
These range from improved separation standards for heavy 
aircraft, better coordination of traffic on the airport 
surface, and streamlined departure clearances using data 
communications.
    NextGen has already yielded $1.6 billion in benefits to 
airlines and the traveling public. In the next 15 years, the 
changes we have already made will produce $11.5 billion in 
benefits.
    We recognize, however, that it is not enough to rely on 
projected benefits. That is why we go back and study the 
benefits that certain improvements have provided to users.
    For example, in Atlanta, we safely reduced weight 
separation standards to improve efficiency at the airport. 
Because of this change, Atlanta's Hartsfield-Jackson 
International Airport has increased the number of planes that 
can land by up to 5 percent or about five planes more per hour. 
Delta Airlines is also saving up to two minutes of taxi time 
per flight. These improvements are saving them between $13 
million to $18 million in operating costs annually.
    We are aware of the criticisms of the FAA's implementation 
of NextGen. I would like to explain our approach. There are 
different theories about how to deploy technology in a complex 
operating environment. Some take the position that you should 
start from a wide ranging vision and work back from there in 
developing a range of scenarios. Others suggest mapping out the 
entire picture and only proceeding when you are sure of the end 
gain.
    Others say to take a more pragmatic approach, and this is 
the path the FAA has chosen, based on close consultation with 
industry. This approach, used by the Office of Management and 
Budget, closely matches investments with tangible benefits to 
airlines and passengers.
    We acknowledge that it requires up front investment, but we 
are careful not to strand programs in the middle of 
implementation.
    When dealing with widespread change in the dynamic airspace 
system, there is no margin for error. The system must transport 
750 million passengers every year with the highest levels of 
safety. Any technology we implement must be reliable and safe 
from the outset. To achieve this high standard, we must remain 
nimble and we must have flexibility.
    Our aviation system is a valuable asset for the American 
public. We should use the upcoming reauthorization to provide 
the FAA with the tools necessary to meet the demands of the 
future and to minimize disruption to the progress we have 
already made with NextGen and our work to integrate new users 
into our airspace system.
    I thank you for the opportunity to appear before your 
committee today, and I am happy to take your questions.
    [The prepared statement of Mr. Huerta follows:]

     Prepared Statement of Hon. Michael P. Huerta, Administrator, 
                    Federal Aviation Administration
    Chairman Thune, Ranking Member Nelson, Members of the Committee:

    Thank you for inviting me to speak with you today on the future 
direction of the FAA. The FAA has a tremendous opportunity to make a 
difference for stakeholders by laying the foundation for the National 
Airspace System (NAS) of the future. We are focusing our 
accomplishments on well-defined strategic priorities, including 
achieving the benefits of the Next Generation Air Transportation System 
(NextGen).
    In the context of FAA reauthorization and the future direction of 
the FAA, some members of the aviation community and of Congress have 
discussed making governance changes at the agency. The Administration 
welcomes the opportunity to evaluate any governance-related proposals 
and we look forward to having those discussions with Congress and 
stakeholders. We would anticipate, however, that any such proposal that 
might include a fundamental shift in current policy would need to be 
very clear in its identification of both the issue to be solved and a 
proposed mechanism to resolve it. While we would not support a 
fundamental change for the sake of change alone, we remain open-minded 
and welcome the chance to further engage with you on that subject.
    Further, with respect to reauthorization, some of the major 
challenges facing the FAA involve funding levels, funding stability, 
and flexibility. We believe that any governance-related proposals would 
need to address these issues while ensuring that our Nation continues 
to maintain the safest and most efficient airspace system today and in 
the future.
    The needs of the system and the aviation community it serves are 
evolving. New users, such as operators of unmanned aircraft systems and 
commercial space vehicles, are entering our Nation's airspace with 
increasing frequency. As we invest in long-term modernization and 
recapitalization projects and build on the successes of NextGen, we 
also have to think about sustaining critical parts of our existing 
infrastructure, much of which is beyond its projected useful life. We 
have to address these challenges in a budget environment with a great 
degree of uncertainty. We are increasingly being asked to do more with 
less.
    In recent years, funding uncertainties resulting from 
sequestration, government shutdowns, and short-term reauthorization 
extensions have hindered the FAA's ability to efficiently perform our 
mission and have impeded our ability to commit to long-term 
investments. The FAA has grappled with funding challenges by focusing 
and prioritizing its work, knowing that we cannot continue to provide 
all of the services we have in the past and understanding that safety 
cannot be compromised. We're having discussions with our stakeholders 
about what we might be able to consider no longer doing, or do 
differently, through innovative business methods and technologies. We 
look forward to working with the aviation community and Congress to 
form consensus on the appropriate path for the future direction of the 
FAA.
    Looking ahead, the benefits that we continue to deliver through 
NextGen will enable a safe and efficient NAS of the future that will 
meet the needs of its users. NextGen is increasingly delivering 
benefits to system users, such as reduced fuel costs, reduced delays, 
reduced environmental impacts, and increased safety. In the midst of 
funding challenges, the agency has focused resources on leveraging 
available technologies to deliver near-term NextGen benefits. This 
strategy has paid off. For example, the FAA's Metroplex program 
improves airspace efficiencies in major metropolitan areas, simplifying 
air traffic flows. In collaboration with the aviation industry, the FAA 
is working with 11 busy metropolitan areas where improved air traffic 
performance could benefit not only the region but the entire national 
airspace. The FAA works with collaborative teams of air traffic 
controllers, airport officials, airline representatives, general 
aviation operators, other industry stakeholders, and community 
representatives to study, design, and implement comprehensive 
approaches for each Metroplex. Metroplex solutions include Performance-
Based Navigation (PBN) procedures that enable aircraft to fly more 
directly from departure to destination by using satellite signals and 
airspace redesign. The FAA has introduced into the NAS more than 7,000 
PBN procedures.
    A recent example of the success of Metroplex is the 60 new routes 
into and out of Houston Metroplex airports that were launched last 
year. The initiative improved merging techniques that begin aligning 
planes hundreds of miles away. The preliminary data from the analysis 
of the Houston Metroplex implementation identified $6 million in annual 
savings and a reduction of 400,000 fewer nautical miles flown each 
year, reducing carbon emissions by 20,000 metric tons and saving 
operators 2 million gallons of fuel. That's like taking more than 4,000 
cars off the streets.
    In addition to focusing on near-term benefits, we continue to 
invest in new infrastructure to support precision satellite navigation; 
digital, networked communications; integrated weather information; and 
more. When the next generation transformation was in its infancy, the 
Government Accountability Office described the effort as 
``staggering.'' When I joined the FAA team in 2010 as Deputy 
Administrator, I experienced that the program was already on its way to 
new levels. Today, I am proud to report the completion of a major 
milestone that will enable NextGen solutions. We've finished installing 
our new high altitude air traffic control system known as En Route 
Automation Modernization (ERAM), one of the largest automation 
changeovers in the history of the FAA. ERAM is fully operational at the 
20 FAA en-route centers across the continental United States. This 
network replaces the HOST computer system that had its roots in the 
1960s.
    ERAM is the backbone of the Nation's airspace system. More than 
simply a faster computer, this new system is a network of computers 
designed to know about your flight, where you plan to go and how you 
plan to get there, from the moment you enter the national airspace from 
anywhere in the country. ERAM's flexible and expandable system design 
will accommodate en-route processing necessary for NextGen technologies 
such as Automatic Dependent Surveillance Broadcast (ADS-B) services, 
System Wide Information Management, and Data Communications. ERAM 
processes data from nearly three times the number of sensors as the 
legacy system. With this system in place, we're able to make available 
new tools for our air traffic controllers including the ability to 
track more high altitude flights, which will result in more efficient 
routing, reducing fuel burn and improving the predictability of airline 
schedules.
    What we've achieved with ERAM was facilitated by introducing 
increased discipline and structure to the way we do business at the 
FAA. In 2012, we created a Program Management Organization to better 
manage the deployment of this and other technology. We also worked 
closely with our air traffic controllers, who provided feedback 
throughout the system development phases. The fact that we turned ERAM 
around, and that it is now operating nationwide, is a testament to what 
the FAA can accomplish as an agency when it sets milestones and pulls 
together to make fundamental changes.
    ERAM links with ADS-B, a more precise and efficient satellite-based 
alternative to radar that will revolutionize how we manage our Nation's 
air traffic. ADS-B opens up new routes to air carriers and increases 
capacity. Last year, we completed nationwide deployment of the ADS-B 
ground stations. The FAA is currently providing nationwide broadcast 
services to equipped users. We are working closely with the entire 
aviation community, including general aviation operators, to work 
toward the mandatory ADS-B Out equipage by January 1, 2020 deadline. 
For aircraft with the additional equipment, which is not required by 
the 2020 deadline, ADS-B delivers traffic and weather information 
directly to the cockpit, giving the pilots more information and 
awareness.
    The success of NextGen is not the FAA's alone. Collaboration with 
all stakeholders, including the aviation industry, our union members, 
and Congress, is key to its success and we can continue to leverage one 
another's commitments to produce benefits. Last year, subject matter 
experts from the FAA met with aviation industry representatives to 
determine what high-benefit, high-readiness NextGen capabilities the 
FAA will be able to accomplish in the next one to three years, and what 
industry commitments are necessary for those activities to be 
successful. The FAA and the NextGen Advisory Committee (NAC) worked 
together to reach agreement on a joint implementation plan consisting 
of capabilities within four focus areas. Taken together, this plan will 
advance our navigation capabilities through PBN, increase capacity on 
parallel runways through Multiple Runway Operations, enhance airport 
surface operations through data sharing, and introduce Data 
Communications between cockpit and air traffic control. The plan 
identifies timelines, specific locations, and costs for each priority. 
These priorities leverage equipment that operators have already 
invested in for other capabilities.
    We hope the benefits that stakeholders are realizing in these areas 
will incentivize them to make larger NextGen investments. A prime 
example of the benefits already being achieved through this focused 
collaboration with industry is the more narrowly tailored and safely 
defined wake turbulence separation standards, which are based on the 
performance characteristics of aircraft and have been implemented at 
several major airports across the Nation. This Re-categorization of 
Wake Turbulence Separation Minima (RECAT) updates and decreases 
separation standards, which are primarily based on aircraft weight 
classes. Because of wake RECAT, FedEx can take advantage of a 13 
percent increase in departure capacity at Memphis. Passenger carriers 
are seeing the benefit, too. At Atlanta's Hartsfield-Jackson airport, 
Delta Airlines and FAA have found a one and one-half minute reduction 
in departure queue delays. Delta projects to save $14-19 million 
dollars in operating costs over a one-year period.
    The FAA will rely on the same high degree of collaboration with 
industry as we monitor our progress against the milestones in the plan. 
The agency is conducting internal meetings at least monthly to monitor 
progress against the plan, while the NAC will work with industry 
stakeholders to ensure their commitments are funded and met. Progress 
reports are provided publically through the NAC, and the FAA is 
reporting progress against the milestones on its NextGen Performance 
Snapshot website. To date the FAA has completed 17 of the plan's 
milestones, including two that were finished ahead of schedule. 
Industry has also met its commitments. This is a significant beginning 
that demonstrates the great potential for future partnerships between 
the FAA and industry to move the NAS forward.
    Last year the FAA convened a call to action to engage the aviation 
industry in meeting the January 1, 2020 deadline to equip aircraft with 
ADS-B Out. FAA experts and industry leaders identified barriers 
delaying operators from equipping and formed the Equip 2020 working 
group to collaboratively resolve those issues. The goal of Equip 2020 
is to ensure the fleet is equipped with technology to utilize the 
benefits of the ground ADS-B infrastructure. The collaborative aspect 
of the Equip 2020 working group put the right stakeholders together to 
solve one of the general aviation (GA) community's biggest barriers: 
cost of equipment. Low-cost equipment options are now available from 
manufacturers; those products and other available avionics are tracked 
in a database with suppliers' equipment data and air carriers' 
purchasing data. Analysis of these equipage trends will indicate 
potential risks to achieving compliance by the deadline so that we may 
adjust our efforts as necessary. To further assist GA owners determine 
their compliance options, the FAA has created an easy to navigate Equip 
ADS-B website \1\ and will host information sessions across the country 
this year. We need to continue to ensure that users of the system make 
timely and necessary equipage investments to maximize the widespread 
deployment of NextGen. Government and industry have a shared 
responsibility to create the aviation system that will carry this 
Nation well into the 21st century.
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    \1\ https://www.faa.gov/nextgen/equipadsb/
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    If you look objectively over the last five years, the FAA has made 
major progress on both completing NextGen's foundation and expanding 
the delivery of NextGen benefits to the users of the system. Continuing 
to build the NAS of the future and accommodating new services will 
require difficult decisions. The aviation community is diverse and does 
not always see eye-to-eye. Nevertheless, I believe consensus on the 
future direction of the FAA is absolutely critical if we are going to 
resolve our long-term funding challenges. We need stable, predictable 
funding to effectively operate our air traffic control system, build on 
our investments in NextGen, and efficiently recapitalize our aging 
facilities. This would best be achieved with the passage of a long-term 
reauthorization bill.
    Chairman Thune, Ranking Member Nelson, I look forward to working 
with you and the Committee as we move forward toward a reauthorization 
bill.

    The Chairman. Thank you, Administrator Huerta. Mr. Engler?

 STATEMENT OF HON. JOHN ENGLER, PRESIDENT, BUSINESS ROUNDTABLE 
             AND FORMER GOVERNOR, STATE OF MICHIGAN

    Mr. Engler. Good morning, Mr. Chairman, committee members. 
Thanks for the opportunity to testify this morning.
    The Business Roundtable members include leaders of major 
U.S. aerospace companies. Every one of our members relies on 
air transportation as customers of cargo and passenger 
airlines.
    As the 20th century drew to a close, U.S. aviation set the 
standard for the world's largest, safest, most technologically 
advanced system. Sadly, we have lost our preeminent position 
and our future leadership is in doubt. The U.S. air traffic 
system remains the world's largest, the world's safest, but it 
is not the most technologically advanced nor the world's most 
cost effective.
    Our national air traffic control system relies on 
essentially the same technology, ground-based radar and voice 
radio transmission, as it did in the 1960s. Almost all of the 
FAA's surveillance technology is still analog.
    Like many other stakeholders, we are concerned about the 
halting pace of the modernization represented by the FAA's 
NextGen program. A National Academies report that was released 
this month clearly stated the problems, the original vision for 
NextGen is not what is being implemented today. Airlines are 
not motivated to spend money on equipment and training for 
NextGen.
    A modern innovative air traffic control system would offer 
tremendous benefits to the users of the airspace; more 
efficient flight paths, reduce fuel consumption and crew time, 
lower emissions and less noise pollution, global commercial 
leadership leading to expanded exports, and increase services 
to small community airports.
    What are the obstacles? Last year, FAA Administrator Huerta 
offered one explanation in a speech at the Aero Club of 
Washington, and I quote ``There is simply no way the FAA can 
implement NextGen, recapitalize our aging infrastructure, and 
continue to provide our current level of services without 
making some serious tradeoffs,'' something Senator Nelson 
referred to really in his opening comments.
    Administrator Huerta and I would agree, I believe, on this 
critical point, the current funding system clearly does not 
provide the needed resources, but a deeper problem is the 
broken budgetary process itself, which prevents the FAA from 
pursuing the kind of step by step technological improvement 
that is standard elsewhere, certainly in the business world.
    For an example of what works, look at AT&T and Verizon. In 
the years the U.S. Government has been talking about NextGen, 
four generations of cellular technology from powering a basic 
flip phone to 4G streaming video in today's modern iPhone have 
been adopted.
    The FAA is trying to fund a $20 billion capital 
modernization effort out of annual and unpredictable cash flow. 
Most other transportation sectors issue long term revenue bonds 
to finance large capital modernization, but bonding is 
something the FAA cannot do. States do it. The private sector 
does it. The Federal Government does not.
    I convened at the Roundtable an expert group to help study 
this issue, including former FAA and Transportation Department 
officials, knowledgeable aviation policy advisors. Their 
conclusion, the status quo is simply too costly and too 
inefficient.
    They identified the necessary elements of an alternative 
system--separation of the air traffic control operator from the 
regulator to improve transparency and accountability, and to 
further increase safety, an organizational structure that 
accounts for multiple objectives so that safety and access are 
valued along with cost efficiency.
    Governance of the air traffic control by a board appointed 
by stakeholders. A revenue structure that enables air traffic 
control to be fully self-supporting, without government 
financial support, and completely free of the Federal budgetary 
process.
    The ability for air traffic control to finance capital 
expenditures and accelerate modernization. Wage and benefit 
structures to protect employees, prevent disruption of 
employees' reasonable career expectations, and preserve a 
collaborative culture.
    Over the last two decades, most other Western countries 
have restructured the way air traffic control is funded and 
governed, determining that it is a high tech service business, 
part of critical infrastructure that could be funded directly 
by its aviation users and customers.
    Separating air traffic control into an entity independent 
from the rest of the FAA is a manageable process. Tools and 
precedents exist for addressing the risks that come with any 
innovation, and a thorough planning process is, of course, 
necessary.
    In the end, I hope that you as the Senators responsible for 
the oversight of the FAA use the reauthorization process to put 
America on a trajectory to a modern air traffic control system 
that is again the gold standard for the world.
    Now is the time for decisive bipartisan action to restore 
America's global leadership. The Business Roundtable looks 
forward to working with you to achieve these important goals. 
Thank you for the opportunity, members.
    [The prepared statement of Mr. Engler follows:]

Prepared Statement of Hon. John Engler, President, Business Roundtable 
                 and former Governor, State of Michigan
    Good morning, Chairman Thune, Senator Nelson. Thank you for the 
opportunity to join you this morning to testify on the operation and 
needed modernization of the Nation's airspace.
    I'm pleased to speak on behalf of Business Roundtable, an 
association of more than 200 CEOs of major U.S. companies. Business 
Roundtable's CEO members lead companies with $7.2 trillion in annual 
revenues and nearly 16 million employees. These companies comprise more 
than a quarter of the total market capitalization of U.S. stock markets 
and invest $190 billion annually in research and development--equal to 
70 percent of U.S. private R&D spending. Our companies pay more than 
$230 billion in dividends to shareholders and generate more than $470 
billion in sales for small and medium-sized businesses annually.
    Aviation is critically important to all members of Business 
Roundtable. Today, civil aviation in the United States accounts for 5.4 
percent of our GDP, contributes $1.5 trillion in total economic 
activity each year, and supports 11.8 million jobs. Business 
Roundtable's members include leaders of major U.S. aerospace companies, 
but more broadly, every one of our members relies on air transportation 
every day as customers of cargo and passenger airlines. For example, 30 
to 40 percent of all daily airline passengers are making trips for 
business purposes.
    The CEOs of Business Roundtable are global leaders in their 
respective industries, and they recognize the value of American 
leadership in aviation. The United States was, of course, site of the 
Wright Brothers' historic first powered flight in a heavier-than-air 
vehicle. Commercial airlines developed in this nation, and so did air 
traffic control; begun initially by a nonprofit, federally chartered 
corporation, air traffic control was taken over by the Federal 
Government during the Great Depression. Following World War II, 
commercial and general aviation boomed in the United States. As the 
20th century ended, our aviation system still set the standard as not 
only the world's largest but also the world's safest and most 
technologically advanced.
    Sadly, our preeminent position has been lost and our future 
leadership is in doubt. The U.S. air traffic system remains the world's 
safest and the world's largest. But it is not the most technologically 
advanced, nor the world's most cost-effective.
    The Business Roundtable last year conducted an analysis that 
superimposed Canadian rates for air traffic control services on U.S. 
flight data, and preliminary results suggest that, in aggregate, the 
Canadians are delivering services for lower cost than the FAA today. 
Canada's cost advantage may result partly due to a less-complex 
airspace than the United States'--and complexity drives cost--but one 
would expect that the larger-scale U.S. operation would also create its 
own efficiencies and lower costs.
    Unfortunately, neither business leaders nor the flying public can 
take the future health of U.S. aviation for granted. Challenges with 
the FAA's provision of air traffic control services have existed for 
decades, but are now becoming more acute. FAA has failed to keep its 
equipment modernized for the entirety of its history, including during 
times of budgetary plenty. Our national air traffic control system 
relies on essentially the same technology--ground-based radar and voice 
radio transmission--as it did in the 1960s. FAA is operating Enroute 
Centers that are mostly over 50 years old. Almost all of the FAA's 
surveillance technology is still analog. And the FAA trains controllers 
now the same way it did more than 20 years ago.
    Like many other stakeholders, we are concerned about the slow and 
uncertain pace of the modernization effort represented by the Federal 
Aviation Administration's NextGen program. Like you, we read the 
numerous reports by the Government Accountability Office and the 
Department of Transportation Inspector General documenting cost 
overruns and late delivery of new systems. The most recent report, from 
the National Academies, released at the beginning of this month was 
particularly damning when it said:

   ``The original vision for NextGen is not what is being 
        implemented today.''

   ``This shift in focus has not been clear to all 
        stakeholders.''

   ``Airlines are not motivated to spend money on equipment and 
        training for NextGen.''

   ``Not all parts of the original vision will be achieved in 
        the foreseeable future.''

    These reports identify underlying problems that have led 
stakeholders to question whether we have the best model--not just for 
delivering NextGen but also for the ongoing operation and management of 
what used to be the world's most advanced air traffic control system.
    The fact that the FAA has been consistently behind when it comes to 
innovation isn't just an inconvenience--it has real costs for the users 
of the airspace and the public at large.
    Airlines and independent aviation all bear significant costs 
because of less-than-optimal routings and excessive block times. From 
the standpoint of airlines and other aircraft operators, reducing 
delays will mean important savings in fuel and crew time, their two 
largest operating costs. And with intelligent consolidation of air 
traffic control facilities, enabled by 21st-century technology, the 
unit cost of services will be reduced, yielding further cost savings 
for aircraft operators. Retiring many obsolete facilities and ground-
based navigation aids will produce additional cost savings.
    These lost benefits for airlines and aircraft operators translate 
to unnecessary delays for shippers and travelers, including the huge 
numbers who are traveling every day on business. Advanced technologies 
and procedures would enable more planes to land and take off safely on 
existing runways, reducing delays. Likewise, more direct flight routes 
at the altitudes with the most favorable tailwinds will speed up 
flights and also reduce delays. Last year, President Obama estimated 
the potential reduction in airspace delays at 30 percent. Even if that 
number is a little high, I was glad to hear the president acknowledge 
the kinds of benefits a modernized system will provide.
    Unnecessary time flying in the air also means adverse environmental 
impacts. More direct routings and optimized flight paths will reduce 
aviation fuel consumption and thereby cut CO2 emissions. 
Shorter and more-precise landing paths (like those implemented in 
Seattle) will reduce noise exposure around airports, which may make it 
easier to add critically needed runway capacity around the country.
    And, as I mentioned earlier, the FAA's failure to keep its systems 
updated also means that the U.S. is no longer the global leader in 
aviation. A modernized air traffic control system would advance 
America's global commercial leadership by expanding export 
opportunities. Overseas sale of technologies developed and deployed in 
the United States would allow highly innovative U.S. aerospace 
companies to expand their global market and increase domestic 
employment.
    In testimony last November before the House Transportation and 
Infrastructure Committee, I said that funding is the most obvious 
challenge facing the FAA. Last year's sequester served as a wake-up 
call for aviation stakeholders, with its furloughs of controllers and 
the near-shutdown of 149 contract towers. And the current sequester law 
has seven more years to go. The FAA's current annual budget for 
Facilities & Equipment is now $1 billion less than what it was 
projected to be five years ago. Alarmingly, a senior FAA official 
recently said the agency faces a $5 billion funding shortfall over the 
next seven years. With regard to NextGen, the FAA and stakeholders are 
currently engaging in triage, figuring out which few projects the 
agency can afford to pursue in the current highly uncertain funding 
environment.
    FAA Administrator Michael Huerta, in a speech last year at the Aero 
Club of Washington, said: ``There is simply no way the FAA can 
implement NextGen, recapitalize our aging infrastructure, and continue 
to provide our current level of services without making some serious 
trade-offs.'' The current funding system clearly does not provide the 
resources that are needed.
    But the heart of the problem is not simply a lack of resources, but 
the broken budgetary process itself. The provision of air traffic 
control services is a technology-driven enterprise. The Federal 
budgetary process prevents FAA from pursuing the kind of incremental 
technology refreshment that is standard procedure in technology driven 
enterprises.
    For an example of how this ought to work, look at two member 
companies of Business Roundtable: AT&T and Verizon. In the years we've 
been talking about NextGen, both have gone through four generations of 
cellular technology, from powering a basic flip phone to 4G streaming 
video in today's modern iPhone.
    What the FAA is trying to do is to fund a $20 billion capital 
modernization effort out of annual and unpredictable cash flow. This 
makes no business sense, as my CEO membership would tell you. Most 
other transportation sectors issue long-term revenue bonds to finance 
large capital modernization--including airports, pipelines, railroads, 
and even bridges and interstate highways. But bonding is something the 
FAA cannot do. Our Federal Government simply does not have a capital 
budget.
    To accommodate the budget process, FAA does its developments in 
massive bundles. Infrequent updating leads to constant obsolescence and 
higher costs. Despite excellent contractor performance, systems are 
frequently out of date, even when they are newly delivered, because 
their specifications were designed so far in advance of delivery. 
Further, budgets and schedules are almost always exceeded.
    This inadequate budgetary process also causes FAA management to 
cater primarily to Congress and OMB as its customers, rather than to 
the more appropriate airspace users, passengers, and shippers. As a 
result, today's FAA tends to be quite slow in responding to the needs 
of airspace users. Because of the slow development of procedures to 
allow for more direct routing, flights continue to follow waypoints 
located where bonfires guided aircraft in the early 20th century.
    Finally, the combination of the air traffic control operator and 
its regulator within the same government agency--as we have today--is 
not beneficial to safety and results in a confusion of roles and 
responsibilities, loss of transparency and accountability, and greater 
frustration for users when they try to make the system work. It has 
also created an organizational culture that resists innovation. As this 
month's report by the National Academies observed:

        ``The FAA and the United States rightly pride themselves on a 
        devotion to safety and an excellent safety record to match. At 
        the same time, a conservative safety culture can affect how 
        quickly process and technological change can happen--a 
        challenge in an arena where technologies change rapidly. Such a 
        culture may inhibit the adoption of new technologies or 
        increased automation that could potentially result in net 
        improvements in both safety and efficiency. A strong safety 
        culture can make up for some limitations in an architecture. 
        For example, while it is a good thing for controllers and 
        pilots to be highly sensitive to close-calls, it would be 
        better if the architecture and design precluded those near-
        misses from happening. Moreover, if the FAA is going to be held 
        accountable for an extremely conservative safety culture--which 
        has historically been the case--then it should be recognized 
        that such conservatism will understandably bias the agency away 
        from innovation. Thus, there are risks associated with a safety 
        culture as well, not least of which are opportunity costs due 
        to not deploying improved (and potentially even safer) 
        technology and procedures in the long run. In addition, 
        excessive care regarding safety can result in the accumulation 
        of technical debt--the deferral of significant refactoring and 
        infrastructure refresh.''

    A few years ago, I convened an expert group to help Business 
Roundtable study this issue, including former FAA and Transportation 
Department officials and knowledgeable aviation policy advisers. These 
experts with government and private-sector experience identified the 
series of challenges that I've outlined here and principles that must 
form the basis for overcoming them. The status quo is simply too costly 
to continue. Any alternative should include:

   Separation of the air traffic control operator from the 
        regulator to improve transparency and accountability, and 
        increase safety.

   An organizational structure that accounts for multiple 
        objectives so that safety and access are valued along with cost 
        efficiency, and there is assurance against any value-leakage 
        outside of the operation.

   Governance of air traffic control by a board that is 
        appointed by stakeholders (including users, employees and 
        government interests) with a fiduciary duty to the operation.

   A revenue structure that enables air traffic control to be 
        fully self-supporting without government financial support and 
        completely free of the Federal budgetary process.

   Financing capability to enable air traffic control to 
        finance its capital expenditures, accelerate its modernization 
        and level out its cash outlays.

   Wage and benefit structures that protect employees, prevent 
        disruption of employees' reasonable career expectations, and 
        preserve a collaborative culture within air traffic control.

    Other countries have charted a similar course of action. 
Researchers have found that over the last two decades most other 
Western countries have restructured the way air traffic control is 
funded and governed--for example, in Australia, Canada, Germany, and 
the United Kingdom. In these and many other cases, the governments have 
decided that air traffic control is a high-tech service business that 
can be funded directly by its aviation users, who become customers, 
just as airlines are customers of airports. More than 50 countries have 
separated their air traffic control systems from their transport 
ministries, leading to arm's-length regulation of air safety--just like 
that applied to airports, airlines, and all the other components of 
aviation.
    While the principles I've outlined are accepted in other countries, 
they would be major changes for U.S. air traffic control. They 
certainly require a full assessment of their feasibility for the U.S. 
system. We have been holding discussions with the principal 
stakeholders over the past year, working to answer these many 
questions. As business leaders, it's particularly important to the 
Business Roundtable that the business case for any new structure be 
sound and well thought out.
    Spinning off air traffic control from the rest of the FAA and 
running it as a separate entity is not a particularly large or complex 
transaction for corporate America. Tools and precedents exist for 
managing the risks that come with any innovation. That doesn't mean, 
however, that we don't need a thorough planning process just as any one 
of the CEO members of Business Roundtable would use if they were 
pursuing a restructuring of this sort.
    In the end, I believe the greatest risk to our system is allowing 
the status quo to continue or pursuing more half-measures and calling 
them reform. We've been down that path. We cannot allow the fear of 
change to prevent us from doing what is needed.
    Instead, I hope that you, as the senators responsible for oversight 
of FAA, will use the reauthorization process to put America on the path 
to a modern air traffic control system and global leadership in 
aviation. Now is not the time for timidity, or minor reforms. Now is 
the time for decisive, bipartisan action to restore America's 
leadership in aviation. Business Roundtable looks forward to working 
with you to achieve these important goals.

    The Chairman. Thank you, Governor Engler. Senator Dorgan?

                STATEMENT OF HON. BYRON DORGAN,

              SENIOR POLICY ADVISOR, ARENT FOX LLP

           AND FORMER U.S. SENATOR FROM NORTH DAKOTA

    Senator Dorgan. Mr. Chairman, thank you for inviting me 
back to this committee. I served on this committee for 18 
years, and no doubt badgered hundreds of witnesses, so maybe a 
turn about is fair play.
    For the past two years, I and former Transportation 
Secretary Jim Burnley have co-chaired a project at the Eno 
Center for Transportation looking at the subject of air traffic 
control and the structure of air traffic control.
    I was the Chairman of the Aviation Panel the last time we 
worked on reauthorizing the FAA, and I pulled up a headline 
from that moment where we finally succeeded, and it said 
``After five years of debate, 23 short-term extensions, and a 
partial shutdown, Congress approved the final version of the 
FAA bill.''
    My hope this time around is that your headline will be 
shorter and your conclusions bolder for this reason: aviation 
is one of the major arteries of the American economy, and the 
fact is, the issue of effective air traffic control is 
essential to that industry.
    I think we have now come to an intersection where we have 
to decide can we retain our leadership in developing the new 
technology and the Next Generation air traffic control system, 
can we retain our leadership with the current ATC structure. In 
my judgment, we cannot.
    A conclusion at the Eno Center for Transportation after 2 
years of work with stakeholders from around the system was if 
we want to retain America's leadership with the most advanced 
technology, moving from ground-based radar to Next Generation 
satellite guidance, which will be safer, faster, and more 
efficient, if we want to retain that, we are going to have to 
restructure the air traffic control function.
    Let me mention just a couple of facts. Number one, there is 
no question we have an impressive safety record in aviation in 
this country, particularly commercial aviation, even though 
there is still more to do.
    I know the families of the Colgan crash victims are in this 
room. I hope all of you get to know them, because over the 
years, they have played a very important role in continuing 
those safety improvement issues with the FAA.
    Number two, the air traffic controllers do a terrific job 
every day, steering 30,000 flights and two million people as 
they fly across this country.
    Number three, the people of the FAA work hard on these 
issues, including air traffic control and NextGen, but they 
necessarily work in the thick glue of bureaucracy, and frankly, 
that is hard to do with these kinds of challenges.
    Here is the key point. The key point is in order to create 
a new modern air traffic control system, you have to have 
stable funding. That is nearly impossible for the FAA at this 
point. In a time of congressional spending restraint, they 
cannot count on stable funding. In fact, they cannot even count 
on level funding.
    Take a look at the budget that just passed, in the 
facilities and equipment account. It is going to be $355 
million below that which was requested, and the lowest in 15 
years. That is the F&E account at the FAA in the current 
budget.
    The fact is as much as we wish it would, the budget picture 
is not going to change. We are going to see more and more 
spending restraint. We are going to see the impact of 
sequestration, the impact of more layoffs, the on again/off 
again stop/start funding from continuing resolutions. That is 
what the FAA is confronted with.
    No one would or could build a major new technology project 
with those kinds of challenges.
    Here is the headline from last week in the Washington Post. 
I know it causes heartache in the agency: ``FAA isn't 
delivering what was promised in a $40 billion project.'' It 
refers to the modernization of the ATC system. That is why 
change is needed.
    In our work at the Eno Center for Transportation, the 
consensus of the stakeholders was that we need to restructure 
to a government corporation or a non-profit organization that 
has bonding capability, stable funding, and the ability to plan 
and to control and finance the march to modernization.
    We have now reached the tipping point that requires, in my 
judgment, action by Congress. I am not the typical spokesperson 
that would normally come to this table and suggest that be the 
case. I am someone who normally would weigh in on the side of 
having the agency do it.
    In this case, there is not going to be stable funding to 
move this country toward the leadership necessary in the 
NextGen opportunity for air traffic control.
    I understand this is not easy. I understand it is a big 
lift, it has been discussed before, but it needs to be done 
now. A number of other countries have done this very 
successfully, and so can we.
    Finally, Mr. Chairman, we know the history, December 17, 
1903, Orville and Wilbur Wright made the first flight. We 
learned to fly, then we flew the bonfires for guidance at 
night, then we flew to lights pointing in the sky for guidance, 
and then we flew to ground-based radar, and for 50 to 60 years, 
we have not changed.
    Now, we need to change. We need to do it quickly and 
effectively, and in my judgment, the only way that is going to 
happen is if we create some different structure, and I suggest 
a government corporation or non-profit organization to 
accomplish what all of us want to accomplish for this country.
    One final point. I know the word ``privatization'' has been 
used. I did not use it. There are other structural approaches 
including, as I said, government corporations and non-profit 
organizations that I think will solve the problem for this 
country and certainly insist the government retain and be a 
stakeholder in a new organization.
    Mr. Chairman, again, thank you for the invite. It is really 
a pleasure to be here and see all of you.
    [The prepared statement of Senator Dorgan follows:]

 Prepared Statement of Hon. Byron Dorgan, Senior Policy Advisor, Arent 
           Fox LLP and former U.S. Senator from North Dakota
Introduction
    The nation's aviation system is part of the lifeblood of our 
economy, yet the system is facing rising demand, limited airport 
capacity, and aging navigation technology. The Federal Aviation 
Administration (FAA) has developed the Next Generation Air 
Transportation System (NextGen) in an effort to modernize the Nation's 
air traffic control system. Once implemented, this system will continue 
to perpetuate safety standards and promote a more efficient, state-of-
the-art satellite-based system. This system has the potential to safely 
facilitate economic growth, increase mobility, and provide the United 
States with the ability to keep pace with our international 
competitors.
    Recognizing the challenge of air traffic control modernization, the 
Eno Center for Transportation brought together key stakeholders, former 
policymakers, and academics into the Eno NextGen Working Group. I have 
had the honor to co-chair this working group with Former U.S. Secretary 
of Transportation Jim Burnley. This group gathered to discuss how to 
best accelerate airspace modernization and to analyze the institutional 
barriers that have contributed to the issues surrounding NextGen's 
implementation. Our research detailed the history of air traffic 
control in the United States and the attempts that have been made to 
accelerate reformation. It also included an analysis of six different 
countries that have successfully reformed the way their air traffic 
control systems are governed and funded.
    Based on the goal of reforming air traffic control provision in the 
United States to effectively and efficiently implement NextGen and its 
accompanying benefits, and the research that has been conducted for the 
working group, we have proposed a set of guiding principles for air 
traffic control reform. These principles are meant to be a starting 
point for crafting legislative reform.
The Need for Reform
    As has been widely discussed in Congressional hearings,\1\ by the 
Government Accountability Office (GAO),\2\ and the Office of the 
Inspector General (OIG),\3\ the NextGen program has experienced 
unstable Federal funding, which has led to implementation issues and 
increasing costs. These challenges have not only made the program more 
expensive for U.S. taxpayers, but have also created costs for the 
economy and compromised U.S. competitiveness.
---------------------------------------------------------------------------
    \1\ For example, the recent Options for FAA Air Traffic Control 
Reform, an Hearing to the Subcommittee on Aviation of the 
Transportation and Infrastructure Committee of the U.S. House of 
Representatives on March 24, 2015.
    \2\ For example, Air Traffic Control System: Selected Stakeholders' 
Perspectives on Operations, Modernization, and Structure (GAO-14-770), 
released on September 12, 2014.
    \3\ For example, Status of FAA's Efforts to Operate and Modernize 
the National Airspace System, released on November 18, 2014.
---------------------------------------------------------------------------
    The FAA, like other Federal agencies, is subject to Federal 
procurement rules, which create additional challenges when it comes to 
managing large-scale projects such as NextGen. The inability of Federal 
agencies to issue bonds or other forms of long-term financing further 
exacerbates these challenges. Our study of the causes of these issues 
has highlighted the potential drawbacks of the existing governance and 
funding structures for delivering ATC services, suggesting that reform 
could substantially accelerate and improve NextGen deployment.
    These issues are not new. The FAA has consistently been slow to 
implement modernization plans and update the numerous systems that 
comprise U.S. ATC. This has catalyzed calls for the internal 
reorganization of FAA multiple times and has prompted many proposals to 
reform ATC governance and funding. Discussions of reform have been 
ongoing since the early 1980s.\4\
---------------------------------------------------------------------------
    \4\ For example, President Reagan's 1987 President's Commission on 
Privatization looked at the issue of air traffic control governance.
---------------------------------------------------------------------------
    In 1994, following vice-president Al Gore's National Partnership 
for Reinventing Government, a very detailed proposal to create a 
government corporation to provide ATC services in the United States was 
put forward by then Secretary of Transportation Federico Pena, the Air 
Traffic Control Corporation Study. The following year, Representative 
Norman Mineta (D-Calif.) introduced a bill, HR 1441--United States Air 
Traffic Service Corporation Act, on April 6, 1995, which aimed to 
``provide for the transfer of operating responsibility for air traffic 
services currently provided by the Federal Aviation Administration on 
behalf of the United States to a separate corporate entity.'' This 
proposed government corporation would have charged user fees to the 
airlines (in the form of weight and distances charges), would have had 
budget autonomy from Congress, would have had permission to issue 
bonds, and would have been subjected to distinct procurement procedures 
from the rest of the Federal Government. But, lacking support from the 
airlines, general aviation, and many members of Congress, this bill 
died in Committee. As it was in 1994, disagreement between stakeholders 
has been a constant theme in all efforts to reform ATC provision in 
this country.
    Two years after introducing the bill to create a government 
corporation to provide ATC services in the U.S., Norman Mineta led a 
commission to study the issue. The conclusion of the ``Mineta 
Commission'' was that the FAA had ``too many cooks'' (including 
Congress, OMB, GAO, etc.) playing a role in ATC. The commission 
proposed a performance-based organization capable of charging user fees 
and issuing bonds.\5\ As a direct result of the Mineta's commission, 
the Air Traffic Organization (ATO) was created as an arm of FAA in 
2000. This new ATO took a step towards reforming governance, yet it 
ignored the Commission's directive to reform ATC's funding structure.
---------------------------------------------------------------------------
    \5\ National Civil Aviation Review Commission, Avoiding Aviation 
Gridlock: A Consensus for Change, released on September 10, 1997.
---------------------------------------------------------------------------
    The creation of the ATO did not solve most of the issues that have 
been identified, including the need for stable funding. The recent 
draft bill for USDOT funding for FY2016 is likely to increase 
challenges for NextGen deployment. While FAA's budget was slightly 
increased, the Facilities & Equipment (F&E) portion of the FAA budget -
FAA's capital account, which funds both maintenance of existing 
infrastructure and modernization--was decreased by $100 million, 
reaching a 15-year low of $2.5 billion.\6\ With a significant amount of 
back maintenance needs on FAA's legacy infrastructure, NextGen 
deployment will once again suffer if funding is cut. Within the current 
budgetary environment, it is hard to envision a scenario where these 
funding levels will have the potential for increase. Recently the FAA 
completed the deployment of the new En Route Automation Modernization 
(ERAM), a critical system that future NextGen developments will use. 
While this is a crucial step in the implementation of NextGen 
technology, it experienced cost overruns of $370 million. Of that $370 
million, FAA Administrator Michael Huerta has noted that $40 million 
can be attributed to the budget sequester.\7\ With more potential 
sequesters looming in the horizon, passengers, carriers, and our 
national economy cannot afford to wait.
---------------------------------------------------------------------------
    \6\ House Appropriations Committee, Fiscal Year 2016 
Transportation, Housing and Urban Development Bill, released on April 
28, 2015.
    \7\ Air Traffic Management (April 30, 2015). ERAM achieves its 
ultimate milestone. Available at: http://www.airtrafficmanagement.net/
2015/04/eram-achieves-its-ultimate-milestone/
---------------------------------------------------------------------------
International Experiences
    While the United States' ATC system is operated by the Federal 
Government and financed through taxation, most other developed 
countries have departed from a system provided directly from the 
national government. In our research, we analyzed six peer countries. 
Three of the countries (Australia, Germany, and New Zealand) have 
created government corporations to provide ATC services. The other 
three (Canada, France, and the UK) all have unique structures: an 
independent non-profit user co-operative in Canada, a reformed 
government agency in France, and a public-private partnership in the 
United Kingdom. All six countries avoid relying on taxation to finance 
their operations and are instead funded by weight and distance fees 
charged to users of the airspace.
    These nations also have separated their ATC operation from safety 
regulation, which remains in governmental agencies. This separation 
eliminates an inherent conflict of interest that exists today with the 
FAA doing both jobs. The International Civil Aviation Organization 
(ICAO), the UN agency responsible for aviation safety, since the early 
2000s has recommended that member states proceed with the separation of 
ATC provision and regulation.\8\ In addition, the European Union has 
also mandated separation for all its 27 members.\9\
---------------------------------------------------------------------------
    \8\ International Civil Aviation Organization (2006). Document 
9734--Safety Oversight Manual, Part A, 2nd edition.
    \9\ European Parliament (2015). Fact Sheets on the European Union--
Air Transport: Single European Sky. Available at: http://
www.europarl.europa.eu/aboutparliament/en/displayFtu
.html?ftuId=FTU_5.6.9.html
---------------------------------------------------------------------------
    Not only is separation recommended by ICAO, but this rationale has 
also been used before in the United States with the Atomic Energy 
Commission (AEC). Until 1975, AEC performed research and development 
(R&D) for the nuclear industry, and also regulated the safety of the 
same industry. In order to eliminate this potential conflict of 
interest, in 1975 these functions were split into two separate 
entities: the Nuclear Regulatory Commission for safety regulation and 
the Energy Research and Development Administration (merged into the 
Department of Energy in 1977) for R&D.
    In recent discussions here in the United States, there have been 
concerns that non-governmental ATC provision could lead to increased 
costs to the airspace users, poor service, or unsafe operations. The 
experience of our peer countries demonstrates that commercialized 
providers have the ability to keep costs in check, upgrade their 
systems without public funds, and improve safety.\10\ Some key factors 
that are essential to the success of these systems include reliable, 
independent sources of revenue; independent, but accountable, 
management; and direct stakeholder involvement.
---------------------------------------------------------------------------
    \10\ Government Accountability Office (2005). Air Traffic Control: 
Characteristics and Performance of Selected International Air 
Navigation Service Providers and Lessons Learned from their 
Commercialization (GAO-05-769); Oster, C. V. and Strong, J. S. (2007). 
Managing the Skies: Public Policy, Organization and Financing of Air 
Traffic Management. Ashgate.
---------------------------------------------------------------------------
Principles for Air Traffic Control Reform
    The only way to solve the challenges associated with NextGen 
deployment is through transformational governance and funding reform at 
the FAA. Based on our research, the members of the Eno NextGen Working 
Group have agreed to a set of 10 Principles for Air Traffic Control, 
which should be used as a starting point for crucial FAA 
reauthorization discussions. The 10 principles are:

   1.  Promote growth and accommodate diversity in the national 
        airspace system

   2.  Ensure a coherent, stable, and predictable funding structure for 
        air traffic control

   3.  Establish a self-sustaining funding mechanism for air traffic 
        control

   4.  Enable an efficient procurement system for air traffic control 
        modernization

   5.  Enable bonding authority

   6.  Include aviation stakeholders in the governance of the air 
        traffic control provider

   7.  Enhance and improve the Federal Aviation Administration's role 
        as the safety regulator

   8.  Improve the certification processes at the Federal Aviation 
        Administration

   9.  Facilitate robust Research & Development for air traffic control

  10.  Create and carefully implement a plan to ensure a seamless 
        transition to a new system

    A complete description of each principle is included for the 
record. Also included in the record is a list of institutional and 
individual members of the Eno NextGen Working Group.
    The principles expressing the need for predictable and stable 
funding, and the need for a self-sustaining funding mechanism, are 
inspired by the need to ensure that the ATC provider is insulated from 
political whims. This is extremely important if we wish to avoid what 
happened in the 2013 government shutdown and the budget sequester. Air 
traffic control is a 24/7 technological service, the backbone of the 
aviation industry, and one of the most important industries in this 
country. It is imprudent to let such a service be subject to political 
and budgetary cycles. The current funding streams must be replaced by 
direct payments to the ATC provider, allowing users to pay for the 
services they receive.
    Furthermore, bonding authority is essential for more efficient 
investments in modernization efforts like NextGen. Trying to deploy 
multi-billion, multi-decade investments in technology with a budget 
that is appropriated year-by-year, like the FAA is subject to, is next 
to impossible. With bonding, backed by the ATC provider's own stream 
revenues, better capital management will be possible.
    As for governance, principle number six highlights the need for 
more stakeholder involvement in the system's governance. While the 
Management Advisory Council (MAC) has an important role in aiding the 
FAA, this should be taken a step further with stakeholders having a 
direct role in the governance of the system. This involvement would 
promote a balanced system that is more attentive to the stakeholders' 
needs. This can provide a more effective way of prioritizing 
investments, but it would not mean that the Federal Government would be 
taken out of the picture. As the guarantor of the public interest, the 
Federal Government must maintain a role in governance.
    These principles are just an initial step to the creation of a 
better, more efficient ATC system. Congress and aviation stakeholders 
should take the opportunity of the momentum that has been created and 
come up with solutions that will allow U.S. ATC to reclaim its title as 
the gold standard of the world.
Conclusion
    Congress has an opportunity during the upcoming FAA reauthorization 
to do something bold and transformational that will allow ATC in our 
country to enter into the 21st century. The time for small scale 
attempts to reform the FAA is over. We need to do something big and 
transformational. Following the numerous discussions that we had during 
the work of the Eno NextGen Working Group, I have come to realize that 
full-throttle reform is the only way to solve the issues that have been 
identified throughout the decades. The logical conclusion of these 
discussions and the principles that we have put forward is that ATC 
provision should be spun off the FAA into a new independent entity. 
This new independent entity, which should be a government corporation 
or a non-profit organization that is fully outside the Federal 
Government, needs to have budget independence, needs to be funded by 
its users, and needs a governance structure that is responsive to the 
industry stakeholders.
    There has been some discussion about removing the entire FAA from 
DOT or even the government; this is an unworkable idea. Even without 
air traffic control, the FAA will have a very important role and 
essential governmental role as the safety regulator of our Nation's 
aviation system--this is a critical public role. It is inconceivable 
that such a role could be handed over to an entity that is outside the 
direct control of the government, even if it is a government 
corporation. Moreover, this would not accomplish the critical 
separation of the operator from the safety regulator, in line with ICAO 
standards and the rest of the developed world.
    We should also use this opportunity to remove the inherent conflict 
of interest that exists in having the FAA both providing ATC and 
regulating ATC safety. No other agency within USDOT both operates and 
regulates a transportation service. For example, the Federal Railroad 
Administration regulates railways and issues grants, but does not 
manage train dispatching. The National Highway Traffic Safety 
Administration regulates the safety of motor vehicles, but does not set 
speed limits or control traffic lights. Separation allows each 
organization to focus on their core mission and avoid potential 
internal conflicts of interest. A new ATC organization could focus on 
serving customers without having broader regulatory responsibilities, 
and the FAA could focus on regulating ATC safety and the rest of the 
aviation industry, ensuring that the United States airspace continues 
to be the safest in the world. ICAO recommendations and our own 
experience in this country are very clear that separation of safety 
regulation from safety regulation is a worthy goal.
    Some have raised the question of ``what problem'' we are trying to 
solve. While it is true that the FAA has been making progress with 
NextGen, this progress is still far too slow compared to what is 
needed. The fact is that with the current budget and regulatory 
environment, only so much can be done. Only governance and funding 
reform, and the creation of a new independent entity to provide air 
traffic control services, will allow the NextGen effort to be 
significantly accelerated. After 30 years of attempted reforms, there 
is now an opportunity to move forward and reform the U.S. ATC provision 
into a system more ready to deal with the challenges that the increase 
of air traffic in the next decades will bring.
                                Appendix
   Eno Center for Transportation NextGen Working Group--Statement of 
               Principles for Air Traffic Control Reform
Principles for Air Traffic Control Reform
1.  Promote growth and accommodate diversity in the national airspace 
        system
    Access to the national airspace system is crucial for the economy 
of the Nation as well as of many small communities around the country. 
General and business aviation represent an important share of the 
traffic in our airspace and make a vital contribution to the national 
economy. Both domestic and international air carriers depend on an 
efficient system, and government is also a critical user. Effective 
representation of all airspace users in the governance structure of the 
air traffic control provider is essential to ensure that stakeholders' 
interests are safeguarded. Congress and the Federal Government should 
also continue to play a substantial role in promoting the growth of the 
entire aviation system to ensure that adequate capacity exists, delays 
are reduced, and access is maximized.
2.  Ensure a coherent, stable, and predictable funding structure for 
        air traffic control
    The current funding mechanism for air traffic control provided by 
annual appropriations is not an effective mechanism for a highly 
technological and capital intensive service business. Air traffic 
control should be removed from the Federal budget process and should 
not be dependent on annual appropriations. This would insulate air 
traffic control from events like the budget sequester and Federal 
Government shutdown of 2013.
3.  Establish a self-sustaining funding mechanism for air traffic 
        control
    The current funding system, which is based on a mix of taxes and 
general revenues, should be replaced, to the extent possible, with 
direct payments to the air traffic control provider. This funding 
method would create a self-sustaining system and would be in line with 
international principles. It would also improve the link between the 
services provided and the revenues coming in, providing an incentive 
for efficiency. Additionally, allowing all sectors of aviation to be a 
part of its governance will allow them to be more engaged in the 
system's modernization.
4.  Enable an efficient procurement system for air traffic control 
        modernization
    Despite 1996 legislation to exempt the FAA from many Federal 
procurement rules, today's FAA procurement system substantially mirrors 
that of the rest of the Federal Government and remains inefficient. 
These procurement rules and procedures are not effectively designed for 
the highly technological ATC system, and hinder the system's 
modernization. Air traffic control modernization must include 
improvements to procurement processes.
5.  Enable bonding authority
    The air traffic control provider will need the ability to issue 
debt, including bonding authority to aid in long term financing of 
capital expenditures. The ability to issue bonds, backed by the user-
based revenues streams, will ensure better capital planning and will 
help modernization efforts like NextGen to be more effectively managed 
and implemented.
6.  Include aviation stakeholders in the governance of the air traffic 
        control provider
    Stakeholders must play a strong role in governance of the air 
traffic control provider in order for it to be responsive to the needs 
of its users and other aviation stakeholders. This involvement would 
promote a system that is more attentive to the stakeholders' needs. 
This could be a more effective way of prioritizing investments. The 
Federal Government will have a role in the governance structure as a 
guarantor of the public interest.
7.  Enhance and improve the Federal Aviation Administration's role as 
        the safety regulator
    The United States has the safest airspace system in the world. The 
FAA should retain its role as the safety regulator of the airspace 
system after reform to ensure that it will continue to be the safest in 
the world. This will bring the FAA in line with the rest of the 
administrations within the U.S. Department of Transportation, which 
regulate safety but do not operate the services. In addition, existing 
rules and procedures should be reviewed, streamlined, and improved, 
including expediting safety regulatory procedures. Separation of 
provision of air traffic control services from safety regulation will 
also follow international recommendations, allowing each organization 
(the FAA and the air traffic control provider) to focus on their core 
responsibilities and avoid potential internal conflicts of interest.
8.  Improve the certification processes at the Federal Aviation 
        Administration
    A critical component of FAA's continuing role as government safety 
regulator is the certification and approval processes of aviation 
products, flight standards, and people. Effective and timely 
certification processes are essential for the industry and the Nation's 
economy, and delays in the approval processes can be extremely costly 
and disruptive to the successful implementation of NextGen, third class 
medical reform, updating the existing general aviation fleet with 
modern equipment that will improve flight safety, among other concerns. 
Moreover, the current processes are unable to keep pace with the rapid 
advancements in technology and must be reformed, quickly, in order for 
the national aviation system to continue to be the best and safest in 
the world. The FAA culture, as well as the regulatory and certification 
processes, especially in the area of general aviation, need to evolve 
in order to better keep pace with changes in technology.
9.  Facilitate robust Research & Development for air traffic control
    The FAA, with the support of NASA, has sponsored laudable Research 
& Development (R&D) to improve the safety and efficiency of our skies. 
Like other areas within the agency, however, this work is constrained 
by Federal budget and procurement procedures that delay projects and 
increase their costs. R&D should be freed of such constraints.
10.  Create and carefully implement a plan to ensure a seamless 
        transition to a new system
    The transition to any new approach for financing and governance 
must be thoughtfully and meticulously implemented. Every effort must be 
made to avoid any adverse effects on the day-to-day functioning of the 
air traffic system during, or subsequent to, the transition. An 
important component is to provide as stable and secure a working 
environment for the employees of the agency as possible, including the 
continuity of the collective bargaining relationships and processes for 
employees who currently are represented. The transition in the 
financing should be done in a way that avoids any significant changes 
in the financial burdens of the users of the system. Sufficient time 
must be given to all stakeholders to prepare for the new operating 
environment.
                                 ______
                                 
    Disclaimer: While we succeeded in reaching a broad consensus on the 
need for air traffic control reform, as is often the case with an 
exercise like this, these principles, in whole or in part, may not 
necessarily represent the views of all who participated.
                               Membership
Co-Chairs
Former Senator Byron Dorgan
Arent Fox LLP

Former Secretary of Transportation Jim Burnley
Venable LLP
Membership Organizations
Aerospace Industries Association
Alaska Airlines
Air Line Pilots Association
Aircraft Owners and Pilots Association
Airlines for America
American Airlines
Boeing
Business Roundtable
International Air Transport Association
jetBlue
L-3 Communications
National Air Traffic Controllers Association
National Business Aviation Association
Reason Foundation
U.S. Chamber of Commerce
U.S. Travel Association
Individuals
Jim Coyne, Cassidy & Associates
Steve Ditmeyer, Michigan State University
Jack Fearnsides, MJF Strategies LLC
Aaron Gellman, Former Director of Northwestern Univ. Transportation 
Center
David Grizzle, Dazzle Partners LLC, Former COO, FAA's ATO
John Harman, Former Deputy Director, Office of Aviation Analysis, U.S. 
DOT
Norman Mineta, Former Sec. of Commerce and Former Sec. of 
Transportation
Eric Peterson, Transportation Policy Consultant
Dorothy Robyn, Former Special Assistant to the President for Economic 
Policy

    The Chairman. Thank you, Senator Dorgan. Nice to have you 
back. We will now turn to Mr. Smisek.

 STATEMENT OF JEFFERY A. SMISEK, CHAIRMAN, PRESIDENT AND CEO, 
                        UNITED AIRLINES

    Mr. Smisek. Thank you, Chairman Thune, Ranking Member 
Nelson, and members of the Committee for the opportunity to be 
here.
    The reform of our Nation's air traffic control system is a 
critical issue for the users of the national airspace, for our 
passengers and employees, and for the many stakeholders across 
the country who benefit from a healthy commercial aviation 
system.
    A4A, Airlines for America, for which I serve as Chairman, 
has dedicated a tremendous amount of resources, time, and 
attention to developing a rigorous, fact-based study of air 
traffic control reform, including a global survey of the best 
practices for operation of air navigation service providers.
    All of our work points to one conclusion: the American Air 
Traffic Control system needs complete transformation in order 
to modernize to meet the demands of the future, and the time 
for that transformation is now. We cannot continue with the 
status quo.
    Today, all users of the ATC system are beholden to a World 
War II era radar-based system that, while world class in 
safety, is inefficient and delay-ridden. For decades, 
policymakers and stakeholders have almost unanimously 
recognized the need for modernization.
    A long string of reports from Presidentially-appointed 
aviation commissions, the Department of Transportation 
Inspector General, the Government Accountability Office, and 
independent private sector experts have found the FAA's 
progress delivering NextGen capabilities has not met 
expectations, calling into serious question the agency's 
ability to deliver on its mission under the existing funding 
and governance structure.
    The problem is not the leadership or the workforce of the 
FAA. It is the funding and governance structure that we must 
fix.
    There are many countries around the world that have already 
successfully transformed their own air traffic control systems. 
A4A has done extensive benchmarking of the success of these 
models.
    Our analysis suggests the following six basic principles 
for success of a transformed air navigation service provider: 
one, separation of the ATC operations and the ATC safety 
regulation functions. Two, a non-profit corporation operating 
the ATC system with independent multi-stakeholder Board 
governance, free from political influence over decisionmaking.
    Three, a professional, effective management team of the ATC 
provider incentivized to pursue efficiencies without the 
numerous constraints imposed on government agencies. Four, a 
fair, self-funding user fee model based on the cost of ATC 
services, allowing for access to capital markets, and a steady 
predictable, reliable stream of funding that is not subject to 
governmental budgetary constraints.
    Five, the ability to manage assets and capital investments 
in a way that allows far greater speed to market of 
technological modernization, and six, transparency in user 
fees, so that users and their customers alike know what they 
are paying, allowing users full ability to recover costs.
    Under a transformed ATC system, the total of new user fees 
for airlines to pay for the new air traffic entity plus any new 
fee on airlines or their passengers to help fund the remaining 
functions of the FAA should not exceed the total tax burden on 
the airlines and their passengers today.
    With independent governance, operation and funding of a 
transformed ATC system, the FAA could then turn its full 
attention to what it does best, safety, regulation, and 
oversight. A transformed ATC system could continue to maintain 
safety as the utmost priority while creating efficiencies, 
delay reductions and environmental benefits from reduced fuel 
burn.
    The inefficiencies, delays and costs of the current ATC 
system will only grow over time, so there is no better time to 
transform the ATC system than now.
    We are capable of rising to this challenge, as have many 
other countries before us, if we conduct this transformation 
methodically and thoughtfully while giving proper consideration 
to transition issues and risk mitigation.
    The result of this transformation would be a modernized 
U.S. air navigation service provider that will better deliver 
the benefits that the users of the system, our employees, our 
passengers, and this great nation expect and deserve.
    Thank you.
    [The prepared statement of Mr. Smisek follows:]

 Prepared Statement of Jeffery A. Smisek, Chairman, President and CEO, 
                            United Airlines
    Chairman Thune and Ranking Member Nelson, I appreciate the 
opportunity to testify before the Committee today. I'm Jeff Smisek, and 
I am Chairman, President and CEO of United Airlines. I am testifying 
today as Chairman of the Board for our trade association, Airlines for 
America (A4A).\1\
---------------------------------------------------------------------------
    \1\ A4A does not represent Delta Air Lines in this testimony.
---------------------------------------------------------------------------
    As the Committee knows, the airline industry believes that 
fundamental reform presents significant opportunities for improving our 
air traffic system, providing real benefits to the users, air 
travelers, employees, communities and businesses across America. We did 
not come to this conclusion easily and we do not take the implications 
and risks of fundamental reform lightly. We have dedicated a tremendous 
amount of resources, time and attention to this topic, including a 
global survey of best practices for operation of national air 
navigation service providers. Our work leads us to the conclusion that 
the American air traffic control system needs complete transformation 
in order to modernize to meet the demands of the future, and the time 
for that transformation is now.
Safety First
    At the outset, I would like to make it clear that this discussion 
takes place under the absolute premise that safety comes first. Under 
any and all scenarios, first and foremost, the FAA must remain and 
retain the role as a world-class safety regulator. Safety of operations 
is the bedrock principle by which each and every person in our industry 
lives, and transforming our ATC system will not change that in any 
manner. In fact, ATC transformation would reinforce safety as the 
primary mission and responsibility of the FAA, making it more of a 
traditional regulator versus the current system where FAA is both the 
operator and regulator of the air traffic services.
Why is ATC reform important to passengers and consumers?
    For some context, A4A member carriers and their affiliates 
transport more than 90 percent of all U.S. airline passenger and cargo 
traffic. In 2014, the U.S. airline industry averaged more than 2 
million passengers and nearly 50,000 tons of cargo carried on 27,000 
flights per day, providing economic benefits to communities throughout 
the United States. Today, all users of ATC are beholden to a World War 
II-era, radar-based system that, while safe, is inefficient and delay-
ridden. As an example, when I joined the airline industry 20 years ago, 
a flight between DCA and EWR was scheduled for under one hour. Today, 
we must schedule that same flight for almost an hour and a half to 
account for ATC delays--more than twice the actual flying time.
What is the problem we are trying to solve?
    For decades, policymakers and stakeholders have almost unanimously 
recognized the need to modernize our antiquated ATC system. There are 
many countries around the world that have already successfully 
transformed their own air traffic control systems. It's time for the 
U.S. to do the same. To their credit, FAA leadership has been 
attempting to modernize the ATC system for more than a decade, and we 
believe that Administrator Huerta, Deputy Administrator Whitaker, 
Assistant Administrator Bolton, and the teams they lead are working as 
hard and effectively as possible within their budget and organizational 
constraints to provide the safest air traffic system in the world. 
Indeed, the leadership and action they and the dedicated workforce of 
the FAA provided following the act of sabotage at the Aurora facility 
last September are worthy of praise. However, a string of reports from 
presidentially appointed aviation commissions, the Department of 
Transportation Inspector General, the Government Accountability Office, 
and independent private sector experts have found that the FAA's 
progress delivering NextGen capabilities has not met expectations, 
calling into serious question the agency's ability to deliver on its 
mission under the existing funding and governance structure. This was 
most recently emphasized in a National Research Council report that 
indicated FAA should `reset expectations' for NextGen. The problem is 
not the leadership or the workforce: it's the funding and governance 
structure that we must fix.
    Too often, politics and budget constraints end up being the major 
influencers of how the system operates, which means all the users of 
the system are beholden to decisions not necessarily in the best 
interest of the system users. We believe an air traffic system that is 
accountable to stakeholders would operate more efficiently and 
effectively to the benefit of passengers and all users of the system.
What is the solution?
    A4A has undertaken considerable research on various models of air 
traffic organizations around the world. In particular, we have done a 
thorough analysis to benchmark and assess the governance, financial and 
operational performance of the U.S., Canadian and European ATC models 
in order to make an informed comparison between our current system and 
those systems engaging in best practices outside the United States. Our 
evaluation reviewed the safety, predictability, efficiency, cost, 
productivity, customer service and NextGen implementation performance 
of each of the organizations.
    Our benchmarking and rigorous fact-based assessment of the 
governance, financial and operational performance of the U.S., Canadian 
and European ATC models suggests some basic principles for the success 
of a transformed air navigation service provider. There must be:

  (1)  Separation of the ATC operations and ATC safety regulation 
        functions;

  (2)  A non-profit corporation operating the ATC system, with 
        independent, multi-stakeholder board governance free from 
        political influence over decision-making;

  (3)  A professional, effective management team of the ATC provider, 
        incentivized to pursue efficiencies without the constraints 
        imposed on government agencies that hamper their ability to 
        manage more nimbly and effectively;

  (4)  A fair self-funding user fee model based on the cost of ATC 
        services, free from the start and stop budget constraints that 
        have resulted in sequester and furloughs of air traffic 
        controllers, allowing for access to capital markets and a 
        steady, predictable, reliable stream of funding that isn't 
        subject to governmental budgetary constraints;

  (5)  The ability to manage assets and capital investments in a way 
        that allows far greater speed to market of technological 
        modernization; and,

  (6)  Transparency in user fees so that users and their customers 
        alike know what they are paying, allowing users full ability to 
        recover costs.

    Commercial airlines, who are the primary and disproportionate 
funders of today's system, believe that the total of new user fees for 
airlines to fund the new air traffic entity, plus any new fee on 
airlines or their passengers to help fund the remaining functions of 
the FAA, should not exceed the total tax burden on the airlines and 
their passengers today.
    These success factors lead to an effective operation because an 
independent ATC entity can operate with stable and predictable funding 
and governance certainty, subject to strong safety regulation and 
oversight by the FAA, which could then solely focus on its core 
function rather than playing the duel and conflicting roles of both 
operator and regulator. An organization that is accountable to 
stakeholders and users of the system will drive effective decision-
making and efficient operations in order to capture the full benefits 
of the ATC system.
    Further, an independent ATC system will be far more likely to adapt 
quickly to keep pace with the constant evolution that is inherent in 
our industry. In aviation, change happens at 500 miles per hour, and 
many of the challenges, risks and opportunities we face tomorrow will 
be different than those we face today. We need an ATC system that is 
nimble, flexible, forward-looking and technologically advanced, with a 
freedom and ability to change that the current system simply does not 
have.
    Our work to date shows that a non-profit governance structure would 
deliver the greatest benefits for a transformed ATC system. This type 
of entity would continue to maintain safety as the utmost priority, 
while also creating significant efficiencies and improvements, 
delivering greater value for all users of the system, our employees, 
our passengers and the communities that depend on the services we 
provide.
How do we transition?
    All stakeholders recognize transitioning from a government 
organization to an independent non-profit organization is a serious and 
complex undertaking that needs to be done in a methodical and 
thoughtful manner.
    The inefficiencies, delays and costs of the current ATC system will 
only grow over time, so there is no better time to transform the ATC 
than now. As part of our on-going research, we are working on a 
detailed transition plan and policy principles for many of the 
unanswered questions that arise when you dig deeply into these issues.
    To those who suggest change carries too much risk, we would reply 
that the risk of doing nothing is higher. While our system is safe now, 
we are moving in the wrong direction. We are at a crossroads, with an 
opportunity to take advantage of the leadership of Congress and the 
stakeholder community to come together and transform our Nation's ATC 
system in a way that will ensure that our country retains our global 
leadership. While there are indeed risks in making major changes, we 
believe the risks and transition issues can be mitigated. We are 
capable of rising to this challenge, as have many other countries 
before us. It would be a mistake to accept the status quo, just because 
progress will take effort.
    It is easy to get buried in the complexities and tangential 
questions that arise with the ATC reform debate. However, if you step 
back and look at the concept, it is really quite simple. We believe the 
air traffic service provider portion of the FAA should become a self-
funding organization, independent of governmental interference, turned 
over to a non-profit entity governed and held accountable by a board of 
stakeholders. We believe that ATC services would operate more 
effectively and efficiently outside the control of government and the 
funding unpredictability and politicized decisions that come with it. 
With a predictable funding structure and direct operational 
transparency and accountability to users of the system, the modernized
    U.S. air navigation service provider would better benefit the users 
of the system, the employees of the system and the passengers they 
serve.
    We look forward to working together with the Committee. Thank you.

    The Chairman. Thank you, Mr. Smisek. Mr. Rinaldi?

 STATEMENT OF PAUL M. RINALDI, PRESIDENT, NATIONAL AIR TRAFFIC 
            CONTROLLERS ASSOCIATION, AFL-CIO (NATCA)

    Mr. Rinaldi. Mr. Chairman and Senators of the Committee, 
thank you for the opportunity to testify in front of you today 
at this important hearing to discuss the future of our aviation 
system.
    We all have a stake in the national airspace system, an 
economic engine for this country that contributes $1.5 trillion 
in gross domestic product and provides over 12 million American 
jobs.
    We invented aviation in this country. It is an American 
tradition. Over the last 100 years, we have dreamed, innovated, 
implemented the unbelievable in aviation. Currently, we run the 
largest, safest, most efficient, most complex, most diverse 
system in the world. Our system is incomparable, unequaled, and 
unrivaled by any other country.
    For example, the next largest airspace system to the United 
States is Canada. They run roughly 12 million operations a 
year. On average, the United States' airspace system runs over 
132 million operations a year. The United States' airspace 
system and the FAA is considered the gold standard in the world 
aviation community.
    Yet, the reality is in order to keep that honor, a change 
is needed. Currently, we face many challenges in responding to 
the given problems of an unstable, unpredictable funding 
stream, including but not limited to the inability to finance 
long term projects such as NextGen, the inability to grow the 
national airspace system for new users, the UAV community and 
commercial space, the inability to modernize our aging 
infrastructure. Currently, our 20 en route centers throughout 
the country are over 50 years old with no plan of replacing 
them.
    Currently, we are struggling to maintain our proper 
resources and staffing our busiest air traffic control 
facilities. Our certified air traffic controllers are at an 
all-time low.
    The upcoming FAA reauthorization bill must address the lack 
of a predictable, stable funding stream for our continuous 
hyper critical safety aviation operation.
    We understand that addressing the stop and go funding 
problems will lead to an examination of a potential structure 
change for the FAA. We believe it is time for a structure 
change. The current system is not dynamic enough to address the 
needs of air traffic control operations in the future.
    Any such change or reform must be carefully examined to 
prevent the unintended consequences of negatively affecting the 
safety and efficiency of our national airspace system. Every 
stakeholder in the national airspace system should work 
together to make sure the United States continues to be the 
global leader in aviation.
    Any reform must address the safety and efficiency of the 
national airspace system. It must be mission driven. It must 
have a process that provides a stable, predictable funding 
system to adequately support air traffic control services, 
staffing, hiring, training, long-term projects such as NextGen. 
Any change must allow for continued growth in our aviation 
system. Any change must be dynamic.
    The aviation system must continue to provide all services 
for all segments of the aviation community. Any change we make 
must be precision like so that we do not interrupt the day to 
day operation of the national airspace system.
    Our national airspace system is an American treasure. 
Aviation is uniquely an American tradition. We cannot continue 
to short-change it. We are still currently recovering from the 
sequestration cuts of 2013. Another round of cuts set to take 
place this year will shrink our country's aviation footprint 
forever.
    We need to make appropriate changes to secure a stable 
funding stream for aviation. We need to establish a proper 
governance structure for our national airspace system, a 
structure that is not laden with bureaucratic lines of 
business. A structure that is not burdened or marred with 
bureaucratic process.
    We need a dynamic structure that is nimble. We need a 
structure that will allow us to grow aviation in this country 
and not shrink it. We need a structure that will allow us to 
modernize our facilities, equipment, procedures, technology, in 
a realistic timeframe.
    We need a structure that will give us the competitive edge 
to ensure our future leadership in the global aviation 
community.
    Mr. Chairman, I thank you for the opportunity to testify in 
front of you today. I look forward to answering any of your 
questions or any questions the Senators may have. Thank you.
    [The prepared statement of Mr. Rinaldi follows:]

Prepared Statement of Paul M. Rinaldi, President, National Air Traffic 
                Controllers Association, AFL-CIO (NATCA)
Introduction
    Chairman Thune, Senator Nelson, members of the Committee, thank you 
for inviting me to testify before you today on the reauthorization of 
the Federal Aviation Administration (FAA).
    The National Air Traffic Controllers Association (NATCA) is the 
exclusive representative of nearly 20,000 aviation safety 
professionals, including nearly 14,000 air traffic controllers employed 
by the FAA, the Department of Defense (DOD), and the private sector in 
the FAA's Federal Contract Tower program. In addition, NATCA represents 
FAA's Alaska flight service station air traffic control specialists, 
engineers and architects, traffic management coordinators, Notice to 
Airmen (NOTAM) service, flight procedures specialists, aircraft 
certification professionals, agency operational support staff, aviation 
technical systems specialists, automation specialists, drug abatement 
employees, airports division, regional counsels, and personnel from 
FAA's logistics, budget, finance, acquisitions, and information 
technology divisions.
    Air traffic controllers and other aviation safety professionals are 
dedicated to ensuring that our National Airspace System (NAS) is the 
safest and most efficient in the world. Every day, air traffic 
controllers handle over two million passengers traveling within the 
busiest and most complex airspace in the world, with roughly 5,000 
planes in the sky at any given moment. Domestic airlines served an 
estimated 756.3 million passengers in 2014. In order to maintain that 
safety and efficiency, aviation safety professionals work to improve 
safety procedures, modernize the NAS, and implement new technology. We 
have professional controllers involved in nearly every FAA program 
related to modernization and Next Generation Air Transportation System 
(NextGen).
    The NAS is an integral part of our national infrastructure and an 
essential driver of our economy. Each and every day, millions of 
individuals and businesses in the U.S. economy rely on the services 
provided by our complex web of aviation routes. Aviation drives nearly 
12 million jobs and contributes $1.5 trillion to the Nation's economy.
The FAA Needs a Stable, Predictable Funding Stream
    For years the FAA has been faced with an unstable, unpredictable 
funding stream, and each interruption has negatively affected all 
aspects of the FAA. The FAA has had to spread its resources thinly 
between fully staffing its 24/7 operation, modernizing the airspace, 
and performing the daily maintenance required to sustain an aging 
infrastructure. When sequestration cuts were implemented, the situation 
became even more dire. The FAA was forced to furlough its employees, 
including air traffic controllers, place preventative maintenance on 
hold, and consider closing Federal and contract towers, curtailing air 
traffic services in smaller markets. The cuts also prevented the FAA 
from hiring new trainees to replace the certified controllers who 
retired, adding stress to an already understaffed workforce. 
Sequestration cuts did not affect the FAA's budget for Fiscal Years 
(FY) 2014 and 2015, but the cuts will return in FY 2016.
    The upcoming FAA Reauthorization bill must address the lack of a 
predictable, stable funding stream to support a safety-focused 24/7 
operational system. We understand that addressing these stop-and-go 
funding problems may lead to an examination of potential structural 
changes for the FAA, but we implore this committee not to merely 
examine the structure of the FAA. Any change that fails to guarantee a 
stable, predictable funding stream could create new unintended 
consequences, without solving the true dilemma.
    As members of the aviation community, we must be precise in 
identifying current problems, and we must also work together to find 
solutions that create a predictable funding stream while maintaining 
the safety and efficiency of the system.
    NATCA looks forward to working with Congress and other stakeholders 
to determine a solution that provides a stable and predictable funding 
stream while also protecting the air traffic control system and its 
future growth. Details matter in this process. No system is like the 
United States' National Airspace System, and no model used elsewhere in 
the world is perfect--certainly not perfect for a system as large, 
complicated, and diverse as ours. Any new model must be mission-driven 
and must ensure robust, continued aviation sector growth throughout 
every segment of our industry and country. We must protect and 
strengthen the great national asset that is our air traffic control 
system.
Existing Problems at the FAA
    The lack of a stable, predicable funding stream has led to serious 
problems at the FAA. We have all seen these issues, which have been 
especially serious over the last five years. We believe that problems 
for FAA are not caused by the failure of Congressional appropriators to 
provide sufficient funding to the system, rather they result from a 
broken process resulting in short-term funding bills, government 
shutdowns, partial FAA shutdowns, threatened government-wide and FAA 
specific shutdowns, sequestration, and 23 short-term authorization 
extensions to name a few. The NAS is held hostage by this unpredictable 
and unstable funding stream.
    FAA operations and redundancy: The lack of a stable, predictable 
funding stream means that the FAA has had to prioritize the basic 
maintenance and repairs that ensure current operations over maintaining 
safety redundancies and making improvements to the system. This is a 
slippery slope because, when stressed, the existing system cannot 
maintain its safety and efficiency without such redundancies and 
continual improvements. The 2013 government shutdown forced the FAA to 
halt important maintenance, and forced a fix-on-fail maintenance 
policy. Additionally, FAA working groups were unable to meet or travel 
during the shutdown, delaying implementation of new airspace and safety 
procedures.
    In the spring of 2013, the FAA made sequester cuts by delaying non-
critical repairs and the requisition of new replacement parts. The FAA 
designated a list of 56 airports and critical facilities. Any facility 
not on the list was subjected to a very strict requisition standard: a 
requisition would be granted only in extremely critical situations with 
a high potential to negatively affect safety or disrupt the expeditious 
flow of air traffic, have a high public visibility, or have the 
potential for creating a real and present danger to the flying public. 
Even a grounded aircraft or an off-line facility without communications 
ability were not necessarily considered sufficient justifications.
    Staffing: The system has lost close to 1,000 air traffic 
controllers (6.2 percent of the workforce) between May 2013 and today, 
down to 13,902 from 14,793. This loss exacerbates an already tenuous 
staffing situation, in which 3,025 of 13,902 controllers are eligible 
to retire today. Of the 13,902 total controllers, 1,680 are still in 
training, meaning they have varying levels of independence controlling 
traffic. If the current situation continues unchecked, the NAS will see 
an increased number of inadequately staffed and even critically staffed 
facilities. Such facilities require controllers to work overtime to 
adequately cover all needed positions. In some cases, those facilities 
do not have the staffing, even with overtime, to open all of the 
necessary positions. Any further staffing reductions will likely have a 
detrimental and immediate effect on capacity, meaning fewer planes in 
the sky and greater potential for delays.
    For example, New York TRACON (N90) and Chicago TRACON (C90) present 
a unique problem. New hires who become FAA training academy graduates 
rarely, if ever, achieve full certification at these facilities, due to 
the complexity of their respective airspaces. As of May 1, 2015, N90 
had 148 Certified Professional Controllers (CPCs), compared to 160 in 
2010. Today, 53 are eligible to retire, meaning roughly 36 percent of 
N90s fully trained controllers could leave at any time. N90 has five 
airspace areas, and as of May 1, 2015, 18 of the 37 CPCs (or 48 
percent) who provide radar approach control services for Newark Airport 
are eligible to retire. It would not be possible to safely maintain the 
same number of operations per day into and out of Newark Airport if all 
18 were to retire before anyone is trained to replace them.
    Due to the critical staffing levels, the controllers work six-day 
workweeks and are often held over for additional overtime. The 
workforce suffers from significant fatigue problems due to extended 
workdays and workweeks. The National Transportation Safety Board (NTSB) 
identified this as one of its highest priority safety concerns. 
Understaffing also hinders facilities throughout the country from 
deploying NextGen programs, procedures, and equipment.
    Hiring and training: Sequestration forced the FAA to cut its 
Operations budget, resulting in furloughs for FAA employees. Those cuts 
also led the FAA to institute a hiring freeze between March 2013 and 
December 2013. The FAA training academy in Oklahoma City was closed for 
most of 2013 as a result of sequestration, so the FAA has not been able 
to keep up with the pace of attrition. Even if the FAA hired at its 
maximum rate in 2015 and 2016, it will still not make up for the 
attrition seen in 2013 through 2016, and will not adequately staff our 
facilities in the near term without a higher priority placed on 
training, and improvements in the placement and transfer processes. 
There is an estimated 25 percent failure rate at the Academy, and 
additional trainees fail once they are assigned to their facilities. 
Moreover, the Academy graduates who are successful in becoming CPCs 
take two to four years to progress through the on-the-job-training 
requirements. The combined effects of these constraints result in a 
shortage of fully certified air traffic controllers and negatively 
affects the FAA's ability to train new hires, develop and implement 
modern technology, and efficiently control traffic.
    Once new hires graduate from the FAA Academy, the FAA's flawed and 
inefficient employee placement and transfer process also presents 
challenges. Many facilities are in desperate need of qualified 
transfers, and many employees want to transfer to higher level 
facilities that need additional staffing. Historically, the FAA has 
placed air traffic control trainees from the Academy into higher level 
facilities, which typically have a higher failure rate than the 
nationwide average of 25 percent. This works against the FAA's efforts 
to efficiently hire, train and retain new controllers. Fully certified 
controllers should be encouraged to transfer to the most important and 
critically staffed facilities in the NAS. Their path to do so should be 
eased while new trainees backfill positions at lower activity 
facilities.
    Modernization delays: Air traffic controllers and NATCA are working 
closely with the FAA to fully realize the benefits of NextGen 
modernization projects. We have made significant strides recently, 
including the complete implementation of En Route Automation 
Modernization (ERAM), which became fully operational at the final air 
route traffic control center at the end of March 2015. Terminal 
Automation Modernization and Replacement (TAMR) and Standard Terminal 
Automation Replacement System (STARS) equipment were successfully 
implemented at multiple facilities throughout the country in 2014 (21 
facilities are scheduled for installations in 2015, and 90 facilities 
through 2018).
    Last year, the FAA implemented 61 new procedures in the Houston 
area and 77 in North Texas as part of the growing Optimization of 
Airspace and Procedures in the Metroplex (OAPM) project. The System 
Wide Information Management (SWIM) Visualization Tool (SVT) is a new 
product that was installed last year at Southern California TRACON 
(SCT). It provides surface situational awareness to controllers, 
traffic management specialists, and frontline managers, and allows them 
access to airport surface data that was previously unavailable outside 
of a tower cab.
    NextGen is already having beneficial effects on air travel in our 
nation, yet we cannot overlook the difficulties that interruptions in 
the funding stream have created for these modernization projects. Lack 
of a stable funding stream makes planning for multi-year projects 
almost impossible. As a result, we have seen significant delays and 
inefficiencies in modernization. For example, ERAM, which was scheduled 
to fully replace the old system in August 2014 at 20 FAA Air Route 
Traffic Control Centers nationwide, was pushed back to March 2015 due 
to the April 2013 furloughs. That delay cost more than $42 million. 
Likewise, the sequester furloughs and government shutdown significantly 
slowed the progress of the OAPM project at nine test sites across the 
country. Final implementation at the Houston test site had been 
scheduled for December 2013. Implementation and its associated benefits 
were delayed until May 2014 due to the furloughs.
    The FAA is making progress on NextGen, and has successfully reached 
significant milestones, but the funding stream needs to be addressed to 
prevent further time and financial overruns. We have made progress, but 
all of our successes will be delayed and more expensive as long as the 
funding stream remains unstable and unpredictable. As you know, stop-
and-start funding impedes the FAA's ability to properly staff 
collaborative workgroups tasked with the design, testing, and 
implementation of new technologies and procedures. These recent 
successes are important, but we cannot forget that each of them faced 
numerous setbacks due to uncertain funding. The NAS is a 24/7 
operation, and the aviation safety professionals at the FAA must 
continue to run that system while simultaneously working on research, 
development, testing, and the implementation of technology 
modernization.
    Potential tower closures, reduced hours of operation, and loss of 
towers: Funding shortages threaten services to rural and small 
communities that benefit from the business that air service brings. 
When sequestration cuts were initially announced, the FAA was prepared 
to close towers and even released a list of over 230 towers under 
consideration for closure. Ultimately the FAA was able to avoid tower 
closures, but closures could once again become a necessity. General 
aviation, military exercises, and flight school services at these 
airports would be at risk, and we would see a reduction in services for 
airlines, commercial interests, and private pilots who rely on towers 
at smaller airports for air traffic services and for secondary services 
like pilot training.
    Sequestration budget caps or cuts could potentially lead to another 
significant consequence. More than 100 of the Federal Contract Towers 
(FCT) throughout the country could be closed. This would affect general 
aviation and rural communities that depend on the services those towers 
provide. While funding for the FCT program is currently moving through 
the appropriations process, we are concerned that future sequestration 
cuts could ultimately shut down many of the towers. Employees at FAA 
facilities would see their workload increase dramatically because FAA 
facilities would have to take over the services that many of the FCTs 
currently provide. This would add stress just as those FAA facilities 
face reduced staffing due to sequestration cuts and the resultant 
furloughs. Contract towers also provide crucial support to our Nation's 
military and private enterprises. For example, one of only two Apache 
helicopter maintenance units in the country is located at Lone Star 
Executive Airport in Texas.
    Physical infrastructure: The FAA cannot keep up with replacing its 
outdated infrastructure and technology at current budget levels. The 
average age of facilities in the NAS is 50 years, and FAA officials 
have testified that the agency already struggles with the maintenance 
of existing infrastructure. The FAA recognizes that it cannot expect 
all aging infrastructure to be replaced simultaneously, even though 
many facilities were originally built at the same time.
    The 2013 government shutdown disrupted the maintenance of NAS 
infrastructure, at which point many projects were delayed due to the 
furlough of FAA employees, including engineers, architects, and 
aircraft certification and airport division employees. Safety-related 
equipment modifications to aircraft, as well as engineering and testing 
services were also threatened, negatively affecting maintenance to 
infrastructure as well as the FAA's modernization efforts. With 70 
percent of the technical workforce furloughed, important projects were 
delayed at some of the Nation's busiest airports.
    The air traffic control tower at Tampa International Airport (TPA) 
provides an enlightening example. At a recent hearing of the 
Transportation, Housing, and Urban Development (THUD) Subcommittee of 
the U.S. House of Representatives Committee on Appropriations, Rep. 
Jolly of Florida highlighted the current condition of NAS facilities 
across the country. The Congressman noted that TPA is about to ``fall 
over the cliff'' in terms of its expected lifespan. New, modern 
equipment is unable to fit into the aging tower, and its condition is 
declining rapidly. This creates obvious challenges for the FAA, as the 
agency must choose between the pressure to modernize and the immediate 
need to repair and maintain facilities such as TPA.
Broad Core Principles
    A discussion on reform must take place in a well-reasoned and 
rational manner. Rushing into any structural changes could lead to 
unintended consequences. Change for the sake of change that does not 
guarantee a stable, predictable funding stream does nothing more than 
create a different bureaucracy. NATCA will oppose any overhaul that 
creates a private, for-profit entity to oversee air traffic control 
services. That would simply create a new funding problem in place of 
the old one. Any reform must ultimately ensure the following:

  1.  Safety and efficiency must remain the top priorities;

  2.  Stable, predictable funding must adequately support air traffic 
        control services, staffing, hiring and training, long-term 
        modernization projects, preventative maintenance, and ongoing 
        modernization to the physical infrastructure;

  3.  Robust and continued growth of the aviation system is ensured; 
        and

  4.  A dynamic aviation system continues to provide services to all 
        segments of the aviation community, from commercial passenger 
        carriers and cargo haulers, to business jets, to general 
        aviation, from the major airports to those in rural America.

    It is critical that the specifics of any reform are vetted among 
all stakeholders, and NATCA will not commit to any concepts in a 
vacuum. Not only do the principles of reform need to be sufficient to 
meet the needs of the NAS, but so do the details of any overhaul. We 
are concerned that the transition to a new system could cause 
disruptions in service that could negatively affect aviation as an 
economic engine. It is especially important that any transition is well 
planned and thoughtfully designed in order to limit any disruptions--
there simply cannot be a disruption in services during a transition. 
The transition period must also be sufficient. Change cannot be made by 
flipping a switch. Given the National Airspace System's 24/7 
activities, any transition, no matter how small, must be seamless and 
deliberate. NATCA will support nothing less.
Proposed Models Being Discussed in Public Domain
    Over the years, NATCA, other industry stakeholders, and this 
Committee have observed that funding challenges have become the norm. 
Year-to-year, the FAA has experienced continuous challenges and faced 
significant problems because of a lack of a predictable funding stream. 
As a result, stakeholders, think tanks, and others have been looking at 
alternative funding and structural models that could address these 
funding problems. Here are some of those alternatives, followed by a 
brief description of each and a discussion regarding their advantages 
and disadvantages.

   Status Quo Model: In this model, the FAA would remain as is 
        with the same funding and structure. Governance would remain 
        within the U.S. Department of Transportation (DOT).

   Enhanced Status Quo Model: In this model, governance would 
        remain within the U.S. Department of Transportation (DOT), but 
        changes would be needed to address the manner in which the FAA 
        is funded without changing it structurally.

   Government Corporation or Independent Agency: This model 
        would pull the FAA, in whole or in part, out of the Department 
        of Transportation, and create a government corporation or 
        independent agency. The government corporation model would 
        require a Governing Board that includes stakeholders and 
        government officials. This model would leave air traffic 
        control functions within the government, but would remove them 
        from the DOT.

   Not-For-Profit Model: This model would require a Governing 
        Board with stakeholders and government officials. An example of 
        this would be NavCanada, whose board has three directors 
        elected by the government of Canada. In this model, safety 
        oversight and regulatory functions would remain within the FAA.
Findings & Analysis
    Below are some key points on the potential structural models that 
have been discussed for the FAA, and the effects these changes would 
have on air traffic control. NATCA will not endorse a particular system 
without knowing all of the details and ensuring a seamless transition.
Status Quo Model
    Simply restructuring the FAA should not be an option because it 
does not solve the funding problems. The FAA has been restructured 
numerous times, and with each restructuring we have seen increased 
bureaucracy. Restructuring has created more overhead and non-operations 
jobs, effectively increasing the time to get results. One example of 
this is in the procurement process. The FAA is exempt from the normal 
government procurement process, but has developed its own bureaucratic 
process that mirrors the rest of government. Unfortunately, this 
process is inappropriately slow and complicated for a system that needs 
new technology as quickly as possible.
Enhanced Status Quo Model
    For this model to succeed the FAA must have multi-year 
appropriations and long-term authorization, budget flexibility, 
mandatory funding for FAA employees, and no disruptions to operations, 
modernization efforts, and other safety related services.
Government Corporation/Independent Agency Model
    There is no profit motive in this model, and the national interest 
would be preserved without risk. This model could be funded in a manner 
similar to the Aviation Trust Fund, which would fund a system that 
supports operations, training, and modernization, with the benefit of a 
leaner bureaucracy and fewer obstacles to implement changes.
    A significant benefit of this model is the potential for an 
alternative funding process, meaning that politics would be less likely 
to interfere with the safety and efficiency of operations. Several 
additional methods could be utilized to generate revenue, such as 
raising funds through public-private partnerships that use lease-backs 
of facilities. Consolidation and realignment, when properly designed, 
could save money, and technology could be updated more efficiently 
without compromising the safety of the system. This model could also 
encourage innovation from within the organization, as has happened in 
other non-profit Air Navigation Service Providers (ANSPs).
    One concern is that a different funding model could be a deterrent 
to General Aviation (GA), which is sensitive to changes in services and 
generally uses facilities that have lower traffic volume.
Not-for-Profit Model
    The positive aspects of this model include it being single-mission 
focused, allowing for a more streamlined procurement process, greater 
flexibility for technology development and less bureaucracy than the 
current FAA.
    The cons include requiring a long transition period to create a 
not-for-profit model. This model may also very difficult to apply to 
our NAS because the U.S. system is so diverse and complex.
    This model also poses risks regarding the protection of the greater 
good. A not-for-profit model must still be cost-conscious and may be 
forced to diminish services to rural areas because they do not offer 
high returns. This would only be a problem for a model completely 
separate from the government, however; any model that is maintained 
within the government can be insulated from these types of concerns.
    The NAS is a national asset that is essential to communities that 
rely on air traffic services, and it benefits even those who do not 
fly. There is a national interest in maintaining aviation growth, and 
not only in those areas where profits can be made.
    NATCA absolutely opposes any model that derives profit from air 
traffic control services, and we will not support a model that allows 
the operations to become a driver for profit. There are several reasons 
why air traffic control services should not become profit-driven. 
First, it could lead to compromising necessary operational redundancies 
to increase profit margins. Cutting corners to save costs could 
ultimately compromise safety. A profit-driven system would likely cut 
services to rural communities because of the lack of returns for 
shareholders. A profit-driven system might also be an impediment for 
our General Aviation (GA) sector, which is very sensitive to changes in 
services or increased costs.
    In addition to the dangers of creating a profit motive, a for-
profit model would be logistically difficult to create. There would 
inevitably be a lengthy transition period to turn the current FAA into 
a for-profit entity, and the transfer of assets would be a complicated 
process as well.
Other Air Navigation Services Providers (ANSPs)
    As this discussion has progressed, many stakeholders have sought to 
examine how other ANSPs are structured, and how well they deliver air 
traffic control services.

   NavCanada in Canada: This privately owned, not-for-profit 
        company established in 1996 controls the operations of the air 
        traffic control system in Canada. Its revenue source is user 
        fees. The advantage of this system is its single-mission focus 
        that prioritizes efficiency. However, NavCanada had a difficult 
        and lengthy transition period. While there may be benefits to 
        the Canadian model, NATCA is uncertain if that model is 
        scalable to the size, complexity, and diversity of our 
        airspace. For example, the U.S. controls 132 million flights 
        annually (2012), compared to 12 million in Canada in an area a 
        fraction of the size of our NAS. The U.S. has 21 centers, 
        compared to seven in Canada, and 315 towers compared to 42. 
        According to Airport Council International's Top 30 Busiest 
        Airports in the world (based on aircraft movements), the U.S. 
        currently has eight of the top 10 busiest airports in the 
        world, and 15 in the top 30. Canada has one: Toronto, which 
        comes in at number 16.

    We are not just concerned about the scalability for the ANSP, but 
        also for the Civil Aviation Authority that would be left behind 
        to conduct the governmental safety and regulatory oversight of 
        the ANSP and the NAS as a whole. Additionally, a seamless 
        transition would be more complex in the U.S. due to the size of 
        our system compared to that of Canada.

   NATS in the UK: This private, for-profit corporation 
        includes the government in a public-private partnership. 
        However, the profit motive remains. A December 2014 large-scale 
        failure caused delays and cancellations. Some have attributed 
        that incident to cost-cutting efforts that have delayed 
        upgrades. In addition, in the fall of 2014, NATS lost a bid to 
        provide air traffic services for Gatwick Airport in the UK. 
        Instead, the airport agreed to contract air traffic services to 
        the German ANSP (described below).

   Deutsche Flugsicherung in Germany: In Germany, the 
        government controls air traffic services, which were 
        transferred to a state-owned corporation, called Deutsche 
        Flugsicherung (DFS), in 1993. The system is funded through user 
        fees, which are sufficient enough to cover operations and 
        modernization efforts. Likewise, DFS improved productivity and 
        operational efficiency through investments in facilities and 
        equipment. At the time of air traffic services' transfer to 
        DFS, Germany's Federal budget constrained efforts to modernize 
        the air traffic control infrastructure.
Conclusion
    Many in Congress, as well as several key stakeholders, including 
the FAA, agree that interruptions to the funding stream are detrimental 
to the operations of the NAS. The status quo is unacceptable, and 
something must be done to ensure continuity of funding.
    NATCA believes the U.S. must have a mission-driven model. We cannot 
lose sight of the fact that any new model will need to continue running 
the safest, most efficient, most diverse, and most complex airspace in 
the world. Safety and efficiency are our top priorities, and any 
proposed changes cannot jeopardize them.
    While considering possible reforms, we must protect and strengthen 
this national asset; our National Airspace System is a treasure. We 
must continue to create an environment that encourages the growth of 
the aviation sector, allowing the integration of new users, new 
innovation, and new technology, while continuing to maintain our global 
leadership. There is much at stake. We must find the path that improves 
the system without causing unintended consequences that set us back. 
The U.S. has always led the world in aviation, and we must continue to 
do so
    NATCA appreciates the opportunity to appear before the Committee 
and participate in this dialogue.

    The Chairman. Thank you, Mr. Rinaldi. Mr. Bolen?

           STATEMENT OF ED BOLEN, PRESIDENT AND CEO, 
             NATIONAL BUSINESS AVIATION ASSOCIATION

    Mr. Bolen. Thank you, Mr. Chairman, members of the 
Committee. General aviation is an important American industry. 
It represents over $200 billion to our economy and it employs 
over a million workers.
    Business aviation in the United States fosters economic 
development in small towns and rural communities. It helps 
companies of all sizes be efficient and productive, and it 
helps with our humanitarian efforts, whether it is responding 
to forest fires, flooding, or getting transplant organs to 
treatment.
    NBAA is honored to be here today. We represent over 10,000 
member companies, companies of all sizes, companies in all 
types of industry. We also represent hospitals, universities, 
and non-profits.
    Eighty-five percent of NBAA's members are small and mid-
sized companies. They generally are operating out of small 
towns and secondary markets. They are generally flying either 
from or to an airport with no commercial service.
    Business aviation is fundamental to the economy of small 
towns and mid-sized communities in the United States.
    Typical of our membership is Schweitzer Engineering out of 
Pullman, Washington. Schweitzer is a high tech engineering 
company located in a community with very little commercial 
service. It is able to compete effectively in the international 
market because it has access to business aviation. Mr. 
Chairman, every member of this committee has a company like 
Schweitzer in a community like Pullman.
    Just as a matter of perspective, there are fewer than 500 
communities in the United States with any type of scheduled 
airline service. There are 5,000 communities in the United 
States that rely on business aviation for economic support.
    The FAA reauthorization bill has a lot to do with 
communities like Pullman and companies like Schweitzer. Why do 
I say that? Because the airspace above our heads belongs to the 
American public. It does not belong to any one stakeholder or 
any industry segment. Our Nation's air transportation system 
serves and must continue to serve all Americans across this 
vast country of ours.
    The fundamental question of reauthorization is who is going 
to ensure that our public airspace serves the public's benefit. 
Will it be the public's duly elected officials or will it be 
some combination of self interested parties.
    For decades, suggestions have been made that Congress wash 
its hands of the air traffic control system, give over to other 
parties taxing authority and the authority to determine who can 
access airports and airspace. This has been something that has 
been pushed since long before NextGen was a concept, and long 
before sequestration.
    These interests have been wanting the sweeping authority to 
determine who gets taxed what and who can fly where and when.
    Mr. Chairman, the power to tax has been called the power to 
destroy. Today, that authority appropriately resides with 
elected officials, so, too, the power to ensure non-
discriminatory access to airports and airspace.
    Congress should not advocate, relegate, delegate, or 
outsource its authority over taxes and access. In fact, the 
Congressional Research Service recently said to do so may well 
be unconstitutional.
    Currently, the United States has by all empirical measures 
the largest, the safest, the most efficient, the most complex, 
and the most diverse air transportation system in the world, 
but the business aviation community is not content with the 
status quo. No American should be.
    Being the best today does not mean we will be the best 
tomorrow. In fact, complacence is our enemy. That is why the 
business aviation community has been active and outspoken in 
its support for NextGen. In fact, no industry segment has done 
more. Our members have invested in technology, and we urge 
Congress to do the same.
    Serious problems do exist with the NextGen program. To 
date, programs have been delayed, implementation of operational 
benefits has been slow, and we still have a lot of work to do 
in terms of certifying technologies.
    It is time for us to focus like a laser on those problems. 
It is time for us to not be distracted from what we need to do. 
We need to use this FAA reauthorization bill to make sure that 
we are making NextGen a reality, to make sure we are improving 
the certification and approval process, to make sure we are 
protecting our Nation's system of airports, to make sure we are 
certifying, implementing, and integrating in a safe way UAVs.
    There is a lot of work to be done. NBAA and its member 
companies look forward to working closely with you to do it. 
Let's just never forget that the public airspace should serve 
the public's benefit.
    [The prepared statement of Mr. Bolen follows:]

          Prepared Statement of Ed Bolen, President and CEO, 
                 National Business Aviation Association
    Chairman Thune, Ranking Member Nelson and members of this 
committee, thank you for inviting me to testify here today. My name is 
Ed Bolen, and I'm the President and CEO of the National Business 
Aviation Association.
    NBAA and its Members commend you for your continued focus on a 
priority of national importance-reauthorization of the Federal Aviation 
Administration.
    As we know, the outcome of this debate will have implications for 
all aviation segments, including the thousands of companies that rely 
on a general aviation airplane to do business in small communities all 
over this vast country of ours.
    Business aviation is an important engine in our Nation's economy 
and a vital link in our transportation system.
    Business aviation fosters economic development in small towns and 
rural communities. It helps businesses of all sizes to be efficient, 
productive and competitive--no matter where they happen to be located. 
And, business aviation assists in our Nation's humanitarian efforts. 
Every day, business aviation transports patients to treatment centers, 
reunites combat veterans with their families, and flies organs for 
transplants.
    NBAA is proud to represent more than 10,000 American members who 
rely on the use of general aviation aircraft to meet some portion of 
their transportation challenges.
    Our members are businesses of all sizes, and also hospitals, 
universities, and other non-profit entities. Eighty-five percent of our 
members are small and mid-size businesses, most of which are located in 
secondary and tertiary communities. They use a range of aircraft for 
business purposes, including pistons, turboprops and business jets. 
Most of these aircraft begin or end their flights at airports with no 
scheduled airline service.
    I think it's useful to provide four examples of our members, from 
the four corners of America, to illustrate what business aviation looks 
like.
    Let me first point to Manitoba, a family-owned metals-recycling 
company located in Lancaster, NY. The company's third-generation CEO, 
Richard Shine, started using business aviation to help his company 
survive when the local manufacturers that provided scrap metal to 
Manitoba disappeared.
    Richard put business aviation to use for his company. In a typical 
day, he would fly out of Niagara Falls Airport to be in two or three 
cities each day to meet with prospective metal suppliers.
    Over the decades, Manitoba's reliance on the airplane hasn't 
changed. Richard reports that, ``Today as much as ever, I rely on my 
airplane, and my ability to reliably access several airports each week, 
to get outside my region and generate the metals I need to stay in 
business. If special interests are allowed to control my access to 
airspace and airports, I'm in jeopardy of losing the business.''
    A similar story to Richard's is that of entrepreneur Brad Pierce, 
the President of Orlando-based Restaurant Equipment World, a family-
owned company founded by Brad's father.
    Brad has said that his company's airplane has been instrumental in 
expanding the growth of his business. He uses it week in and week out, 
flying to visit customers throughout the Southeast, and as far away as 
California, making stops all along the way.
    For this kind of business model to work, it is absolutely essential 
for Brad to have access to airspace and airports, at a reasonable cost.
    ``If our aviation system was turned over to special interests that 
could control how much I pay to access the system, and when and where I 
was allowed to fly, it would destroy my business,'' Brad has said. ``We 
cannot let that happen.''
    A third illustrative example of what business aviation looks like 
can be found in the story of Dr. Michael Gregory, the chairman and 
founder of a business called Apogee Physicians, an Arizona-based firm 
that uses a business airplane to provide doctors to medically 
underserved communities spanning four time zones. The towns served by 
Apogee's doctors include Grants Pass, OR; Marion, IL; and Thomasville, 
GA.
    Dr. Gregory often calls his airplane ``a lifeline'' to the 
communities where his doctors are located. ``But in order to be able to 
get doctors to patients on a real-time basis, I must have reliable 
access to airports and airspace,'' he adds. ``If our aviation system 
were changed so that I couldn't access any town, at any time, I 
wouldn't be able to quickly get my doctors to those who need their 
life-saving treatments.''
    A fourth demonstrative example of business aviation can be found in 
Schweitzer Engineering Laboratories, an employee-owned business located 
in Pullman, Washington. The company's founder, Dr. Ed Schweitzer, works 
with a team of engineers to develop computer systems, power-grid 
technologies and other leading-edge innovations. The company does 
business all across the U.S., and in more than 100 countries around the 
world.
    Schweitzer could not compete in a global marketplace without 
business aviation, because it is often the only way the company's 
personnel can meet the real-time demands of servicing power grids and 
other infrastructure.
    Manitoba Recycling, Restaurant Equipment World, Apogee Medical 
Physicians, Schweitzer Engineering, and countless other companies like 
these are located in small and mid-size towns far away from the major 
metropolitan areas. In those towns, such companies are vital to job 
creation and economic activity.
    In fact, studies have shown that general aviation contributes to 
the creation of more than a million jobs in the U.S., and more than 
$200 billion in economic activity each year.
    The reason for this economic success story is largely due to the 
ability of business aviation to access small community airports. The 
airlines serve fewer than 500 airports in the U.S., but business 
aviation can access about 5,000 airports.
    Access to airports, and to the Nation's airspace, is what creates 
all those jobs, generates all that economic activity, and helps make 
America's aviation system work for all Americans.
    During the FAA Reauthorization process, it is critical that 
Congress keep in mind that the airspace above our heads belongs to the 
American public. It doesn't belong to any private company, or group of 
companies. It doesn't belong to any segment of the aviation industry, 
or even the aviation industry itself. The airspace above our heads 
belongs to the American public, and it should be operated for the 
public's benefit.
    The question on the table--perhaps the fundamental question in this 
reauthorization debate--is who is going to ensure that our public 
airspace is operated for the public's benefit?
    Will it be the public's elected representatives or will it be some 
combination of self-interested parties?
    In the past, some of the parties pushing Congress for major changes 
have wanted for themselves the sweeping authority to determine: (1) who 
gets taxed, and in what amounts; and (2) who will have access to 
airports and airspace, and who will get shut out.
    John Marshall, the first Chief Justice of the Supreme Court, had it 
right when he famously wrote that the ``power to tax is the power to 
destroy.'' Today, that authority resides with the American public's 
elected representatives. So, too, does the power to ensure non-
discriminatory access to airports and airspace.
    Congress should not abdicate, relegate, delegate or outsource its 
responsibility in the areas of aviation taxes and fees. Nor should it 
abdicate or delegate its responsibility to ensure non-discriminatory 
access to airports and airspace.
    In fact, the Congressional Research Service recently wrote that 
giving a non-profit, privatized air traffic control corporation the 
authority to set user fees and establish air traffic flow controls may 
well be unconstitutional.
    Let's face it: It is difficult to see how a combination of self-
interested industry representatives would really exercise taxation and 
access authority in a way that best serves the public, rather than 
their best commercial self-interest.
    During this reauthorization debate, let's not get distracted from 
the hard work that needs to be done. Today, America has, by all 
empirical measures, the largest, safest, most efficient, most complex 
and most diverse air transportation system in the world.
    But the business aviation community is not content with the status 
quo. No American should be. Being the best today is no guarantee you 
will be the best tomorrow. And having the world's strongest air traffic 
system is in the best interest of all Americans. Complacency is our 
enemy.
    That is why business aviation has been an active and outspoken 
champion of NextGen. No industry segment has done more than business 
aviation to make NextGen a reality. We want and need the benefits of 
increased capacity, enhanced safety and a reduced environmental 
footprint. We are investing in NextGen equipment and we are asking 
Congress to do the same.
    We know challenges need to be addressed. There are NextGen programs 
that are delayed, operational benefits that are slow to be implemented 
and decommissioning of legacy equipment that has been deferred. We 
desperately need to streamline our certification and approval process. 
All of this increases funding pressures.
    Let's get about the serious work of fixing these problems, and 
making NextGen a reality, so that all Americans--including those in 
small towns and rural communities--can continue to receive the benefit 
of their public airspace.
    Congress does not need to turn over its power to tax to do that. 
With regard to taxes, it is important to note that while no industry 
likes paying taxes, or wants to pay anymore taxes than necessary, the 
general aviation community has always said that the fuel tax mechanism 
is the perfect mechanism for our community to contribute funding for 
our Nation's air transportation system.
    The general aviation fuel taxes are easy to pay and difficult to 
avoid. They require users to pay before they fly, not after the fact. 
They are progressive in nature, and closely approximate one's use of 
the system. They create a constant incentive to invest in fuel-
efficient technologies and fly fuel-efficient routes. Finally, they do 
not require a bureaucracy of agents, collectors and auditors to 
administer.
    The authority over taxes and access to airspace and airports 
belongs to Congress, and it is an authority that should not be 
abdicated or delegated. Communities of all sizes in every corner of the 
country are depending on you to retain your oversight authority in the 
areas of taxes and access, to ensure that the public airspace benefits 
the public.
    Mr. Chairman, in closing, I'd like to provide our basic guiding 
principles for FAA reauthorization, which we request the Committee 
consider as it works to develop legislation. Those are as follows:

   Make NextGen a reality. NextGen is our plan to retain our 
        world leadership position in air traffic management; the 
        question is, how do we make it a reality? That question is 
        central to the reauthorization process. Unfortunately, the 
        challenges are significant--NextGen is not simply a matter of 
        ``flipping a switch,'' as some would have you believe. Make no 
        mistake about it: no one is content with the clarity, pace or 
        cost of the transition to NextGen to date--we need to do 
        better.

   Keep Congressional control over taxes, fees and charges. For 
        the people who have to pay them, mandatory taxes, fees and 
        charges are all the same. Proposals may be put forward that 
        would effectively take authority to fund our aviation system 
        and put it in the hands of nonelected officials. A dialogue 
        about finding a new governance structure may be appropriate, 
        but the composition and scope of its authority matters. 
        Congress must retain authority over taxes, fees and charges. 
        This is not a responsibility that can be transferred, delegated 
        or outsourced.

   No user fees. As the members of this subcommittee know, the 
        general aviation community, including business aviation, pays a 
        fuel tax to fund its use of the aviation system. This mechanism 
        is an unmatched proxy for system use, because the more often 
        you fly, and the longer distances you fly, the larger your 
        aircraft, and the more fuel you burn, the more taxes you pay. 
        The fuel tax is also highly efficient: paying at the pump means 
        full compliance, without a collection bureaucracy--a ``SKY-R-
        S''--needed to administer fees or charges. The fuel tax also 
        covers all of the air traffic control services, including those 
        for flight safety, that are needed in a typical flight. We 
        don't want to promote a disincentive for people to use safety 
        services. Simply put, anything that could be done through a 
        user fee, the fuel tax can do better. For all these reasons and 
        more, Congress has repeatedly written to the current and 
        previous Administrations in opposition to per-flight user fees, 
        and should continue to oppose them.

   Ensure predictable, affordable access to airspace and 
        airports. The inherent value of business aviation is the 
        ability of companies to fly where they need to, when they need 
        to. Things that impede our access to airports and airspace have 
        the potential to do great harm. Business aviation must have 
        continued access to our Nation's airports and airspace. As we 
        have learned in Australia and other parts of the world, this is 
        not something that can be taken for granted.

   Protect the privacy of those in flight. The Automatic 
        Dependent Surveillance-Broadcast (ADS-B) technology, a 
        cornerstone of the FAA's satellite-based NextGen system, does 
        not currently include needed protections for operators' privacy 
        and security. While NBAA has long promoted the development of 
        ADS-B, we have consistently pointed out that, in transitioning 
        to satellite-based navigation and surveillance, we must ensure 
        that it makes accommodations for privacy.

    When it comes to ADS-B, we continue to believe that people should 
        not have to surrender their privacy and security just because 
        they travel on a general aviation aircraft. This committee was 
        integral in protecting these rights previously, and we 
        respectfully request that these privacy protections be 
        addressed in the pending 2015 FAA Reauthorization bill as well.

   Protect our airport system. Our national system of airports 
        was created to provide communities with access to a safe and 
        adequate public system. We must ensure that our system of 
        airports meets national objectives, including economic growth, 
        defense, emergency readiness, law enforcement, postal delivery 
        and other priorities.

    Unfortunately, in certain regions of the country, attempts are 
        being made to close important airports, even when Federal 
        investments and assistance have been provided to ensure these 
        airports meet national economic and other priorities. We 
        support giving the Secretary of Transportation sufficient 
        discretion to allow an airport to remain open for purposes of 
        protecting or advancing civil aviation interests of the United 
        States, if standard conditions become unenforceable. Simply 
        put, we must continue supporting facilities, at the Federal 
        level, as part of a single, national aviation-transportation 
        system.

    We strongly believe that airports should be good neighbors and 
        should work with communities to maintain a balance between the 
        needs of aviation, the environment and the surrounding 
        residences. However, over the years, attempts have been made to 
        create new restrictions and impediments for aviation users 
        through airport curfews and other local initiatives to restrict 
        access to airports. We must be vigilant in stopping ongoing 
        attempts from local interests to compromise the national nature 
        of our aviation system.

   Improve the certification and approval process. The approval 
        process can be cumbersome, unnecessarily taking up time and 
        resources. The FAA should constantly look for ways to keep or 
        improve safety, while adopting more efficient, effective 
        business-like processes.

   Ensure the safe introduction and integration of new aviation 
        technologies. NBAA would also like to take this opportunity to 
        commend the U.S. Department of Transportation (DOT) and FAA on 
        their recent release of a notice of proposed rulemaking toward 
        adopting a regulatory framework governing the commercial 
        operation of small, unmanned aircraft systems (s-UAS) weighing 
        less than 55 lbs.

    The FAA has taken a good first step in releasing these initial 
        guidelines to provide a much-needed regulatory structure for 
        these operations. We urge the Committee to work closely with 
        the DOT, FAA and the UAS industry as they work to integrate UAS 
        into the national airspace system in a thoughtful, deliberative 
        process focused on ensuring the safety and security of all 
        aviation stakeholders.

   Ensure continuity of government aviation services. Aviation 
        aircraft and parts cannot be produced, financed, bought or sold 
        without the written approval of the Federal Government. When 
        the FAA Registry Office was shuttered in the 2013 government 
        shutdown, it significantly impacted much of America's general 
        aviation industry, including thousands of businesses that use 
        general aviation aircraft for parts delivery, customer visits, 
        aircraft repairs, fuels sales, hanger construction and aircraft 
        brokerage activities.

    We urge the Committee to include language in the pending FAA 
reauthorization legislation, which would ensure that the important 
aviation safety and security functions of the FAA Registry Office are 
protected from any future government shutdowns.
    I look forward to responding to any questions the Committee may 
have. Thank you.

    The Chairman. Thank you, Mr. Bolen. You are a very 
efficient panel. Everybody came pretty close to the five minute 
rule, even our former colleague managed to adhere pretty 
closely to that.
    [Laughter.]
    The Chairman. I have a couple of quick questions for Mr. 
Huerta a little bit off topic, but I need to ask him, because 
over the weekend there were these media reports that indicated 
a security researcher claim to have temporarily taken control 
of an engine on a passenger aircraft by hacking into the 
inflight entertainment system.
    If true, this would certainly be a very disturbing 
incident. What has been the FAA's response to this matter, and 
do you feel the FAA is well equipped to analyze these types of 
threats against the flight control systems on passenger 
aircraft?
    Mr. Huerta. First, with respect to the specific incident, 
we are cooperating with the FBI in their investigation. They 
are working on that.
    As it relates to the larger question, cyber, this is 
something that is an ever evolving threat, and something that 
we are looking very carefully at and that we are taking very 
seriously, not only in the operation of our system but also in 
the manufacture of aircraft.
    That means we are working closely with the manufacturers to 
understand how the threat morphs, how it evolves, how it 
changes, and how do we stay ahead of it, by having as we have 
always had many layers of security and control over access to 
critical systems within the aircraft.
    I will say that I think cyber is and will continue to be a 
very significant challenge not just in aviation but in any 
technology based sector, and it is something that we have to 
work cooperatively across government and industry to ensure 
that we are staying ahead of.
    The Chairman. That incident over the weekend is still being 
investigated?
    Mr. Huerta. Yes, sir.
    The Chairman. There is nothing to report about that at this 
time?
    Mr. Huerta. That is correct.
    The Chairman. There is a recent report by the National 
Academies that noted it would require a significant effort for 
the FAA to attract, develop, and retain the work force talent 
to deal with cybersecurity challenges going forward.
    When you talk about that issue and the agency's efforts, 
how do you deal with the limitations the government faces in 
competing against private sector employers in some of these 
fields?
    Mr. Huerta. Well, a factor we always need to consider is do 
we offer a competitive job and do we offer competitive 
compensation for that. For us, that is a combination of 
ensuring that we are casting the broadest possible net, but I 
think it is also important to point out that while we do 
operate within the government environment, there is a 
significant portion of our applicant pool and our work force 
generally who is interested in coming to work for the FAA 
because of their belief in the mission and their belief in 
public service.
    It is a very competitive environment that is out there. We 
are never going to pay the top salaries that top technology 
companies pay. Our focus is on how we can ensure that we have 
an orderly process for promoting and retaining people and how 
we sell the job itself.
    The Chairman. This committee, of course, is very interested 
and concerned with cybersecurity as it relates to ATC and 
NextGen. We will continue, I am sure, to be in touch with you 
on that subject.
    I want to turn back to the subject at hand today. Mr. 
Rinaldi, you spoke about how the status quo with regard to 
funding is not an acceptable situation. Can you assess among 
the options that have been put forward how some of those reform 
options provide for more stable funding for the ATC system than 
the current government model?
    Mr. Rinaldi. Thank you, Mr. Chairman. We have been studying 
probably for the last 18 months some of the other countries, 
and when they broke off the air traffic control services from 
the government entity, and some of them have done very well and 
some are still struggling.
    What we are looking at is to make sure that we have a 
stable, predictable funding stream, and then if we are going to 
change the structure, the one thing that we know for sure we do 
not want is a system that is for profit. It would just put 
another barrier, another hurdle in front of us to actually 
provide the safest and most efficient system in the world.
    The Chairman. There has been a lot of discussion in the 
context of reform, about what is happening to the north of us 
in Canada as a model for comparison. Understanding there would 
be some reluctance to simply copy their model reform effort, I 
am curious to know what aspects of the Canadian air traffic 
control system your members find most appealing.
    Mr. Rinaldi. I was up there last week visiting in Ottawa 
and looking at their technical center. I think the unique thing 
they do is they have a true collaboration from the position out 
in developing their NextGen technology. They have the air 
traffic controller, the engineer, and the manufacturer working 
together from the conceptual stage all the way through to 
training, implementation, and deployment within their 
facilities.
    What that does is save time and money, and they actually 
are developing probably the best equipment out there, and they 
are selling it around the world, and they are doing it in 30 
months to a 3-year timeframe, when we have to look much longer 
down the road because of our procurement process in this 
country.
    The Chairman. This will be for Governor Engler, Senator 
Dorgan, and Mr. Smisek. In the context of an independent ATC 
services provider, some of you have referenced a preference one 
way or the other or at least suggested several different 
models.
    Can you speak to the differences between a Federal 
corporation, a federally chartered non-profit corporation, and 
what might be the pros and cons of each approach?
    Mr. Engler. We convened a group of experts to look at this. 
Their kind of consensus was that probably a non-profit 
corporation outside the government allowed for maximizing your 
shareholder participation, including some of the benefits Mr. 
Rinaldi just spoke up, speeding it up.
    One of the things that also would happen is the ability to 
get that bonding authority. We really are talking about NextGen 
as a capital project. If a Governor were doing this or Senator 
Peters when he is back in Michigan, we would have bonded the 
project and done it in a fairly short period of time, and then 
you would be continuously improving.
    The nimbleness of the corporation, in the entity, that 
would seem to be--we have not endorsed a specific approach, but 
I would say kind of the people we have consulted with tend to 
rely on that non-profit corporation with the shareholder 
management, if you will. We think that gets you the most bang 
for your buck.
    I also think over time it gets us back out on the 
innovation leading edge where we are simply not today.
    Senator Dorgan. Mr. Chairman, we have submitted to you a 
fairly substantial document that the Eno Center for 
Transportation, Jim Burnley and myself, and the other folks 
that were involved produced. It describes a series of different 
approaches with strengths and weaknesses of each, and also 
describes in some detail what other countries have done.
    I think what Governor Engler indicated is the most 
important point, and that is the stability of funding for a 
project of this type is essential. I served in the Congress 30 
years. There is a lot I do not know, but I do know this, in a 
time of spending restraint, in a time of sequestration, in a 
time of multiple continuing resolutions and all the things that 
are coming at us, there will not be stable funding for this 
type of project in the future unless it comes through a bonding 
capability and another type of organization.
    It is important to note that I do not support something 
that does not have the government as a stakeholder. I support 
and believe that this project will not get done for the country 
the way we want to see it getting done, to regain our 
leadership, unless we decide to do it in a different structure.
    To do that then allows us stable funding through bonding 
capability and so on, with the input of all the key 
stakeholders, including the government.
    The Chairman. Mr. Smisek, do you have anything to add?
    Mr. Smisek. Thank you, Mr. Chairman. Airlines for America 
supports a non-profit corporation for a number of reasons. 
First of all, a user fee structure, as Senator Dorgan and 
Governor Engler have mentioned, would provide a stable stream 
of funding that could be funded, so there could be rational 
infrastructure investments made, and assurance of funding and 
stability.
    Second, this would be governed by a Board of Directors 
comprised of stakeholders, representatives, for example, from 
the Department of Defense, the U.S. Government, general 
aviation, commercial air carriers, air cargo carriers, NATCA, 
and union representatives, so the stakeholders would be present 
and would govern, but they would have fiduciary duties to the 
enterprise.
    They would not be employees of the government or employees 
of the airlines or employees of the unions, but rather would 
have fiduciary duties dedicated to the mission and safety of 
the air traffic control system.
    Also, the efficiencies that would be driven from a non-
profit corporation, we have very good evidence of that from 
Canada. That would provide funding as well for excellent and 
stable and professional management.
    You mentioned the ability, as Administrator Huerta 
mentioned, to attract and retain an excellent work force, 
including cybersecurity experts, which are quite important in 
any enterprise, and that enterprise would also be free of the 
political influences that so bedevils the FAA and its ability 
to modernize today.
    The Chairman. Thank you, Mr. Smisek. Senator Nelson 
followed by Senator Wicker.
    Senator Nelson. Thank you, Mr. Chairman. I want to follow 
up on your introduction of the question of the cyber attack. 
Part of what we are looking to do in this Next Generation is we 
are going to do air traffic control off satellites. You could 
be a lot more efficient. You can have awareness right from the 
cockpit of the other airlines around. There is not only the 
cost of transitioning from the ground-based radar, there is the 
question of the backup of the ground-based radar.
    What happens if there were a cyber attack on the GPS that 
shut it down, Mr. Smisek, on the arrangement that you are 
talking about, who would bear the cost of that back up of the 
ground based radar, since that is the less efficient operation?
    Mr. Smisek. Senator Nelson, I am certainly not an expert on 
cybersecurity, but it is necessary in any enterprise, the 
enterprise we are talking about or any enterprise, to have very 
expert investments in cybersecurity.
    It is a risk and no doubt a growing risk as we become the 
Internet of all things. Certainly an attack on the GPS system 
would not simply affect the air traffic control system, it 
would affect the Department of Defense, it would affect 
everything.
    Senator Nelson. Right. In the private corporation, who 
would bear that cost?
    Mr. Smisek. If as a result of concerns that were 
sufficiently material to the ability of someone to bring down 
the GPS system, of which I certainly have no knowledge at all, 
and if it were determined there would be a required back up, 
then that would also be the responsibility of the non-profit 
corporation, because it would be responsible for operating the 
system, as would NavCanada or anyone else.
    I am not actually familiar with whether Canada has retained 
a back up radar system. Perhaps Mr. Rinaldi would know that.
    Senator Nelson. You are saying the private corporation 
would in fact retain the ground based radar as a backup system?
    Mr. Smisek. I am not saying that, sir, because I do not 
know whether that would be necessary based upon the robustness 
of the technology itself.
    Senator Nelson. That is one of the costs. Mr. 
Administrator, why is DOD weighing in on this so heavily, that 
they are concerned about this privatization? Can you speculate 
how privatization would impact the relationship with DOD, and 
would you be able to interact with a private entity or non-
profit corporation in the same way that you have existing 
opportunities to interact with DOD?
    Mr. Huerta. Senator Nelson, I can certainly speak about the 
relationship and the working procedures we have with the 
Department of Defense as they exist today. They are an 
important partner in the provision of air traffic control 
services, and they control certain airspace in the country, we 
control certain airspace in the country, and we have a shared 
responsibility for efficient and effective management of the 
safety of the air traffic control system.
    We often take advantage of the airspace they use 
exclusively during peak travel periods to accommodate 
additional traffic loads. We work collaboratively with them to 
ensure they have access to airspace they need for their mission 
requirements and for training.
    Senator Nelson. I understand you work collaboratively with 
them. Why do you think they are weighing in so vigorously?
    Mr. Huerta. I cannot speak to why they are weighing in, but 
I think what it ultimately depends on is what would be the 
structure in an alternative model under which they would 
interact with their partners in the air traffic system.
    It would strike me that there would be a way to build 
protocols, but it is entirely dependent on what structure would 
be selected.
    Senator Nelson. Mr. Bolen, why are the general aviation 
business manufacturers so concerned about this? You represent 
folks like Embraer, Gulfstream on the G-5, Cessna, et cetera. 
Why are they so concerned about this?
    Mr. Bolen. As I mentioned earlier, 85 percent of NBAA 
members are small and mid-sized companies. They are flying into 
and out of airports with little or no commercial airline 
service. They are concerned about their access to airports and 
airspace, and they are concerned about ensuring their access is 
safe, it is predictable, and it is affordable.
    I think one of the questions that came up earlier was about 
financing the system, and what we heard is one of the plans for 
the future is to have bonding authority, which is a euphuism 
for borrowing.
    The reality is that today, our current system generates 
through taxes a largely, but not entirely self-sufficient, 
system. We do that through a combination of user fees and taxes 
plus a general fund contribution that then fully funds the FAA.
    The question on the table is if we pull the general fund 
contribution out, then we will have a situation where all of 
those industry contributions do not equal the amount we have 
today. Thus, we can either raise the taxes to get to that 
amount, we can cut the system to get to the amount, or as you 
have heard, we can go borrow the money. Borrowing money comes 
at a cost, that has to be serviced, and prolonged borrowing 
ends up creating an interest nightmare.
    There are issues here that need to be addressed. What we 
want to do is make sure that all the small towns, the rural 
communities, the secondary and tertiary markets around the 
United States, are able to have business aviation located in 
their communities and being able to access the airports and 
airspace in the major markets where those companies need to go 
as well.
    Senator Nelson. Thank you. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Nelson. Senator Wicker?

              STATEMENT OF HON. ROGER F. WICKER, 
                 U.S. SENATOR FROM MISSISSIPPI

    Senator Wicker. Thank you. Senator Dorgan, let me just 
begin. Is every witness here a part of this working group?
    Senator Dorgan. No.
    Senator Wicker. I think this is an excellent report, so 
kudos to the authors. Would you do this for me, because in 
reading through, I think at some point there needs to be a page 
where the owners take ownership of this, and I do not see that. 
We checked the website and found a number of people. Would you 
provide that for the record? Would you do that, sir?
    Senator Dorgan. I would be happy to do that.
    [The information referred to follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
Co-Chairs
Former Senator Byron Dorgan
Arent Fox LLP

Former Secretary of Transportation Jim Burnley
Venable LLP
Membership Organizations
Aerospace Industries Association
Alaska Airlines
Air Line Pilots Association
Aircraft Owners and Pilots Association
Airlines for America
American Airlines
Boeing
Business Roundtable
International Air Transport Association
National Air Traffic Controllers Association
Reason Foundation
U.S. Chamber of Commerce
U.S. Travel Association
Individuals
Jim Coyne, Cassidy & Associates
Steve Ditmeyer, Michigan State University
Jack Fearnsides, MJF Strategies LLC
Aaron Gellman, Former Director of Northwestern Univ. Transportation 
Center
David Grizzle, Dazzle Partners LLC, Former COO, FAA's ATO
John Harman, Former Deputy Director, Office of Aviation Analysis, U.S. 
DOT
Norman Mineta, Former Sec. of Commerce and Former Sec. of 
Transportation
Eric Peterson, Transportation Policy Consultant
Dorothy Robyn, Former Special Assistant to the President for Economic 
Policy

    Senator Wicker. Mr. Bolen, are you part of this working 
group?
    Mr. Bolen. We were part of the working group but we did not 
feel our concerns were being reflected, so we are no longer 
part of that.
    Senator Wicker. I think that is probably accurate to say. 
There are three options that involve some major structural 
change, 100 percent government-owned Federal corporation, 
second, independent non-profit organization, and third, private 
for-profit corporation.
    The fourth option sort of basically tells Congress that we 
ought to do our job, get the funding straight and make sure 
that it is reliable and steady. The fourth option would reform 
the system's funding stream while maintaining the system's 
current governance structure.
    It goes on to say that this option could alleviate 
transition issues that are a concern with a completely new 
governance structure.
    Would it be fair to say that your organization is more in 
tune with that fourth option?
    Mr. Bolen. We have studied various structures around the 
world. We have looked at Australia, New Zealand, England, 
Canada. In none of these markets do we see a robust business 
aviation community that is providing economic development in 
small towns and rural communities.
    We have seen serious access issues. In Australia, for 
example, business aviation is not allowed access to airspace in 
Melbourne or Sydney on an equal basis at all. We end up waiting 
sometimes three, four, and five hours on the tarmac waiting to 
get access.
    I was on a panel recently with the head of the Irish Air 
Traffic Control System, and he said you just have to 
understand, you are not going to get equal access, that is just 
part of the natural selection process.
    As we looked at NATS in the United Kingdom, we saw that 
after an economic downturn, that privatized group needed a 
bail-out from the taxpayers.
    When we looked at Canada, we saw they have instituted user 
charges which are very problematic, while continuing fuel 
taxes.
    What we have seen as we have looked around is a lot of 
fundamental problems with some of the different structures. We 
want to make sure that in the United States, we are identifying 
problems and we are finding targeted solutions to them. To 
simply say we are going to pull air traffic out and we are 
going to give an independent board borrowing authority leaves a 
lot of concerns about our ability to safely, predictably, and 
affordably access airspace and airports.
    Senator Wicker. You are saying the United States is unique 
in that we have the 5,000 communities that rely on business 
aviation, as you mentioned in your prepared remarks, and access 
will not be the same if we go to one of these three structural 
changes? Is that part of your concern?
    Mr. Bolen. Yes. Our study of the systems around the world 
that have taken this action have raised serious access and 
affordability concerns.
    Senator Wicker. Senator Dorgan, it sounds like he has a 
good point there.
    Senator Dorgan. It depends on who is listening. As Ed Bolen 
knows, I spoke on the floor of the Senate a number of times 
about general aviation and its importance to this country. I 
think it is very important.
    The question, I think, before this committee is are we in 
fact going to have the latest technology, Next Generation 
system, built and completed in this country to allow us to fly 
more safely, more efficiently. The answer in my judgment is 
without a change in structure, we are not going to get there.
    I understand there are lots of interests that are opposed 
to this. I am going to give you a list of everyone who 
participated, which were the best academicians and stakeholders 
from around the country. You cannot reach everyone because 
everyone has their own set of interests they bring to these 
issues.
    As I mentioned to you, this is a heavy lift, which I 
understand. We did not put before you a pattern with all the 
specifics for important reasons. We would not have gotten 
agreement on a specific pattern with all the specifics in it.
    Mark Twain was once asked if he would engage in a debate, 
and he said oh, yes, if I can take the negative side. They said 
we have not told you the subject. Oh, he said, the negative 
side takes no preparation.
    I understand this is controversial. I will make one point, 
if I might. Mr. Huerta came to our organization as well. He was 
not a participant, but we invited him. I have great respect for 
him. I have and you have as well been through a lot of folks 
that have run the FAA. I have great respect for him. That is 
why we invited him to hear his vision as well.
    All of us should want the same thing. The question is not 
the endpoint. The question is what is the route to get to that 
endpoint. There will not be stable funding in a time of 
spending restraints for the next 10 years, which will probably 
include sequester, probably include furloughs, and probably 
include a budget as we saw this year that cuts $365 million out 
of the facilities and equipment account of this organization 
even as they are trying to climb this hill of modernization. 
That does not work and will not work.
    Senator Wicker. A stunning indictment which very well may 
be correct. One quick point, Mr. Chairman. Mr. Huerta, several 
weeks ago, I guess it was April 14--goodness, time flies. You 
appeared before the full committee on a similar topic, FAA 
reauthorization.
    A number of us asked questions for the record, particularly 
with regard to the Contract Tower Program. We are still 
awaiting those details, and I look forward to receiving answers 
to those QFRs, sooner rather than later.
    Mr. Huerta. Absolutely, sir. I think we are actually trying 
to schedule a staff briefing to go over the methodology that we 
discussed at that hearing.
    Senator Wicker. OK. If we could have squeezed those 
questions in at the time, you could have answered them right on 
the spot. Do your best and see if you can get those answers to 
us. Thank you.
    The Chairman. Thank you, Senator Wicker. Senator Peters 
followed by Senator Manchin.

                STATEMENT OF HON. GARY PETERS, 
                   U.S. SENATOR FROM MICHIGAN

    Senator Peters. Thank you, Mr. Chairman. Thank you to the 
panel for your testimony today.
    Governor Engler, it is good to see you. Governor Engler and 
I served together in the state, he was the Governor and I was 
the State Senator. I recall you coming before me when I was on 
the finance committee then in testimony. Here we are again, in 
just a different capacity. It is great to see you again.
    I would like really to pick up briefly on Senator Wicker's 
comment. It is interesting as I have heard the testimony from 
the panelists here and concerns about funding and sequester, 
budget, and that fourth option that he mentioned. It seems to 
me ultimately it falls back on Congress, that we are not doing 
our job here in providing the resources necessary to implement 
NextGen and other types of reforms.
    The proposals that are put before us to privatize are 
because we are not doing our job here. Perhaps that is what our 
focus needs to be, to do our job, making sure the FAA has the 
resources necessary to continue to go forward.
    Having said that, Mr. Smisek, I have a question for you. I 
understand the second largest air carrier in the United States 
is Delta Air Lines, which has a major presence in my state of 
Michigan. It is a major hub for them, as well as a very large 
employer in the state of Michigan.
    They have declined to endorse the A4A position that you 
have been advocating for today. Delta Air Lines suggests that 
the current system can become more efficient and deliver 
substantial benefits through improved collaboration efforts 
between the FAA and aviation stakeholders.
    Delta fears that separating the ATC system from the FAA 
would lead to certain operational risks and pitfalls that they 
outlined, such as organizational disruption, the creation of 
additional structural separation, bureaucratic silos between 
the ATC system and the FAA safety experts, unforeseen costs 
that will accompany the transition to a new organization, and 
the loss of expert personnel and institutional knowledge.
    A long list of concerns that Delta Air Lines has expressed. 
Could you please maybe comment on some of those concerns, and 
do you agree that some of those risks are indeed ones we need 
to consider here as a panel?
    Mr. Smisek. I would be happy to, Senator. As you can 
imagine, Airlines for America, like Congress, we do not always 
get unanimity. However, on this issue, we do have unanimity 
except for one member, and that member has expressed its 
concerns.
    I will say I think our colleagues at Delta have no evidence 
that the FAA can become more efficient or can deliver effective 
services compared to a non-profit enterprise. I think NavCanada 
is a perfect example of that. NavCanada today has the best 
technology probably in the world.
    I think Mr. Rinaldi would agree with me. They have brought 
down the costs of the system to the users by 30 percent. They 
are a model of safety, and they are selling their technology to 
third parties because they are so adept at working 
collaboratively with the unions, working collaboratively with 
experts, attracting and retaining experts. I would say that 
lacks evidence.
    In terms of risks of transition, of course there are risks 
of transition. There are risks in anything large. As Senator 
Dorgan has said, this is a heavy lift. This is something that 
needs to be done.
    What we know is what we have today does not work. We have 
candidly little to no confidence that there will be a stream of 
stable funding for modernization of the air traffic control 
system or the ability of the FAA to attract and retain 
qualified people to implement it or a change in how the FAA 
operates with respect to stakeholders in terms of 
collaboration.
    I think this Nation should reach for greatness, and I think 
this is an opportunity to do so. What we know is it does not 
work, and I believe if we just keep doing the same thing we 
have been doing for all these years and expect a different 
result, we will get what we deserve.
    Senator Peters. Administrator Huerta, under the Eno Center 
proposal, ATC is spun off, as we have heard, potentially into a 
new independent entity outside of government. However, the Eno 
Center also says that ``The government must maintain a role in 
governance of the system since the FAA is ultimately the 
guarantor of the public interest.''
    Administrator Huerta, it is the role of the FAA obviously 
to put safety of the traveling public first. Are you concerned 
this priority might be diminished if the FAA were to only play 
a small part in a multi-stakeholder model of governance that 
has been envisioned by some of the members?
    Mr. Huerta. I would envision there would be a couple of 
different roles. First and foremost, there is the question of 
who oversees the safety of the air traffic system. Under our 
current structure today, we have an independent safety 
organization within our aviation safety structure that provides 
safety oversight of the air traffic control system.
    With respect to some of the other questions that have been 
raised by the panel relating to access to the system or 
ensuring the public interest, I think those are all questions 
that would need to be carefully considered by this committee, 
and would need to be reflected, should there be a change in the 
governance model, in whatever structure is put in place to 
ensure all those perspectives are reflected.
    Senator Peters. Governor Engler?
    Mr. Engler. I think it is very clear, certainly in the 
expanded testimony I have submitted, that the FAA remains the 
regulator. In fact, I think you get better regulation by 
separating--right now we have an inherent conflict, they are 
both the rulemaker and the regulator. They are judge and jury. 
They make the rules and they assess their efficacy.
    I think the separation actually allows them to do their job 
very, very effectively as they do in a lot of areas. I think 
there is a benefit in many respects to that, and I do not think 
there has ever been a suggestion that somehow safety--we are 
talking about the air traffic control system itself, the 
operation of it, the vision for it, the leadership, all of that 
has to come back.
    The other thing the FAA can contribute, which I think Mr. 
Smisek is better equipped to comment than I--we need a more 
effective way for the FAA to modernize its own procedures. Now 
they would be able to focus on that and get up to date on 
things where it does help improve the way we fly, the way 
airlines can manage operations.
    In some cases, I think there are examples of literally 
rules being months if not years behind, so the ability to have 
a separation, division of labor, I think actually is one of 
what I believe to be the benefits of this idea.
    I would suggest also, as I think you have pointed out in 
your question, it is moving to--somebody said government 
corporation, we have suggested a non-profit corporation, but it 
is far different than a private enterprise being set up, a 
stock company, for example.
    Senator Peters. Thank you.

                STATEMENT OF HON. JOE MANCHIN, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Manchin. First, I want to thank all of you for your 
attendance today. I think we need to look at the size of what 
we are dealing with here. I have heard all of you, your 
statements, and your thoughts and beliefs in what we should be 
doing. I have heard basically we have the safest system in the 
world, and I heard it does not work, so conflicting statements 
coming from you all. It does not work, but it is the safest in 
the world.
    When you start looking at the size, let's look at Canada. 
Canada has 42 towers and seven centers. France, 86 towers, five 
centers. Germany, 16 towers, four centers. Mexico, 58 towers, 
four centers. The United Kingdom, 16 towers and two centers. 
The United States of America, 512 towers, 21 centers. They do 
not even come close. You can put everybody in the world and 
they do not come close to us.
    How are we saying the system does not work and we are not 
able to maintain a system that is the safest in the world, and 
it is the most used in the world?
    Let me give you my little state of West Virginia. They told 
us if you deregulate, it is going to improve air service in 
rural West Virginia. We were told that. I remember that back in 
the 1970s and 1980s. Jennings Randolph was a pioneer at that 
time. I think, Senator Dorgan, you remember Senator Randolph.
    We have 122 airports in West Virginia, 86 of them are 
little private strips here and there, 36 are public, only seven 
have commercial flights, and only seven of them have towers.
    Our ability to move people in West Virginia has been 
tremendously diminished because of the relevance of what is 
going on.
    I am just looking at the situation of where we are supposed 
to be improving a system by privatizing, and in some cases, I 
have been all for privatization. I am also for public/private 
partnerships.
    We have contract towers, that still come under the purview, 
I believe, of the FAA, but they are in a private stream, if you 
will. That seems to have worked in West Virginia. Our towers 
would have been eliminated. We would have only had two towers. 
Five would have been gone.
    I am looking at everything, how I am going to go home and 
explain that we are really making the system better, and then 
we start charging, if it was not for private aviation, if it 
was not for the business aviation that is going on today, we 
would be out of communication completely. Some of our little 
towns would not have any industry whatsoever because they could 
not go back and forth.
    With that, I would just say, Senator Dorgan, if we take 
Congress out of the equation and spin off the air traffic 
control system to some non-governmental organization, how would 
that speak for rural America?
    Senator Dorgan. Senator, no one is suggesting that the 
government not be a stakeholder in whatever is proposed. I do 
not support privatization. I told you what I do support and 
why.
    I spent a lot of time on this committee holding up signs 
talking about how you could fly twice as far for half the price 
under deregulation. You are talking about a different subject. 
That subject has nothing to do--you and I agree on that 
subject, it has nothing to do with the question of how you move 
airplanes from one part of the world to another, how to fly 
from one airport to another, and whether we are going to 
continue to use a World War II ground-based radar system or 
whether we are going to move to a different type of system 
using modern technology.
    This is not a question of what is. It is a question of what 
will be. There is no conflict by saying this is an unbelievably 
safe system, there is no conflict in saying that, and also 
observing that we are not moving as rapidly as some others are 
and as rapidly as we need to move in order to embrace the new 
technology and retain America's leadership in an area that is 
very important.
    I met with the Europeans and others on this subject because 
the world is moving in this direction. The question is how fast 
will we move and will we retain our leadership. In my judgment, 
there will not be funding to do it in the public sector, and I 
believe, therefore, we have to find a new structure, but not 
one in which the government is not a stakeholder.
    Senator Manchin. I believe sooner or later we are going to 
have to get a budget that works for this country, based on 
priorities and based on our values. We have not done that 
because of the political toxicity of this place we call 
``Washington.''
    It has to change sooner or later or we are going to hit the 
wall and we are going to have to get into it, and it cannot be 
picking and choosing what side of the fence you are on.
    The thing I would say is there have been reports, the 
Congressional Research Service highlighted some potential 
constitutional concerns of what we are talking about. One of my 
biggest concerns is delegation of taxing authority to an 
unelected, unaccountable Board of Directors that will have 
unfettered authority to adjust user fees and levy new taxes.
    One of the strongest arguments being made for privatizing 
or incorporating our air traffic control system, is it would 
allow it to be financially self-sustaining, free from the 
political forces that often drive Federal appropriations.
    I would just ask any of you here in the business arena, do 
you think it is legal and appropriate for Congress to 
relinquish our constitutional authority to levy taxes?
    Mr. Smisek. If I could jump in, sir. I do not purport to be 
an expert on constitutional law, but I believe it is very 
difficult to judge the constitutionality of a structure that 
does not exist and legislation that has not been drafted.
    The user fee structure that we have been talking about is 
designed to cover the costs of the system, and only the costs 
of the system, and to have an appropriate reserve fund. For 
example, if there were reductions in travel caused by an 
economic----
    Senator Manchin. I do not have a problem with that.
    Mr. Smisek. In terms of the issues of general aviation, for 
example, in Canada, and it could be done here, general aviation 
is charging an annual fee sort of like the sticker you put on 
your car, registration fee, a very simple process. There is no 
intent to use the user fee structure to change the proportion 
of funding the airlines today disproportionately pay, and the 
airlines are certainly not proposing to change that, because we 
see the vast--even though it would be philosophically the 
appropriate thing to do, we see enormous efficiencies that 
could be driven from a non-profit corporation with clear 
stakeholders of interest involved, particularly the government, 
the Department of Defense. Of course, we would have to have 
that.
    Senator Manchin. Mr. Bolen?
    Mr. Bolen. The amount of money being generated today from 
industry is less than what the FAA costs. It seems to me as we 
go forward we are going to have to make decisions on whether we 
are going to raise industry taxes, and you can call them user 
fees, you can call them rates, you can call these charges, or 
taxes, it does not matter, it is all the same thing--forced 
payments from the industry to fund the system which have to go 
up or the size of the system has to come down, or as has been 
discussed, we can borrow the money. We can give bonding 
authority.
    I think if we are going to do that, we would need to know 
pretty clearly what are we going to borrow, what are we going 
to get for it, when is it going to be available, how are we 
going to pay that back, and who is going to pay that back.
    As I said before, the authority to tax was said by the 
First Chief Justice of the Supreme Court to be the power to 
destroy, and we are very concerned about that.
    We have heard some of the press announcements that have 
been made in the past about people who have suggested that, and 
the goal of cost shifting has been part of that. It remains a 
concern.
    Senator Blunt [presiding]. The gentleman's time has 
expired. Ms. Klobuchar followed by Mr. Schatz, Mr. Booker, and 
Mr. Markey.

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. Thank you very much, Senator Blunt. 
Thank you. Welcome back, Senator Dorgan. It is good to see you.
    I actually was at the Canadian Embassy last night with the 
premier of Ontario and talking about some of their funding, and 
Senator Blunt and I have been in Canada talking about how they 
have handled transportation projects.
    I will be honest, our focus has been a bit more on highways 
and bridges and how they have been able to have the private 
sector finance those projects over the long haul, and have some 
stake, that they are still publicly owned in the end.
    Could you tell me, those of you who are experts on how this 
works with a model with air traffic control, if it is the same 
model, and how they do this in Canada with the FAA? Obviously, 
there are concerns that some of my colleagues have expressed 
about the effect this would have on smaller airports, on public 
safety, and other things.
    I wonder how NavCanada compares to what they have done with 
their roads and bridges and some of that, which I found a 
pretty interesting model to look at.
    Mr. Rinaldi?
    Mr. Rinaldi. Thank you, Senator. I will not call myself an 
expert on this, but I have been researching with NavCanada, 
along with the U.K. and the Australia system.
    As far as what I know of the NavCanada system, they have no 
really reduced services. That would be one of the things I 
would be deeply concerned about. They moved out of Transport 
Canada, which was their government structure in the early 
1990s. They started to transition about 1994, and it took about 
5 years to go through a full transition. It was a big 
transition that they actually went through, and then stood up 
their corporation of NavCanada. They established an user fee of 
all the users in the system.
    Senator Klobuchar. Someone else brought up the Delta 
letter. They talked about a tax increase in the provision of 
service, cost increases, airports look to make up for lost 
airport and airway trust fund money. Again, this is a different 
model, but in Canada. Any comments on that? Anyone?
    Mr. Smisek. I could speak to the U.S. The amount of money 
that is raised from the tax structure today pays for the entire 
traffic control system, and contributes additional monies to 
the operation of the FAA, and we would not propose that would 
change.
    I think the 15 year average of the general fund 
contribution to the entire FAA today is around $3 billion, so 
that with the user fees to run the system initially, there 
would be certainty with the current level of taxation, a 
portion of it replaced by user fees, a portion of it retained 
by Congress. There would be money that would continue to be 
contributed to the FAA, whether that would go into the AIP or 
the general fund----
    Senator Klobuchar. In this reformed system, would the users 
be willing to pay more?
    Mr. Smisek. I think certainly from the U.S. airline 
industry, as you know, Senator, we are one of the most heavily 
taxed industries today. We are taxed more than alcohol and 
tobacco, which are sins, and we are not a sin.
    We would suggest that perhaps taxation not be increased. I 
believe over time, personally I believe over time, based on the 
NavCanada model, that the user fees would actually go down 
because of the efficiencies, and for example, in Canada, they 
have gone down by 30 percent.
    Mr. Bolen. Senator, I think from a business aviation 
perspective, the business aviation community looks dramatically 
different in Canada than it does in the United States. While 
they have some large companies up there, they do not have a lot 
of the small and mid-sized companies operating out of the small 
and mid-sized communities that we do in the United States.
    As Paul mentioned, they do have both user fees and a fuel 
tax up there, so it is a double tax situation. It is also 
fundamentally different because in addition to privatizing air 
traffic control, they also have privatized airports, which have 
their own associated costs. For a lot of different reasons, we 
do not believe it is an apples to apples comparison.
    Senator Klobuchar. How would smaller airports fare under 
this model? I guess I would ask the same thing of Senator 
Dorgan and Governor Engler, just because they are a little 
familiar with those in their previous lives in their states.
    Mr. Bolen. From my perspective, quickly, we are very 
concerned about that access to those airports and airspace. 
Today, I received a letter from the Fargo Jet Center, which 
obviously has an awful lot of general aviation operations, they 
are very concerned that we not copy that model.
    What we hear from our members who operate in Canada is a 
lot of concern about the way it works up there with regard to 
paying the user fees as opposed to the fuel taxes. It is not 
nearly as efficient. It creates a costly administrative burden, 
and they think it has harmed business aviation.
    Senator Klobuchar. Governor Engler and Senator Dorgan?
    Mr. Engler. One of the arguments I would make perhaps goes 
in the opposite direction, that today we have technology that 
would allow for more remote airport access services to these 
smaller airports that we cannot get fully deployed. We are 
running behind on that. That would be a benefit.
    As I look at this, do we like what we have and are we 
confident we can make it a lot better if we stay the course, 
and if we want to change, what would that entail. We are 
getting into some of the debate about what might be in a bill, 
but I think the questions that are being asked are able to be 
responded to both by some of the work that the Eno Center has 
done and other reports we have looked at.
    Senator Klobuchar. Senator Dorgan?
    Senator Dorgan. I think Mr. Bolen is concerned about the 
uncertainty, and I understand that. My interest is not in 
creating a system, and we have offered an approach here that 
does not have a lot of specifics, we are simply describing why 
we think we need a structure.
    I have no interest in injuring business aviation, general 
aviation, or small airports.
    One of the principal issues here is every major airport in 
this country has bonding authority, and in every one of your 
communities, if you have a major airport, they are bonding for 
investment and so on.
    I think one of the significant issues here is to give a new 
structure bonding capability to be able to build the system in 
a robust way, and we have explicitly not described an user fee 
or structure system beyond that, and I think Mr. Bolen--I fully 
understand his point. I do not have any interest in seeing a 
system that is going to injure general aviation, business 
aviation, or small airports, or access to airports for that 
matter.
    Senator Klobuchar. Thank you.
    Senator Blunt. Senator Markey followed by Senator 
McCaskill.

               STATEMENT OF HON. EDWARD MARKEY, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Markey. Thank you, Mr. Chairman, very much. It is 
good to see the great Byron Dorgan back at Congress.
    Last month, along with Ranking Member Nelson, Senators 
Cantwell, Booker, Blumenthal, I sent a letter to the Department 
of Transportation asking about airlines' ability to engage in 
personalized pricing.
    Personalized pricing is a practice that would allow an 
airline to charge different prices to consumers that are trying 
to buy the same seat on the same flight at the same time. The 
difference in air fare would be based on personal information 
that the airline has collected about the passenger.
    I am, and the other members are deeply concerned that if 
airlines are allowed to engage in personalized pricing, they 
could discriminate amongst consumers, charging customers 
different prices based on zip codes, income levels, marital 
status, or other characteristics.
    What if, for example, airlines using consumer zip code 
information offered special fares to consumers who live in more 
affluent zip codes to entice them to travel more frequently 
while failing to provide these same discounts in lower income 
areas?
    Mr. Huerta, the FAA publicly refused last year to determine 
whether price discrimination based on income level, marital 
status, or trip purposes would constitute unreasonable 
discrimination. I believe that practice is discrimination. What 
can you tell the Committee today? Will the FAA revisit that 
determination?
    Mr. Huerta. First of all, Senator, to clarify, economic 
regulation and oversight is an authority held in the Office of 
the Secretary at DOT, not in the FAA. We can certainly get you 
a response for the record.
    Senator Markey. I think that is important for the 
Committee.
    [The following response was supplied to the Committee:]

    On August 6, 2014, the U.S. Department of Transportation approved 
the International Air Transport Association (IATA) Resolution 787. The 
Department's approval did not include permission for airlines to engage 
in personalized pricing, nor did it endorse or approve a business model 
that would require consumers to divulge personal information in order 
to shop for airfares. Rather, it was contingent on stringent privacy 
protections, including a requirement that consumers' ability to shop 
anonymously must not otherwise be undermined. Further, the order stated 
that the implementation of any data standard that asks a passenger to 
voluntarily supply personal information is subject to the airline's 
privacy policy. Failure of an entity to follow its privacy policy for 
the sharing and storing of personal information is a violation of the 
statutory prohibition against unfair and deceptive practices and unfair 
methods of competition.

    Senator Markey. Mr. Smisek, your airline, would you 
discriminate based upon income status or marital status or trip 
purpose?
    Mr. Smisek. Sir, if what you are describing is a new 
distribution capability at IATA, which is a technological 
advance for the ability of airlines to offer to third parties 
additional services that the customers cannot get today, I do 
not view that--not only do I not view it as discriminatory, I 
view it as pro-consumer.
    Senator Markey. What I am asking you is are you going to 
use marital status----
    Mr. Smisek. No, sir. We have no desire or intent of doing 
anything like that. What the new distribution capability is to 
do, for example, if you are a premiere member at United 
Airlines buying through a third party site, today, if you 
bought directly from us, directly on www.united.com, you would 
be able to get an economy plus seat for free, but if you are 
buying through a third party, we do not know your loyalty 
status because of the technology in existence today, and we are 
not able to offer that ability to upgrade for free, which 
requires you to book through the third party and come back to 
www.united.com and get your upgrade.
    Senator Markey. All I am really trying to clarify is that 
you will not be using income status or marital status, zip code 
information in any way to make any of these----
    Mr. Smisek. Senator, United Airlines has no desire to 
discriminate against anyone.
    Senator Markey. That is very helpful. Thank you, sir. We 
have heard recent reports about cybersecurity threats that air 
travelers face. One security researcher claimed to hack into 
the airline's control systems through the entertainment system, 
changing the direction of the plane.
    I am concerned about recent claims that the Wi-Fi on planes 
lacks basic security and that makes it easy for hackers to spy 
on customers using the network.
    Let me first ask about hacking into airplane controls. I 
know Chairman Thune earlier asked Administrator Huerta about 
the FAA's efforts, so let me turn to you again, Mr. Smisek. 
What is American Airlines doing to prevent hacking into the 
vital controls of your airlines?
    Mr. Smisek. Sir, I am not sure what American Airlines is 
doing, but I will tell you that United Airlines is--obviously, 
any form of cybersecurity issue is of great concern to us, sir.
    I will say we are cooperating with the FBI because of an 
allegation with respect to one of our aircraft was involved. We 
are unaware of whether or not this is possible. The original 
equipment manufacturers, at least from what I understand, have 
stated this is not possible today. However, I think what we 
need is as an industry to take any threat seriously. There are 
clear firewalls between a Wi-Fi system and any kind of control 
of the airplane.
    Senator Markey. Has United taken efforts to secure the 
wireless----
    Mr. Smisek. Absolutely, we have.
    Senator Markey. Are your customers protected against data 
breaches while they are using the United Wi-Fi system?
    Mr. Smisek. We provide the most robust protections that we 
can, sir, but I will tell you based upon data breaches of 
corporations worldwide, allegations of the Chinese military 
involvement, I do not think anybody can honestly----
    Senator Markey. I am only talking about someone in the 
plane at 30,000 feet using your Wi-Fi system. Are those 
consumers on that plane protected against data hacking?
    Mr. Smisek. We have protected them to the best of our 
ability, sir, and we have robust protections particularly with 
respect to the flight safety of the aircraft.
    Senator Markey. And the data protection of the customers?
    Mr. Smisek. Yes, sir; as best we can.
    Senator Markey. Thank you.
    The Chairman [presiding]. Thank you, Senator Markey. 
Senator McCaskill?

              STATEMENT OF HON. CLAIRE McCASKILL, 
                   U.S. SENATOR FROM MISSOURI

    Senator McCaskill. Thank you. It is not clear to me how 
much of this is money and how much of this is management. Does 
anybody want to put a percentage on which is which? Is 90 
percent of this a lack of stable funding and 10 percent 
management? What do you think, Governor Engler?
    Mr. Engler. I will take a shot at it because I do not think 
it is knowable, but going to the National Academies' report, 
which I think is objective, and you know, smart people that 
Congress mandated to look at this, they raised a lot of 
management questions. Management is kind of strategic thought 
leadership, where are we going, what is the architecture.
    It is that kind of management of a process and the design, 
and then money, I think there is no question. I would say it is 
50/50.
    Senator McCaskill. It is interesting. I do not know how we 
ensure we get better management by just changing the structure. 
Look at the U.S. Postal Service. Look at Amtrak. These are all 
examples of things we have done that are structures where we 
have tried to do something other than the traditional ``this is 
an inherently government function and the government is going 
to do it.''
    Mr. Engler. I would say look at FedEx.
    Senator McCaskill. Those are privatized for-profits. Are we 
advocating going to for-profits?
    Mr. Engler. No.
    Senator McCaskill. If that is the case, my rural airports 
are totally hosed.
    Mr. Engler. No. We are not saying that, but I think the 
private non-profit corporation in my mind, when I look at some 
of the decisions that were made in other countries and how they 
have approached it, to me, they offer the kind of flexibility.
    Remember, the FAA is still a rule setter here. They are 
still the boss, but now, in the hands of a private company--one 
of the things on the funding side, Mr. Bolen said bonding, you 
know, is a euphemism for borrowing, of course it is. The 
markets today, you can borrow capital at almost no cost, 
anybody would do this and just go build it. You get tremendous 
savings by being able to make your investment now.
    You could probably do the build out, I do not know, in 
three years, would it be all done?
    Senator McCaskill. Should we do this? I am listening to you 
and I am hearing highways. We are all thinking about highways 
right now.
    Mr. Engler. I am with you, I did that as a Governor.
    Senator McCaskill. We do not have a bill and the highway 
funding runs out in about 10 minutes, we still do not have a 
hearing or a bill on highway funding. Should we do this for our 
highway system? Should we go to a not-for-profit organization 
for our highway system? What about our waterways? What about 
locks and dams? Should we go to a not-for-profit corporation 
for that?
    Mr. Engler. Some of the port authorities are actually maybe 
analogous to that. Indiana did it on highways. Ohio has done 
something similar. We have certainly done it on bridges in some 
cases. The Mackinac Bridge is run by an authority, actually.
    Senator McCaskill. It seems to me that if we could do 
better on the funding part, if we would all acknowledge that in 
fact bonding is debt, but we need to do it for our 
infrastructure or we need to do something for our 
infrastructure. We are short-changing our country in a dramatic 
fashion when it comes to infrastructure, and that includes our 
airways.
    That is the majority of the problem. I am skeptical and I 
know Senator Dorgan shares some of my skepticism because he was 
in a front row seat as I have tried to be about turning over 
inherently government functions to private corporations because 
he did groundbreaking hearings on some of the abuses in Iraq 
with the contracting we did for inherently government functions 
that went badly awry and wasted billions of dollars.
    I just do not think a new structure is the silver bullet. I 
am open to this. I do not mean to sound like this is a terrible 
idea, but it seems to me that what we are trying to do is put a 
Band-Aid on a cancer which is the inability of Congress to step 
up to the plate and do the mandated hard job of finding the 
resources to fund infrastructure.
    Mr. Engler. If you will indulge me for 10 seconds, I will 
tell you, I got into this initially by looking at how it is 
that we can explain to the Federal Government that there is a 
better way to do capital budgeting, and I do not want to get us 
off on that track.
    I believe strongly there ought to be a capital budget at 
the Federal level, but absent that, are there ways to think 
about how you solve big critical infrastructure questions, and 
this is a discrete one, and if we had funded this when we first 
started talking NextGen, bonded for it and built it, it would 
have been all done, we would have been using it.
    We talked to the Administration about this when TARP was 
being talked about. Hey, let's get this done, you could have it 
done by the time you are running for re-election. That was not 
an option they chose. The Secretary of Transportation and both 
parties in the past have supported this, the Administration and 
both parties have supported this. There is a lot of history 
here.
    I think this one lends itself, and I would like to see the 
Committee seriously consider it and then validate a concept, 
which I think you have astutely jumped ahead, and are there 
other applications, you bet. I think there are a ton of them.
    Senator McCaskill. It would become irrelevant.
    Senator Dorgan. If I might just respond briefly, you asked 
a question that is really important about the issue of 
management versus funding. I will admit that I think there are 
management issues and have been for some long time, and I have 
been watching as Chair of the Aviation Subcommittee and other 
venues what is happening for a long time.
    I think were it not for the funding issue, I probably would 
not be at this table with this message. I honestly think it is 
naive to believe that the funding issue is going to change and 
that somehow the Congress, who this year, by the way, is going 
to cut $365 million from the facilities and equipment account 
of Mr. Huerta.
    It is unbelievable to me. That will probably be magnified 
by another sequestration and maybe a couple of continuing 
resolutions and who knows. You cannot build what we want to 
build for this country and retain leadership opportunities in 
this critical area of technology of air traffic control with 
this approach.
    That is why I have come to the conclusion that we need 
restructuring of the type I described.
    Senator McCaskill. Thank you.
    The Chairman. Thank you, Senator McCaskill. Senator 
Blumenthal has returned, so he is up next, followed by Senator 
Daines.

             STATEMENT OF HON. RICHARD BLUMENTHAL, 
                 U.S. SENATOR FROM CONNECTICUT

    Senator Blumenthal. Thanks, Mr. Chairman. Thanks for having 
this series of excellent hearings and to all of you who are 
before us today. The chairman mentioned earlier that you were a 
very efficient panel, and you are also a very distinguished and 
informative one, and I want to thank you for being here.
    I was interested as a rider of Amtrak as well as a flier in 
some of the reports last week in the wake of the Philadelphia 
tragedy about potential price-gouging among airlines, and the 
derailment obviously was a horrific event, and I know you join 
me in expressing our sympathies to all the loved ones and all 
who were affected.
    I wonder, Mr. Smisek, as an executive for United Airlines, 
can you confirm whether these reports are valid, whether they 
have been exaggerated, if the FTC were to look at these fares, 
what would they conclude?
    I just want to mention that a $2,309 flight from D.C. to 
LaGuardia would be an example of potential price gouging, and I 
want to advise that I am not asking you because I am pointing 
to United Airlines in any way or form as potentially one 
responsible or accountable. I am just asking you as an informed 
airline executive.
    Mr. Smisek. Thank you. I would be happy to respond. Let me 
express my condolences to the families and loved ones of those 
killed in that terrible tragedy of Amtrak.
    Absolutely not, sir, speaking for United Airlines, we would 
never take advantage of an opportunity like that, if you viewed 
it as an opportunity. No one would do that.
    It is true that as people book closer into a flight, the 
ticket prices tend to go up because that inventory, as you 
know, evaporates every time a flight takes off without someone 
in that seat. That inventory disappears. Therefore, that 
inventory is priced more toward last minute business travelers 
who tend to have a willingness to pay more because they are 
traveling on business.
    When you have a tragedy such as Amtrak, you have a sudden 
rush of demand for the very few remaining seats in those high 
inventory buckets; those prices are high, but we would never 
raise prices in connection with a tragedy.
    Senator Blumenthal. You would attribute any increase in 
prices to just----
    Mr. Smisek. Those are last minute fares in an open 
inventory reserved for business travelers, for people booking 
at the last minute. What we saw was certainly a surge in demand 
for tickets, and the only available inventory was the last 
minute business inventory.
    Senator Blumenthal. Mr. Rinaldi, did you have a comment?
    Mr. Rinaldi. On the ticketing? No.
    Senator Blumenthal. I would join you in the strong feeling 
that that kind of price gouging would be utterly reprehensible, 
and if there is any indication, certainly I will call on the 
FTC to investigate promptly, as perhaps this committee would 
have a role as well.
    Mr. Smisek. Sir, I would join you in that call.
    Senator Blumenthal. Thank you. Speaking of that derailment 
and the aftermath when rail transportation was stopped, I think 
we saw in the reaction among passengers in rushing to the 
airlines that the lack of adequate rail transportation has an 
impact on the airlines. These systems are all interconnected. 
The present air transportation system can become so congested 
that it simply cannot serve all of the riders who are diverted 
from rail.
    I would ask the panel whether you have any observations on 
the importance of rail in assuring adequate and efficient 
airline transportation, simply in providing a necessary link 
that relieves the congestion in the airlines.
    Mr. Huerta. Senator, certainly from our standpoint as an 
agency of the Transportation Department, we work very closely 
with our colleagues across all of the modal agencies to ensure 
that we have connections and linkages, and that the system is 
being appropriately managed as a total system.
    One of the things that we have been very focused on is how 
do we link modes of transportation together, and a lot of that 
as you well know is rail access to airports to ensure that 
there is a seamless transportation network that spans many 
modes of transportation, but clearly, there is a relationship.
    Senator Blumenthal. Finally, I have one last question for 
maybe Governor Engler and Senator Dorgan. The need for 
investment in these systems seems so apparent, even obvious to 
us, and we have a virtually full room here.
    The public still does not seem to be mobilized, and this 
Congress seems to be divided. Do you have some advice based on 
your political wisdom and experience on how we do better to 
raise awareness and generate support? Obviously, both of you 
have long-standing experience.
    Mr. Engler. Privatization is tough, but I do have one 
observation, that it makes little sense to try to build 
railroads in the desert in California when we have a Northeast 
Corridor that we truly ought to make the premiere showcase 
corridor for passenger rail and separate passenger rail from 
freight rail on the Corridor, maybe bringing in some of the 
ambitions in other parts of the country while we fix the 
corridor that matters the most would be my thought on that.
    I would also suggest the subsidization costs of different 
modes, one of the things you heard from Mr. Smisek and I think 
maybe everyone on the panel today, air has been pretty good 
about paying its own way, and has been pretty heavily taxed. 
That is not necessarily the case with rail and transportation, 
while states have been willing to raise fuel taxes, we know 
that form of tax is coming to an end at some point, and there 
is a need for a solution.
    I am hoping that we can get, Senator, into the broader 
question of tax reform and buy ourselves maybe a few years 
while we sort out how we are actually going to fund highways 
and bridges and reconstruction in the country. That is a big 
unmet need.
    Senator Dorgan. You know, I do not know that I can offer 
you much advice except to say we have painted ourselves into a 
fiscal policy corner. We have a dozen years or more that we 
have not paid for and we have so much--I chaired the 
appropriations panel on energy and water, we had $60 billion of 
authorized water projects, and $2 billion a year 
appropriations. This stuff does not add up.
    It is true in transportation. It is true in a wide range of 
areas of infrastructure.
    I just think we have to do better on fiscal policy and make 
investments in the country if we are going to have the kind of 
country we want in the future.
    Senator Blumenthal. Thank you. I want to thank all of you 
again, and Mr. Rinaldi, I want to thank the extraordinary work 
by our air controllers across the country, most especially in 
Connecticut. I met with a number of them earlier today. They 
are often unappreciated and unclaimed heroes of our air 
transportation system, so thank you for being here today.
    Mr. Rinaldi. Highly trained, highly skilled professionals 
and they love their job.
    Senator Blumenthal. Thank you. Thanks, Mr. Chairman.
    The Chairman. Thank you, Senator Blumenthal. Senator 
Daines?

                STATEMENT OF HON. STEVE DAINES, 
                   U.S. SENATOR FROM MONTANA

    Senator Daines. Thank you, Mr. Chairman. I have some 
questions that relate to rural America. The Chairman represents 
South Dakota. I have the privilege of representing the state of 
Montana. For states like ours, connectivity is so important to 
grow our economies.
    Broadband connectivity has allowed us to build world class 
technology companies now that are close to fly fishing streams 
and mountain ranges, and it is the way to attract and retain 
some of the best talent in the world, and frankly, to build 
great companies.
    The other part of connectivity is air service. It is a 
requirement to build a world class company to have 
accessibility to good air services.
    For Administrator Huerta, as you continue to examine 
potential air traffic control modernization reforms, I would 
strongly encourage you to first focus on rural community 
interests when considering any changes.
    As we look at our states, not only do we have the ability 
to grow great technology companies now because of the quality 
of life, but also a lot of our energy deposits, our future 
energy sources, are going to be in places that are a long way 
away from urban areas. Certainly Senator Dorgan sees that in 
North Dakota, and I see that in Montana and other places.
    Programs like Essential Air Service, the Contract Tower 
Program, and the Airport Improvement Program are critical to 
rural states like Montana. In fact, the Montana airports are 
very concerned. We are hearing that the proposed changes to air 
traffic control will harm the AIP program specifically. I 
encourage you to undertake consultation with all stakeholders.
    What specific remedies, Administrator Huerta, can the FAA 
provide to rural airports as it considers reforming the air 
traffic control program?
    Mr. Huerta. Senator, I think you have asked a very 
important question. It is something that as we have this longer 
term discussion of investment and structure that everyone 
understand that the aviation system, and the grant program, and 
the aviation structure of the United States has always been 
about achieving twin objectives.
    First, to have an efficient system that serves the largest 
number of passengers, and second, to provide a level of access 
to communities throughout the country.
    In previous reauthorizations, that has always been a matter 
of great debate, as you well know, between members of Congress 
about how to achieve that balance.
    That challenge and issue does not go away under any 
structure, nor does any structure alone deal with what those 
issues are. What you are raising is an important public policy 
question of where we as a nation are going with respect to 
ensuring a highly efficient system and the ability to invest in 
modernization of that system while at the same time ensuring 
some level of access.
    That debate, I think, is foundational to what we need to be 
looking at in a reauthorization, and we need to answer that 
question before we can really answer the question of what is 
the best structure that enables us to get there.
    There are other questions as well in terms of how we 
capitalize, how we pay for what we are looking for, and longer 
term, how we ensure that we are keeping those twin objectives 
in balance.
    Senator Daines. Let me go to a similar issue. I was part of 
building a great technology company in Montana, and we had a 
great airport, the Bozeman Airport, the busiest airport in 
Montana, in fact. I ran the Asia Pacific division of the 
company from Bozeman, Montana. I am bouncing across the water 
thanks to connectivity with airlines.
    I want to step back and ask Mr. Smisek, as you look at 
global systems, with a great airline like United Airlines, in 
the air traffic control systems used by other countries, what 
do you see from some of these countries, something we can learn 
to apply best practices, improvements in our systems going 
forward here that will make the U.S. system better?
    I realize there are scalability questions, if we look at 
North America and the United States' air space, but can you 
share some comments that you might want to interject in the 
record here of how we can make our system better based on what 
other countries are doing?
    Mr. Smisek. I would be happy to, Senator. Thank you. What 
we are looking for in this opportunity is to provide 
technological improvements that will improve throughput, reduce 
the time that travelers sit on a runway waiting to take off, 
reduce the incidences of circling airports waiting to land, 
reduce congestion, reduce fuel burn.
    We believe the technology is absolutely scalable. Let's use 
NavCanada. I think NavCanada is one of the best in the world, 
and I believe Mr. Rinaldi would agree they have the most 
advanced technology, the most productive workforce, the 
happiest air traffic controllers. I think those are all true 
things.
    [Laughter.]
    Mr. Smisek. Even happier than yours and they are pretty 
happy, and by the way, someone mentioned these were the unsung 
heroes. We sing their praises daily because we deal with them 
daily and they are very professional and expert.
    Getting back to NavCanada, it is indeed smaller, but air 
transport is handled by sector, and you know from your own 
history, technology scales magnificently. I think there are 
tremendous opportunities.
    As we fly around the world, there are some systems that are 
better than others. There are some foreign countries that 
handle it well and others that do not. We are very focused on 
not only maintaining where we are and where we are in safety 
for sure, but improving the efficiency of this system because 
this system--even though we are a global carrier, this system 
disproportionately affects our operational reliability, our 
customer satisfaction, our fuel burn.
    If we get it right, and we have the opportunity to get it 
right, we can have a huge step forward in the efficiency of the 
system, in the value of the system to the United States, the 
economy, and to consumers.
    This is a tremendous opportunity for us, and this is the 
system we focus on the most because this is where we actually 
have not only a vast majority of our assets and our flights, 
but also this is an opportunity for the United States of 
America, where we are citizens, and United Airlines is a 
citizen of the United States, to provide the best air traffic 
control system in the world.
    Senator Daines. I am out of time. I will say for the flying 
public, go on something like Flight Aware and see all the 
traffic in the air at any given time across the United States. 
It is humbling. Grateful for what we have here. The number you 
used, Mr. Rinaldi, 130 million?
    Mr. Rinaldi. Yes, 132 million.
    Senator Daines. These are impressive numbers, and it always 
keeps us aware of the importance of the system today.
    Mr. Rinaldi. Just one second to address your first 
question, if I may. Status quo, we have a lot of talk about 
rural America and the airports, I think status quo is one of 
our biggest concerns for rural America and the airports.
    If you look at what the FAA tried to do under sequester in 
2013, they looked at 238 air traffic control towers, they shut 
them down because they did not have funding. The majority of 
those were contract towers, but also were FAA towers, the 
majority of them are in rural America. That is one of our 
biggest concerns, about status quo.
    Senator Daines. Thank you for looking out for rural 
America, I appreciate that.
    The Chairman. I thank the Senator from Montana for looking 
out for rural America. I think he and I would probably both 
agree that at the end of this we would like to see more direct 
flights to and from South Dakota and Montana. Is that right?
    [Laughter.]
    Senator Daines. Very much so, Mr. Chairman. I associate 
myself with your comments.
    The Chairman. I think we have run out of questioners. I do 
appreciate very much the panel's great remarks today. Different 
perspectives. This is really kind of the Senate's first foray 
into this issue of reform, and obviously we have to figure out 
a way as we move toward reauthorization of doing what is best.
    I think we have the same goal in mind, and as was pointed 
out, sometimes maybe slightly different perspectives about how 
best to get there. I do think one of the things that was 
raised, stability of funding, is an important one. I think that 
is something in the current budgetary environment that we find 
ourselves in today as increasingly challenging.
    I think there is an openness to look at models that might 
better cope with that issue as well as some of the other issues 
that were raised today.
    Thank you all very much, and the hearing record will stay 
open for 2 weeks for members to submit questions, and if you 
could respond in a timely way to those questions, it will be 
most appreciated.
    This hearing is adjourned.
    [Whereupon, at 12 p.m., the hearing was adjourned.]

                            A P P E N D I X

        Prepared Statement of Mike Perrone, National President, 
                Professional Aviation Safety Specialists
    The Professional Aviation Safety Specialists, AFL-CIO (PASS) 
represents approximately 11,000 Federal Aviation Administration (FAA) 
employees in five separate bargaining units throughout the United 
States and overseas. The largest PASS bargaining unit is comprised of 
employees from the Air Traffic Organization (ATO). This bargaining unit 
includes systems specialists from Technical Operations who install, 
maintain, repair and certify the radar, navigation, communication and 
environmental systems making up the air traffic control system in our 
country; aeronautical information professionals in Mission Support 
Services (MSS) who develop, maintain and support instrument flight 
procedures and a variety of aviation products that enhance industry 
performance and efficiency in the airspace and on the ground; and 
Flight Inspection Services (FIS) pilots, mission specialists, 
operations staff and aircraft maintenance employees who are responsible 
for the airborne inspection of ground-and space-navigation systems to 
ensure the integrity and safety of the instrument procedures, airways 
and operational navigation systems that make up the National Airspace 
System (NAS).
    PASS appreciates the opportunity to present our views regarding 
issues related to reform of the FAA. The following statement includes 
PASS's position that a lack of a stable, consistent funding stream is a 
significant issue currently facing the FAA; the importance of ensuring 
the FAA remains a cohesive unit of Federal employees; and our concerns 
with privatizing any portion of the air traffic control system that is 
the world's standard.
    Commercial aviation contributes more than $1.5 trillion to the U.S. 
economy each year in addition to providing over 11 million jobs. As 
Congress considers legislation to reauthorize the agency, addressing a 
stable funding stream for the FAA should be a priority. In April 2013, 
when sequestration took effect, impacts were felt throughout the NAS. 
Flights across the country were delayed as a result of reduced 
maintenance and loss of system redundancy; cutbacks in funding for 
spare parts impacted the repair and maintenance of air traffic control 
equipment; aviation safety inspectors were prevented from overseeing 
commercial and general aviation industries; manufacturing inspectors 
were not inspecting aviation mechanics, facilities, training programs 
and equipment; and registration certificates were not issued for U.S. 
civil aircraft and airmen. Furthermore, training was suspended at the 
FAA Academy in Oklahoma City, forcing employees to fall behind on 
training essential to performing their jobs to the best of their 
ability. The FAA is just now recovering from the impacts of the 2013 
sequestration.
    While PASS recognizes that FAA funding must be addressed and that 
this may involve some restructuring, we are concerned that any major 
overhaul of the FAA that privatizes any functions or services either 
through a for-profit or not-for-profit company has the potential to 
negatively impact agency operations. Our country has the safest and 
largest aviation system in the world and it defies logic to believe 
that major changes to this intricate system will not at a minimum 
present major challenges. With any structural changes, unintended 
consequences and unforeseen circumstances are inevitable, which is a 
gamble this country should be unwilling to take.
    Another concern regarding privatization of air traffic control 
services is whether it is legal. The Congressional Research Service 
(CRS) released an analysis on April 10, 2015, specifically noting that 
the establishment of a private, non-profit corporation to provide air 
traffic control services may raise specific and consequential 
constitutional issues.\1\ More definitively, the CRS concluded that 
such a corporation may be constitutionally suspect because of potential 
violations of the nondelegation doctrine, Fifth Amendment Due Process 
issues and infringements on the executive power. Essentially, the 
construction of a privatized model threatens to subject the structure 
of the public's air traffic system to legal questioning and wrangling, 
which could ultimately lead to its unraveling. This is not a risk worth 
taking.
---------------------------------------------------------------------------
    \1\ Congressional Research Service, memorandum to the Honorable 
Peter A. DeFazio, Ranking Member of the Committee on Transportation and 
Infrastructure, ``Analysis of Constitutional Issues Arising from a 
Proposal to Authorize a Federally Chartered Private Corporation to 
Provide Air Traffic Control Services,'' April 10, 2015.
---------------------------------------------------------------------------
    In addition, progress in NAS modernization has been made over the 
past several years and changing the structure at this point could 
threaten that progress at a time when modernization is essential. While 
proponents of privatization point to lack of progress with the Next 
Generation Air Transportation System (NextGen) as a reason to privatize 
the Air Traffic Organization (ATO), PASS points to the variety of 
accomplishments and milestones successfully reached by the agency in 
establishing a stable platform for full modernization. Advancements are 
continuing in the following areas, among others:

   Installation of new systems and equipment, including the En 
        Route Automation Modernization System (ERAM), which has been 
        implemented at all 20 en route centers.

   Optimization of Airspace and Procedures in the Metroplex 
        (OAPM) to promote greater efficiency throughout the country in 
        Texas; Memphis; the Washington, D.C., region; New York/
        Philadelphia and Boston; Central and Southern Florida; Southern 
        and Northern California; Chicago and Cleveland/Detroit; 
        Seattle; Denver; Las Vegas; and Phoenix.

   Integration into the NAS of more than 14,000 Performance-
        Based Navigation (PBN) procedures, including 713 Required 
        Navigation Performance (RNP) procedures.

   Continued upgrading and standardizing of terminal automation 
        by transitioning to the Standard Terminal Automation 
        Replacement (STARS) platform at more than 150 Terminal Radar 
        Approach Control (TRACON) facilities throughout the country.

   Advancing data and voice communications capabilities, with 
        Data Communications clearance trials currently taking place 
        with plans for deployment at 56 airports starting in 2016.

   Continued work on the NAS Voice System, which will further 
        the advancement of voice communication capabilities and allows 
        the transfer of voice services from one facility to another.

   Ongoing collaboration between the FAA and stakeholders as 
        well as operators to prioritize implementation of NextGen 
        initiatives and smooth the transition.

    Ensuing that the men and women who perform this vital work remain 
Federal employees is of fundamental importance in maintaining a safe 
and efficient NAS. These employees include Technical Operations systems 
specialists who install, maintain, repair and certify the complex 
systems that make up the NAS. These Federal employees are extensively 
and specifically trained on a variety of interconnected, specialized 
systems and equipment in order to fulfill the responsibility of 
protecting aviation safety. For example, system certification, the 
process in which a certificated FAA systems specialist checks and tests 
systems or equipment on a periodic basis in order to ensure that the 
systems or equipment can be safely returned to service and not 
negatively impact any aspect of the NAS, has been deemed inherently 
governmental by the FAA.\2\ The FAA's certification process has been 
successful for decades and is a key element in maintaining the safest 
and most efficient air transportation system in the world. At more than 
340 facilities nationwide with over 70,000 certifiable systems and 
equipment, FAA systems specialists are the only individuals with the 
clearance, authority, skill and expertise to perform this work to keep 
the system safe.
---------------------------------------------------------------------------
    \2\ Manager, General Law Branch, AGC-110, memorandum to Manager, 
Maintenance Engineering Division, ASM-100, ``Contractor Certification 
of Navigational Systems in National Airspace System (NAS),'' June 18, 
1991.
---------------------------------------------------------------------------
    PASS also points to last year's incident in Chicago as further 
proof of the essential work of these Federal employees. Just over two 
weeks after a fire was deliberately started by a contract employee 
targeting vital aviation communications systems and equipment at the 
Chicago Air Route Traffic Control Center, the facility reopened for 
full operations thanks to the tireless efforts of FAA employees. On the 
day of the incident, systems specialists and other safety professionals 
at the FAA launched into action providing whatever assistance necessary 
to address the full loss of communications at the Center. Across the 
region, in Cleveland, Indianapolis, Kansas City and Minneapolis, 
systems specialists quickly ensured backup systems responded and air 
traffic remained safe. In the days that followed, in Chicago and other 
locations, Federal employees went above and beyond to make sure the 
aviation system remained safe and functional.
    In addition, Flight Inspection Services (FIS) professionals and 
aeronautical professionals in Mission Support Services (MSS) support 
pilots, air traffic controllers and aviation planners through the 
development and maintenance of all public instrument flight procedures 
and airways. These responsibilities include developing, maintaining and 
assuring the integrity and safety of flight procedures to support 
NextGen advancement in the NAS. The development, implementation, flight 
inspection and maintenance of flight procedures requires the proper 
interpretation of a complex series of computations, measurements and 
modeling standards, strict compliance with diverse criteria, extensive 
coordination with multiple stakeholders, and the frequent adaptation of 
procedures in a constantly evolving aviation environment. FAA 
specialists oversee the NAS in order to make sure everything aligns 
safely and is working efficiently, which should clearly remain a 
function of the Federal Government. Thanks to these employees and other 
safety professionals at the FAA, the United States enjoys the safest 
air traffic control system in the world.
    Proponents of privatization consistently point to models in other 
countries as sources of inspiration for this country to emulate. PASS 
warns against making such comparisons as no aviation system can compare 
in size and scope to that which is operating in this country. These 
models operate at a fraction of the size in terms of number of 
travelers and overall size of their airspace, with the United States 
surpassing any other country in terms of air traffic control operations 
and management. There really is no comparing this country's aviation 
system with any other aviation system in the world.
    Finally, there are some proposals related to FAA reform that 
include separating the Air Traffic Organization (ATO) from the other 
lines of business within the FAA. This is a concerning proposition 
since the ATO Safety Management System (SMS) is inextricably 
intertwined with the agency's other lines of business. For example, 
communication and sharing of information and resources within the 
agency, including between the ATO and the Office of Aviation Safety 
(AVS), are essential to allow the agency to seamlessly perform work 
necessary to ensure safety every step of the way. It is likely that the 
requirement that the FAA's safety office interact with a private 
corporation concerning regulation of air traffic control will create 
bureaucratic dysfunction, delays and unexpected costs. Furthermore, 
proponents have not indicated how the remaining parts of the FAA would 
be funded, and PASS is concerned that support and funding of the 
remaining Federal agency could be placed at risk if the ATO is a 
separate entity. The FAA must remain one cohesive unit in order to 
allow all FAA employees to continue working together for the benefit of 
the world's foremost aviation system.
    The United States stands at the forefront of the aviation world. 
Our country's air traffic control system is an important and extremely 
valuable public asset that is critical to our Nation's economy. Today's 
FAA employees are proud, dedicated and focused on the public good when 
they perform their jobs. They have been rightfully classified by the 
U.S. Department of Transportation as ``safety critical'' because the 
duties they perform ``have a direct and immediate impact on public 
health and safety, the protection of life and property. These positions 
require the highest degree of trust and confidence.'' \3\ FAA 
employees, as government employees, answer only to their customers, 
their only stockholders: the American people.
---------------------------------------------------------------------------
    \3\ Department of Transportation, ``DOT Order 3910.1D: Drug and 
Alcohol-Free Departmental Workplace Program,'' Appendix A, p. A-1, 
October 1, 2010.
---------------------------------------------------------------------------
    There is no debate that sequestration, operating under multiple 
continuing resolutions, 23 FAA reauthorization extensions during the 
last reauthorization cycle, and government shutdowns resulted in 
negative impacts on the NAS that resonated nationwide. PASS asks that 
members of Congress work together to consider funding alternatives that 
provide a stable, long-term funding stream for the agency, including 
allowing the FAA the flexibility to transfer funds among accounts as 
needed, advanced appropriations or a multiyear budget cycle. Other 
solutions may involve removing the FAA from the appropriations process. 
With this, the funding mechanisms currently supporting the FAA would 
likely require revisions to ensure an adequate funding stream.
    PASS thanks the Committee for considering our views, and we look 
forward to working with the Committee on the FAA reauthorization 
legislation.
                                 ______
                                 
     Prepared Statement of Thomas L. Hendricks, President and CEO, 
                National Air Transportation Association
    Chairman Thune, Ranking Member Nelson, members of the Commerce 
Committee, thank you for the opportunity to submit comments for the 
record on the Committee's review of air traffic control reform. My name 
is Thomas L. Hendricks and I serve as President and CEO of the National 
Air Transportation Association (NATA).
    NATA represents the interests of the general aviation business 
community before the Congress as well as federal, state and local 
government agencies. Representing nearly 2,300 aviation businesses, 
NATA's member companies provide a broad range of services to general 
aviation, the airlines and the military. Our members range in size from 
large companies with international presence to smaller, single-location 
operators that depend exclusively on general aviation for their 
livelihood. Smaller companies account for the majority of NATA's 
membership and most of our members have fewer than 40 employees and are 
designated as small businesses by the U.S. Small Business 
Administration.
    We understand the major reauthorization issue the Committee must 
address this year is whether and how we might alter the FAA's 
organization and funding stream. This is certainly an appropriate 
discussion to have in light of the recent sequesters, government 
shutdown and criticisms of the FAA's modernization plans. As the 
Committee looks at this very important issue, NATA shares many of the 
core reauthorization principles outlined by FAA Administrator Huerta--
particularly the need to maintain our system's excellent safety record. 
I have had the opportunity to captain passenger aircraft all over the 
world and I can tell you that there is no air traffic control system in 
the world that compares with ours, and certainly nowhere else in the 
world that compares with the challenges of managing the airspace in the 
U.S. northeast corridor. While we should support the injection of more 
private sector practices into the FAA, it is important how we manage 
any changes to the agency in order to maintain a stable, safe and 
efficient system that protects access for all users of our system. We 
should begin by determining whether the issues identified as needing 
reform can be addressed within the current construct.
    NATA believes the Committee should build on its excellent work 
begun in the last reauthorization and continue to assist the agency 
toward a more efficient operating structure. We believe it is possible 
to develop and deploy cutting-edge technology within the government 
structure and this is already occurring at the FAA. But, like other 
stakeholders, we believe more remains to be done. As Administrator 
Huerta has noted, the FAA must continue to foster a culture of 
innovation and efficiency. So if the question is whether the agency can 
efficiently deploy and certify cutting-edge technology, then let us 
provide the agency with the flexibility it needs in order to make that 
happen.
    In a discussion I had with one of the leading proponents of an 
alternative ATC structure, I identified another government agency that 
develops and deploys cutting edge technologies. The response was a 
horrified, ``The FAA could never manage programs that way, it can't 
fire people!'' While somewhat humorous, it begs a larger question. Will 
an alternative air traffic control structure really be able to operate 
more efficiently? Compensation is the number one driver of air traffic 
control costs and of the approximately 35,000 employees that would 
presumably move to a new air traffic control organization, are they the 
ones from where efficiencies will be derived? Or will it inadvertently 
create a situation where costs will not in fact be controlled and the 
travelling public saddled with new and ever increasing fees?
    One of the benefits of the current authorization/appropriations 
process is the agency's accountability to the taxpayer. I cannot think 
of any government agency that does not want its money without strings 
from Congress and I have never known an era where government spending 
was not described as ``constrained.'' When pressed for what is not 
being funded in modernization, the grudging response is that new 
technology is being deployed and that is certainly something to which I 
can personally attest as a user of the system. Of course, industry is 
then told the central issue is not modernization funding today but in 
the future while also being reminded that other aspects of the FAA 
suffer as a result of budgetary tradeoffs. NATA believes that before 
accepting this at face value, one must ask--is the agency doing 
everything it can to operate at its most efficient? If not, what 
additional authorities does it need to achieve that goal?
    Certainly, the FAA, as well as other agencies of the Federal 
Government that depend on discretionary funding, has been impacted by 
the budget impasses between Congress and the Administration. Experience 
tells us though that there is a limit to which discretionary spending 
can be reduced. In fact, it was the inability to bring to the House 
floor a transportation appropriation bill that resulted in the Ryan-
Murray budget deal that has provided us with stable FAA funding for the 
past few Fiscal Years. A user-fee funded agency is not necessarily 
exempt from sequestration. So again, should the Congress consider 
changes to the current funding stream or instead provide the agency 
with a clear, unambiguous exemption from the impacts of sequestration 
and government shutdowns?
    Further, we cannot underestimate the potential impact of separating 
air traffic from the agency's safety functions. Administrator Huerta 
recently observed that breaking down stovepipes means close interaction 
between the operations and safety functions of FAA. Turning the FAA's 
safety organization into a solely regulatory body, including overseeing 
operational standards, creates potential unintended consequences that 
might undermine many of the efficiencies that would come from a new air 
traffic control structure.
    Finally, we must discuss the potential risks to America's general 
aviation community, including the investment and jobs created by the 
members of NATA. Recently, eight general aviation associations, 
including NATA, unveiled a new industry-wide study detailing the 
economic contributions of general aviation to the Nation. That study, 
conducted by PricewaterhouseCoopers, determined that general aviation 
supports 1.1 million total jobs and supplies $219 billion in total 
economic output in the United States.
    Reform to the FAA's management structure and funding could put that 
investment and those jobs at risk. We understand that our Nation's air 
traffic control system was not built primarily with the general 
aviation fleet in mind. While we do not challenge what drives the 
construct of the system, it is certainly the one within which general 
aviation must operate and requires us to be a voice at the table of any 
discussion and not just a sole voice, but rather one that includes the 
many segments of our industry.
    Just as important is general aviation's contribution to the 
system's operation. Clearly, general aviation is an incremental user of 
a system built for other users. We cannot think of a more efficient 
method for capturing general aviation's use of the system than the 
current system of excise taxes. What we fear is what transpired in 
Canada, the collection of new user fees while still being saddled with 
old taxes--double taxation. And we cannot have it both ways, claiming 
the current discretionary funding situation drives this debate while 
not acknowledging how difficult it will be to pull those revenues out 
of the current budget construct.
    If we eventually conclude the challenges to the agency cannot be 
addressed in its current construct, then we urge the Committee to be 
very deliberate in what comes next. NATA cannot support any de facto 
``leap of faith'' proposals that would put general aviation's fate in 
the hands of undefined management structures or leave unresolved its 
contribution to the system. We are particularly concerned by Business 
Roundtable's corporatization proposal--what we view as a classic 
example of logrolling. Entirely funded via user fees and controlled in 
perpetuity by a board of industry insiders, general aviation would find 
itself in constant peril and the travelling public paying ever 
increasing fees.
    Chairman Thune, Ranking Member Nelson, members of the Committee, 
thank you for your consideration of our views. While maintaining the 
status quo risks our Nation's supremacy in aviation, it is equally true 
that radical change to the FAA's management structure and funding poses 
equal risks, including to the safe and stable nature of the world's 
best air traffic control system. We look forward to working with the 
Committee and assisting the agency toward a more efficient operating 
structure.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                         Hon. Michael P. Huerta
    Question 1. Administrator Huerta, the National Research Council's 
recent report on NextGen recommended that expectations be reset for 
NextGen along with a number of other recommended improvements. How is 
FAA responding to this report? Do you agree with the findings?
    Answer. The Next Generation Air Transportation System (NextGen) was 
envisioned as a complex modernization effort that was necessary for the 
Nation to maintain the safest and most efficient air transportation 
system possible for generations to come, adaptable to growing demand by 
increasing capacity and reducing delays. It is important to remember 
that the NextGen vision examined by the National Research Council (NRC) 
was a multi-agency view of the future including both operational and 
research partners. As such, it included both near and mid-term 
expectations as well longer term--stretch goals to serve as a basis for 
advanced research. The FAA's commitment to that vision, as an 
implementing agency, is found in the FAA's NextGen Plans and the Mid-
Term Concept we produced to which we are still substantially aligned.
    The FAA's NextGen implementation objectives are delivering benefits 
through improvements that include saving time and fuel, and reducing 
emissions. The improvements deployed by NextGen to date have already 
delivered nearly $1.6 billion in benefits by upgrading our 
infrastructure, creating more efficient procedures, and delivering 
advanced technologies. In addition, NextGen has made significant 
progress in areas such as infrastructure, surveillance, navigation, 
information, separation standards, and decision support tools.
    The FAA is responding to this report by continuing to work closely 
with industry to achieve high standards, remain nimble, and have 
flexibility. We will also continue to work with our cross-government 
partners on their implementations and research that extend and refine 
the far-term expectations.

    Question 2. As we consider potential air traffic control reforms, 
we are examining a host of studies indicating safety and service have 
not been negatively affected by separating air traffic control services 
from direct government control in other countries. As part of a 
possible transition in the U.S., what are some of the key issues you 
believe should be addressed?
    Answer. Congress' consideration of a new FAA governance structure 
raises many important issues that would need to be addressed to best 
ensure that the Nation's and public's interests would continue to be 
served, and that the U.S. would retain its global leadership in 
aviation, operating the world's safest, most diverse, most complex, and 
most efficient aviation system.
    Studies on the transition from one type of governance to another in 
other nations indicate that it could take years to effectively and 
totally separate air traffic control functions. This could prove even 
more challenging in the U.S. given the size and complexity of our 
aviation sector compared to other nations. Some of the complexity of a 
transition would involve defining new processes, roles, and 
responsibilities that may have not been included in establishing 
legislation.
    In evaluating whether to depart from the existing air traffic 
control service model and what a new model would look like, while not 
exhaustive, some of the issues that would need to be addressed include:

   Funding issues including how the existing mix of taxes and 
        revenues would be divided between a new entity and the 
        remaining FAA; the transition to a user fee structure; the 
        charges that general aviation (GA) would pay; source and 
        structure of airport funding; and dealing with budget 
        instability and uncertainty for the residual FAA.

   Safety oversight of a new entity and integration of new 
        entrants in the national airspace

   Governance of the new entity and roles of stakeholders on 
        oversight boards, if any

   Maintaining security and linkages with the Department of 
        Defense and Department of Homeland Security

   Retaining a global leadership position in aviation

   Ensuring good stewardship of the environment

   Determining appropriate roles and responsibilities in the 
        development of NextGen

   Assigning capital liabilities and assets between the FAA and 
        a new entity

   Development of new processes (e.g., new air traffic route 
        development) that currently require coordination between air 
        traffic and regulatory functions

   Determining the employee and labor protections associated 
        with a new entity

   Establishing new offices for any functions that would be 
        required in both the FAA and the new entity (e.g., human 
        resources)
                                 ______
                                 
      Response to Written Question Submitted by Hon. Roy Blunt to 
                         Hon. Michael P. Huerta
    Question. The FAA has indicated it has made great progress on 
NextGen over the last several years. However, according to the National 
Academy of Sciences report released on May 1, 2015 (very recently), it 
identifies many areas where the FAA is not delivering the promised 
benefits of NextGen to users of the air traffic system. Specifically, 
the report states `the original vision for NextGen is not what is being 
implemented today. Can you explain the large discrepancy between what 
the FAA is publicly saying on NextGen compared to the National 
Academies report?
    Answer. The original NextGen vision, Concept of Operations for the 
Next Generation Air Transportation System, was published in 2007. It is 
important to remember that this NextGen vision examined by the NRC was 
a multi-agency view of the future including both operational and 
research partners. As such, it included both near and mid-term 
expectations as well the longer term--stretch goals-to serve as a basis 
for advanced research. The FAA's commitment to that vision, as an 
implementing agency, has been found in the FAA's NextGen Plans and the 
Mid-Term concept to which we are still substantially aligned. 
Throughout this process, the FAA has engaged a broad cross section of 
stakeholders to include airlines, airports, business aviation, general 
aviation, other government agencies, and academia. We have engaged our 
stakeholders in numerous workgroups and committees to collaborate on 
high-priority, high-value improvements.
    Some of our most recent collaboration with our stakeholders are:

   NextGen Priorities Plan. A collaborative plan with the 
        NextGen Advisory Committee, delivered to Congress in October, 
        lays out milestones for delivering benefits in the one-to 
        three-year timeframe. This provides early-benefit, high-
        readiness capabilities to airspace users. The priorities are 
        improvements in Performance Based Navigation, Data 
        Communications, surface and multiple runway operations. We have 
        completed 27 of 27 commitments so far. This builds on previous 
        collaborative efforts with the aviation industry.

   Global Harmonization: The FAA has worked collaboratively 
        with partners worldwide to ensure that NextGen capabilities 
        won't stop at our borders. Interoperability and standards 
        setting have been a focus of NextGen planning and 
        implementation.

   Interagency Planning: We work with other agencies, including 
        the Departments of Defense and Commerce, as well as the 
        National Aeronautics and Space Administration, through our 
        Interagency Planning Office (and before that, through the JPDO, 
        which established the original vision for NextGen). We work 
        with our cross-government partners on their implementations and 
        their research that extend and refine the far-term 
        expectations.

    In some cases, we have decided to adjust our plans as the needs of 
the airspace have evolved. In addition, flexibility has been necessary 
because not all technologies and improvements mature at the same time.
    Finally, a significant challenge has been funding. The cost 
differential between what we designed NextGen to achieve and the 
funding we actually received has been $3 billion since 2011. A 
modernization with this many moving parts requires stable and 
predictable funding, as well as a long-term plan with the flexibility 
to make incremental updates to adjust to advances in technology and the 
latest priorities of our industry.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Deb Fischer to 
                         Hon. Michael P. Huerta
    Question 1. I have read the concerns expressed by the general 
aviation community regarding ``commercialization'' or ``privatization'' 
of the air traffic control (ATC) system. Do you believe there is a way 
for us to reform this system to ensure safety, efficiency, and 
innovation, while protecting the concerns of general aviation?
    Answer.

   The general aviation (GA) sector in the United States has 
        breadth and scope unparalleled elsewhere in the world. It is 
        part of what makes the U.S. aviation sector so dynamic. 
        Certainly one set of the issues involved in separating the air 
        traffic organization (ATO) from the FAA involves the GA 
        community, such as how much GA contributes to funding a new 
        model, and the impact of an FAA structural change on services 
        to the GA community and access to airspace.

   The Administration has not proposed governance changes to 
        air traffic control, and we are not in a position to endorse an 
        approach to resolve these issues. There may be a number of 
        approaches to consider in evaluating these issues ranging from 
        the composition of the new entity's board to Congress 
        legislatively setting a GA fee and service structure. However, 
        financial independence and viability for the new entity would 
        necessitate authority and flexibility to change fees and 
        services, so legislation would need to provide a compromise 
        that preserves GA interests as much as possible while ensuring 
        viability of the new entity. If Congress decides it wants FAA 
        to change how air traffic services are provided, then we will 
        need to work carefully with the GA community as well as other 
        stakeholders to design a system the continues to ensure safety, 
        efficiency, and innovation.

    Question 2. As you know, reforms to the ATC system have been 
considered by the FAA and Congress previously. In 2007, the FAA 
released a cost allocation study that helped determine the factors that 
drive the costs of providing air traffic control services and the 
allocation of those costs to various users. This 2007 study was used to 
support policy development for alternative ATC proposals. As we 
consider reforms to the ATC system in the upcoming FAA reauthorization, 
can you please commit to providing the Committee with an updated 
version of the ATC cost allocation study?
    Answer. Cost allocations are often quite complex and require policy 
decisions. As such, any future study should be preceded by substantive 
discussions with stakeholders. As the assumptions and choices 
underlying various cost allocation methodologies are reflected in the 
results, studies designed to reflect different choices would be needed 
to inform the use of the studies' results. It would be premature to 
pursue an updated study without input on key assumptions.

    Question 3. Administrator Huerta, a recent report by the National 
Research Council found that the FAA is not delivering what it promised 
with regard to NextGen. Given the National Research Council's findings, 
and the real benefits to aviation businesses and passengers from moving 
to the NextGen system, do you agree that private-sector oriented 
reforms to our ATC system would help to advance NextGen technology?
    Answer.

   Our ability to deploy NextGen technologies and capabilities 
        depends on sufficient funding and commitment from government 
        and service providers, and effective internal collaboration as 
        well as with industry to ensure milestones and goals are met, 
        implemented, and sustained.

   There are a wide variety of air traffic management models in 
        different countries around the world ranging from government 
        owned to fully privatized. I am not aware of any clear data 
        that shows that one particular model is better than another to 
        achieve the necessary modernization of air traffic systems. 
        Running a Fortune-500-size complex enterprise, operating 24 
        hours a day while undertaking one of the largest, most 
        sophisticated infrastructure projects in the last few decades 
        in modernizing the national airspace system would prove 
        daunting whether in the private or public sector.

   The success of NextGen deployment hinges on 
        interdependencies and relationships within the agency. NextGen 
        is more than installing technology in our air traffic 
        facilities and on aircraft--it involves the close participation 
        of our safety organization to ensure that the technology is 
        safe and that controllers and pilots know how to use it safely. 
        It requires training and equipage within the aviation sector. 
        Therefore, we believe that any decision about changes to 
        governance must take into account these issues.
                                 ______
                                 
 Response to Written Question Submitted by Hon. Richard Blumenthal to 
                         Hon. Michael P. Huerta
    Question. I am a proud sponsor of S. 911, the Saracini Aviation 
Safety Act of 2015, which would require airlines to install secondary 
barriers on most commercial aircraft. These barriers would prevent 
access to the flight deck of the aircraft. The legislation is named in 
honor of Victor J. Saracini, a pilot killed when terrorists hijacked 
United Flight 175 on September 11, 2001. The FAA has encouraged and 
issued guidance on secondary barriers, but the FAA has not mandated 
their installation. Does the FAA already have the authority to mandate 
secondary barriers? If so, what prevents the FAA from requiring that 
commercial airlines install physical secondary barriers, considering 
the threats we face in aviation?
    Answer. Yes, the FAA already has the legal authority necessary to 
require secondary barriers. However, such a step would require a 
rulemaking.
    Since passenger-carrying aircraft already have reinforced cockpit 
doors, a requirement put into place as a result of the September 11 
attacks, it is unlikely that the benefit of mitigating the very small 
remaining risk with a secondary cockpit door or other secondary barrier 
would outweigh the high cost of requiring secondary barriers across the 
commercial fleet.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Brian Schatz to 
                         Hon. Michael P. Huerta
    Question 1. Last year, a radar facility in Aurora, Illinois was 
knocked offline, exposing a serious vulnerability in our air traffic 
operations. This outage led to the cancellation of nearly 2,000 flights 
at a major international hub airport and delays across the country, 
exposing a lack of redundancy in the system. The FAA must also be 
prepared to deal with natural disasters. Since 1980, the U.S. has 
experienced 151 severe weather disasters. In these situations, it is 
vital that air traffic services are restored as quickly as possible to 
support response and recovery efforts, as well as to resume commercial 
flights. How does the FAA typically respond to man-made and natural 
disaster events to ensure the continuity of air traffic operations? 
What redundancies are built in place to ensure that the system 
infrastructure is reliable in the event of an emergency?
    Answer. Driven by lessons learned from real world incidents and 
numerous exercises over the years, the FAA has developed and repeatedly 
and successfully used a multi-layered approach to respond to and 
rapidly recover from disasters, supporting the safety and efficiency of 
the Nation's air traffic operations to the maximum extent practicable.
    Operations Contingency Plans: The FAA has implemented a requirement 
for all of its Air Traffic Control (ATC) facilities, including all 
tower, Terminal Radar Approach Control (TRACON), and Air Route Traffic 
Control Center (ARTCC) facilities to maintain Operations Contingency 
Plans (OCP). These OCPs, which were executed during the September 2014 
Chicago ARTCC/ZAU incident, are intended to focus actions to maintain 
the continuity of affected air traffic services and operations to the 
maximum extent practicable when the capabilities of a given facility 
(or facilities) are at risk, degraded, or disrupted.
    Communication and Collaborative Decision Making: The FAA utilizes 
daily a robust traffic flow and communication capability that is 
orchestrated at the national level at the agency's Air Traffic Control 
System Command Center (ATCSCC), leveraging input from FAA facilities, 
airlines and other aviation operators flying in airspace. This 
capability enables the FAA to quickly coordinate and carry out traffic 
management initiatives to optimize the flow of air traffic within the 
NAS due to demand or external factors such as a man-made or natural 
disaster.
    Systems Resiliency: The ATO maintains a wide spanning national 
infrastructure--to include facilities, air navigation services systems 
and automation, and the supporting power and environmental equipment. 
Throughout this infrastructure, the FAA has integrated various 
resiliency design elements based on risk analyses. Where additional 
redundancies are required, geographic diversity of systems are 
implemented to provide backup or overlapping coverage.
    Continuity and Disaster Response Exercises: The FAA regularly 
participates in a broad spectrum of continuity and disaster response 
exercises at the Federal, State, and local levels, in which the agency 
validates and identifies gaps in its ability to sustain air traffic 
operations in the NAS, as well as contribute to interagency efforts to 
save lives, protect critical infrastructure, and safeguard property.

    Question 1a. Does the FAA have a goal of how quickly it will 
restore air traffic control services following such an event?
    Answer. Following the September 2014 temporary loss of the Chicago 
ARTCC/ZAU cited by Senator Schatz, the FAA established new aviation 
system restoration targets of a) within 24 hours after a major 
disruptive incident, recovering to 90 percent of normal full capacity 
for the affected major airport; and b) within 96 hours after a major 
disruptive incident, recovery to 90 percent of normal full capacity for 
the affected en route airspace.

    Question 1b. What challenges does the FAA face in adequately 
preparing for catastrophic events? What steps need to be taken to 
enhance system resiliency?
    Answer. Following the September 24 ZAU incident, the agency 
evaluated the basic resiliency of its air navigation services 
infrastructure as part of the 90-day after-action review. While 
recommendations have been made during the initial review, the FAA is 
continuing this resiliency effort to more broadly quantify and address 
possible resiliency improvements. The resiliency characteristics of the 
FAA's current air navigation services regime ensure safe operations 
following any given disruptive incident. However, the FAA's new system 
recovery targets will necessitate resiliency improvements at key 
facilities, which will, in turn, require future capital investments. 
Any funding for further resiliency enhancements will be competing with 
other capital expenditure needs.

    Question 2. Currently, air traffic control operations are covered 
by the Airport and Airway Trust Fund plus General Fund appropriations. 
At a minimum, those federally appropriated funds would have to be 
replaced under a privatized or corporatized model. It is not realistic 
to assume that efficiency improvements alone would be enough to make up 
for the loss of these funds, and funds raised through bonds would 
result in debt that would eventually have to be serviced.
    Answer. In the context of FAA reauthorization and the future 
direction of the FAA, some members of the aviation community and of 
Congress have discussed making governance changes at the agency.

    Question 2a. If the air traffic control system is moved to a 
separate, self-funding entity, what model would you propose to generate 
sufficient funds to cover the cost of operations?
    Answer. The Administration welcomes the opportunity to evaluate any 
governance-related proposals and we look forward to having those 
discussions with Congress and stakeholders.
    Further, with respect to reauthorization, some of the major 
challenges facing the FAA involve funding levels, funding stability, 
and flexibility. We believe that any governance-related proposals would 
need to address these issues while ensuring that our Nation continues 
to maintain the safest and most efficient airspace system today and in 
the future.

    Question 2b. Would it lead to cuts to air traffic controller costs 
(by reducing salaries, benefits, and pensions), raise user fees, or 
both?
    Answer. We believe that any FAA reauthorization, whether it 
includes structural change or not, needs to address two key challenges 
facing the agency:

        Reauthorization should provide budget stability including a 
        greater ability to plan and commit resources over the long-
        term. Budget stability will help ensure our strong 
        participation in the global aviation community and demonstrate 
        our commitment to aviation.

        Reauthorization should allow for management flexibility for 
        making business decisions regarding the size, scope, and types 
        of air traffic management services and infrastructure.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Cory Booker to 
                         Hon. Michael P. Huerta
    Question 1. I applaud FAA's work on moving forward multiple NextGen 
technologies, including En Route Automation Modernization and Automatic 
Dependent Surveillance-Broadcast. However, the FAA Inspector General 
and industry stakeholders have been critical of delays and cost 
overruns in the implementation of NextGen programs. Can you explain how 
FAA has addressed these criticisms? How can the FAA foster innovation 
in this area to move implementation forward faster?
    Answer. Over the past few years, the FAA has put in place a 
stronger, more efficient, and more effective leadership model for 
continuous program improvement. Our efforts, which began with an 
internal organizational realignment and the designation of a Chief 
NextGen Officer, continue with incorporation of lessons learned to 
improve program management processes and robust, proactive stakeholder 
engagement.
    NextGen's success has been characterized by four fundamental 
approaches that will continue to guide our progress:

   Executing programs to support the infrastructure of NextGen

   Delivering capabilities to benefit users of the National 
        Airspace System (NAS)

   Advancing collaboration with partners in the aviation 
        community

   Examining work done and renewing goals to ensure the 
        initiative remains on the right track

    We have in place a comprehensive, cross-agency portfolio approach 
to program implementation that recognizes NextGen as an integrated 
effort rather than a series of independent programs. This approach 
provides a sound framework of milestones and governance driven 
investment decisions aligned with NextGen strategy, monitors NextGen 
development and deployment progress, and ensures collaboration and 
coordination across FAA lines of business.
    We have made improvements to the NAS Enterprise Architecture that 
explicitly identify how and when decision points will impact the 
delivery of NextGen products. Case-by-case analyses are also carried 
out to fully understand the relative size, breadth and scope of impacts 
across programs.
    We have developed and refined criteria and processes for 
identifying high-priority program decisions, which are documented in 
the NAS Integrated Systems Engineering Framework (ISEF).
    Collaborating with our aviation community stakeholders through 
forums like the NextGen Advisory Committee (NAC) has improved 
industry's understanding of the complexity involved in implementing 
NextGen programs. Our recent work in developing the NextGen Priorities 
Joint Implementation Plan has created an environment of mutual 
understanding of respective challenges. The FAA collaborated with the 
aviation industry through the NAC in response to a request from the 
House of Representatives Committee on Transportation and 
Infrastructure, Subcommittee on Aviation, to develop a plan to 
implement a number of high-priority NextGen capabilities that will 
provide significant near-term benefits to NAS users. The plan's 
foundation was earlier NAC work, which recommended the FAA focus on 
NextGen capabilities in four areas: Multiple Runway Operations, 
Performance Based Navigation, Surface Operations and Data 
Communications. Throughout 2014, FAA subject matter experts met with 
aviation industry representatives to determine what the FAA is able to 
accomplish over the next one to three years in the four focus areas and 
what industry commitments are necessary for those activities to be 
successful. These meetings enabled the FAA and industry to reach 
agreement on all of the ``high priority, high readiness'' capabilities 
that the NAC has recommended, with the FAA committing to specific site 
implementation plans and industry ensuring operator preparedness in 
order to take full advantage of NextGen benefits. Both the FAA and 
industry are meeting their Plan commitments and continue close 
collaboration to solve barriers to effective implementation. The FAA 
has completed all the scheduled commitments due to date, three of which 
were completed early.

    Question 2. In your January 2015 FACT3 report, FAA concluded in the 
New Jersey-New York area airspace that, ``while the ongoing airspace 
redesign effort and NextGen enhancements will help to improve 
efficiency and flexibility, FAA sees strong evidence that additional 
runways may be the best long-term solution to meet future demand for 
intercity travel to and from the NYC area.'' If new runway construction 
at these airports is unlikely to commence in the near future, what else 
can we do to address this untenable situation before 2030, if NextGen 
and the airspace redesign are not solutions on their own?
    Answer. There are many contributing factors to the flight delay 
challenges in the NYC area: high demand, tightly coupled traffic flows, 
complex airspace and limited capacity. As a result, there is no single 
solution that will address the expanse of operational complexities in 
the NYC area. Rather, a suite of solutions working in concert is 
required, including deploying NextGen technologies, airspace redesign, 
airport capacity enhancement, and slot management.
    NextGen is delivering benefits and will continue to do so as new 
technologies for both pilots and air traffic controllers are deployed 
throughout the region. Improvements prior to 2030 include tools to de-
conflict and streamline traffic flows, improve predictability, and make 
more efficient use of existing airport and airspace capacities.
    Restructuring the New Jersey-New York area airspace will support 
and maximize the benefits of NextGen improvements in the NYC area. 
Airspace Redesign efforts in the New Jersey-New York area airspace have 
already delivered benefits in efficiency, flexibility, and delay 
reduction. The FAA suspended further implementation of the Airspace 
Redesign in May 2013 due to funding constraints that limited the FAA's 
ability to further integrate airspace to the extent envisioned. FAA 
plans to tailor a solution that will best meet the unique operational 
and safety needs in the NJ-NY area airspace, leveraging the successful 
Metroplex model.
    The January 2015 FACT3 (Future Airport Capacity Task) report notes 
that taxiway and gate constraints can be common causes of delays and 
inefficiencies. Improvements are in progress to address these issues in 
the NYC area, including reconfiguration of the Central Terminal 
Building at LGA, and the ongoing JFK runway construction is intended to 
provide high-speed taxiways and accommodate larger aircraft. Although 
more incremental than new runways, these improvements are achievable in 
the nearer term and will help to make more efficient use of the 
existing airfield. The FAA also continues to support more than a dozen 
reliever airports as well as secondary commercial service airports in 
the greater New York metropolitan area, including airports in both New 
York and New Jersey.
    Nevertheless, the number of runways at JFK, EWR, and LGA will 
remain a limiting factor when accommodating long-term NYC area demand. 
Additional runway capacity is needed, and for this reason the PANY&NJ 
undertook a comprehensive System Capacity Study for the NY metropolitan 
area. In the interim, passenger capacity is improving as airlines 
increasingly use larger aircraft with more seats that are more fuel and 
cost-effective in addition to needing fewer flights to accommodate the 
same or growing number of passengers. However, if new or enhanced 
runway capacity cannot be achieved, then the NYC airports may have to 
continue to rely on techniques to address severe congestion-related 
delays such as slot management currently in effect under temporary 
Orders limiting operations at JFK, EWR, and LGA. The FAA recently 
published a Notice of Proposed Rulemaking (public comment period closed 
on May 8, 2015) intended to provide a longer-term and comprehensive 
approach to slot management at these airports.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Tom Udall to 
                         Hon. Michael P. Huerta
    Question 1. Flight paths and air traffic can be controversial 
issues locally. While I believe that NextGen has value, I am concerned 
about how it will impact local communities.
    I strongly urge the FAA to make sure it is working with local 
residents to keep them informed of changes to the air traffic control 
system and the impact these may have on their communities. This is an 
area where pre-emptive communication goes a long way.
    What outreach activities with local communities does your agency 
currently engage in for NextGen? Do you feel these are sufficient? Are 
there any other efforts underway?
    Answer. The FAA has been focused on the implementation of the 
foundational programs that will enable full NextGen capabilities. For 
example, we recently completed the ground infrastructure that supports 
ADS-B and the replacement of the En Route and Terminal automation 
systems that are the backbone of the air traffic control system. With 
the foundational work nearing completion, we are transitioning to the 
implementation of transformational tools and capabilities that will 
provide the full benefit of NextGen.
    From the perspective of local community impact, implementing the 
NextGen foundational infrastructure such as the replacement of 
automation systems like ERAM was transparent from a local community 
perspective. However, as we continue to implement new procedures and 
new technology, we fully recognize the need for stakeholder outreach 
and local community engagement. For example, during Metroplex projects, 
local communities are provided information on process and progress 
during the various stages of each project.
    During the first two phases (study and design) of each Metroplex 
project, the leading FAA project teams communicate with airports and 
stakeholders via monthly or quarterly meetings. These meetings inform 
the stakeholders and allow them to communicate information to local 
communities as necessary. During the third phase (evaluation), affected 
communities are updated directly through environmental workshops, 
during which local stakeholders are able to provide input. The public 
response is gauged to determine the frequency and location of 
additional workshops to meet community and project needs. In the 
implementation phase, news stories announce related activity, and 
during the final phase (post-implementation), benefits stories are 
developed by the FAA. Based on recommendations from stakeholders 
through the NextGen Advisory Council, the FAA is strengthening its 
outreach and education activities by developing a formal outreach 
process that engages airports and communities from the beginning of a 
project.

    Question 2. The Department of Defense has expressed concerns about 
how a possible new air traffic organization entity would coordinate 
services with DOD and ensure that national security remained a top 
priority. New Mexico has two air force bases and a missile range. I am 
concerned about the impact any reform could have on our local 
operations. How do the FAA and DOD currently coordinate? How might that 
interaction work best between two government agencies?
    Answer. Under current authority, the FAA Administrator is 
obligated, among other things, to consider the requirements of national 
defense, regulate civil and military operations in the airspace, and 
consult with the Secretary of Defense to establish areas in the 
airspace determined necessary in the interest of national defense.
    Over the years, an extensive, complex network was established for 
civil/military coordination and cooperation, which facilitates problem 
resolution at the appropriate level as required. The network operates 
effectively through agreements and the exchange and interaction of 
personnel.
    The DOD is focused on ensuring that military services have 
sufficient airspace to meet military, training, and test and evaluation 
requirements for peacetime, contingency, and wartime operations. 
Airspace designated for military purposes, when not required by the 
DOD, is made available to the FAA for civil use. DOD cooperates with 
the FAA for the effective and efficient management of the National 
Airspace System.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                            Hon. John Engler
    Question 1. As you may know, a legal memorandum by the 
Congressional Research Service was recently made public that outlined 
certain constitutional concerns with separating the Air Traffic 
Organization from the FAA. What is your assessment of the legal issues 
that might arise from making a transition to a new governance 
structure, and how might they be addressed?
    Answer. The memo raised important concerns that should be addressed 
in any enabling legislation. However, it appears the authors of the 
memo were unclear on a central concept related to the creation of a 
new, not-for-profit entity to operate the air traffic control system. 
That is that the new ATC entity should be required perform air traffic 
control services in accordance with performance standards and other 
rules and regulations promulgated from time to time by the FAA. The new 
entity would not set the regulations; it would apply the regulations 
that are promulgated by the FAA just as airlines apply the regulations 
of the FAA with respect to the use of electronic devices on board. The 
new entity's conduct falls squarely within the ``ministerial'' 
exception to the private non-delegation doctrine.
    Similarly, the new entity would not have enforcement power. When 
there are infractions, the new entity would report the infraction to 
the FAA, which would then decide if and how enforcement is undertaken.
    Finally, as is a common practice with government-sanction 
monopolies (like electric utilities), all of its fee assessments would 
be appealable to the DOT or some other governmental entity.

    Question 2. How might a new air traffic control organization 
finance and acquire the billions of dollars of existing air traffic 
control facilities, infrastructure, and equipment? Why would a new 
model be better than the way the government currently finances such 
facilities?
    Answer. As far as transferring existing assets to the new entity, 
the enabling legislation will need to determine whether the new entity 
should pay a fee to acquire the assets and, if so, who should set that 
fee. The Secretary of Transportation may be best positioned to make 
such an assessment.
    As for financing of future facilities, infrastructure and 
equipment, the new entity would possess many advantages over the 
current system.
    Today, the Federal Government finances multi-year capital 
investment programs through annual appropriations. This model is not 
followed by most state governments nor by the private sector, and for 
good reason. When massive programs, which are predicated on a 
particular long-term funding expectation, collide with inconsistent and 
unpredictable Federal appropriations, as illustrated by the recent 
sequester, the result is a jagged mismatch of funding and program needs 
in every single year and a constant acceleration and then dead-stop of 
program implementation. And there is no room or budget authority to 
buffer this mismatch with funds from the operating budget, which is 
already overextended keeping obsolete systems operational. The FAA's 
top priority will always be to maintain and operate the current system. 
That is why systems being installed today incorporate technology 
specified a decade ago, and these will already be outdated when NextGen 
comes fully online, hopefully in 2025.
    Under the proposed model, technology investments would be guided by 
an organization that is committed to consistent, incremental technology 
improvements. Technology development would be predictably financed--
because the entity would be able to issue bonds in the capital 
markets--with assurance that all systems would be compatible and 
incorporate proven state-of-the-art technology.

    Question 3. How does a standalone, commercialized air traffic 
control model address concerns about funding stability, continuity of 
operations, and the confidence among users regarding prospects for 
accelerating NextGen benefits in a way that cannot be achieved by more 
reforms within the government?
    Answer. As noted in my previous response, the current system is 
unpredictable. The new funding system would be designed to be 
inherently stable. It would be funded by user fees to cover operating 
and financing costs, and capital expenditures would be funded through 
bonds issued in the capital markets. This would enable new technology, 
such as NextGen, to be more quickly built-out and delivered at a 
predictable date.

    Question 4. What are the implications of reform for smaller rural 
airports, which may or may not have any commercial air service? Why is 
reform beneficial for small and rural communities?
    Answer. Under the current system, smaller and rural airports are 
the first to see services cut when budgets are tight. For example, 
under the recent sequestration, in March 2013 FAA proposed to close 149 
contract towers which were providing air traffic control services to 
smaller and rural airports. While Congress acted to avert the closures 
in special legislation, the fact remains that in a tight budget, these 
are the first services likely to be cut--not because they are 
unimportant, but their closure is simply a quick way to generate cash.
    Under a potential not-for-profit operator of the new system, as 
discussed in the hearing, the new entity would have multiple bottom 
lines defined in the enabling legislation. Profitability should not be 
the only bottom line. One of those missions should be to maintain and 
expand access to air traffic control services. This could be easily 
achieved under the new model. A commitment to remote tower technology 
(currently outside the budget capability of the FAA) and other 
technical innovations would increase operational capacity, stimulate 
economic development, and improve safety for smaller and rural airports 
across the country.
    The new proposed model is a boon for small communities.

    Question 5. Approximately how long might the transition to a new 
air traffic control model take? What are some of the lessons learned 
from the transition experience in other countries around the world to 
ensure smooth and seamless transition?
    Answer. We expect a transition would need to be built into enabling 
legislation that might last for two years, with distinct milestones to 
be achieved during the transition period. The transition could be 
handled largely the way a major corporation would handle the spin-off 
of a major division. The most important aspect would be to identify the 
new leadership and exactly which assets would transfer to the new 
entity.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Deb Fischer to 
                            Hon. John Engler
    Question 1. I have read the concerns expressed by the general 
aviation community regarding ``commercialization'' or ``privatization'' 
of the air traffic control (ATC) system. Do you believe there is a way 
for us to reform this system to ensure safety, efficiency, and 
innovation, while protecting the concerns of general aviation?
    Answer. Yes, and we would support doing so. Business Roundtable 
does not support privatization of the system as that word is generally 
understood. Specifically, the creation of a for-profit corporation to 
run the system would be detrimental to users, particularly to the 
general aviation sector. That is why the proposal under discussion is 
to create a federally-chartered not-for-profit entity to operate the 
system, with FAA continuing to regulate the system, ensuring safety. 
This separation of operation and regulation into two separate entities 
is now considered a best practice internationally for maintaining the 
safety of air navigation systems. The enabling legislation for this 
new, not-for-profit entity, should ensure that one of its core missions 
is to maintain and expand access to air traffic control services--not 
limit those services to those with the greatest ability to pay. 
Further, we believe there are ways the legislation could ensure that 
general aviation does not see a significant change in the overall 
amount of financial support it is required to provide to maintain the 
ATC system. Finally, general aviation should also be represented on the 
board governing the new entity, ensuring that this mission is achieved, 
and the board should be designed to ensure that no one user group--
including airlines--would be represented by a majority of the board.

    Question 2. In your written testimony, you noted that the U.S. has 
lost its global leadership in aviation because we are falling behind 
when it comes to our air traffic control system and the technology we 
use. Can you provide the committee with some examples of how technology 
has advanced in private sector oriented ATC systems?
    Answer. The Canadian system, the second-largest air traffic control 
system in the world which is operated by a not-for-profit corporation, 
NavCanada, provides the best example. Touch-screen automated route 
tracking technology developed by NavCanada is now sold around the 
world, while U.S. controllers are still printing paper strips inserted 
in little plastic holders passed from controller to controller to keep 
track of each plane in the sky. Also, NavCanada is a principal investor 
and lead strategic partner in the Aireon satellite-based ADS-B 
technology, which the FAA has not been able to afford to embrace. 
NavCanada, like U.S. corporations that are technology-driven service 
enterprises, value incremental technology improvement. Because of the 
nature of the U.S. Federal procurement system, the FAA is stuck making 
generational leaps every twenty to thirty years, and those leaps tend 
to fall short of the mark.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Bill Nelson to 
                            Hon. John Engler
    Question 1. How would a new entity ensure that there is continued 
service to small communities and rural areas?
    Answer. Under the current system, smaller and rural airports are 
the first to see services cut when budgets are tight. For example, 
under the recent sequestration, in March 2013 FAA proposed to close 149 
contract towers which were providing air traffic control services to 
smaller and rural airports. While Congress acted to avert the closures 
in special legislation, the fact remains that in a tight budget, these 
are the first services likely to be cut--not because they are 
unimportant, but their closure is simply a quick way to generate cash.
    Under a potential not-for-profit operator of the new system, as 
discussed in the hearing, the new entity would have multiple bottom 
lines defined in the enabling legislation. Profitability should not be 
the only bottom line. One of those missions should be to maintain and 
expand access to air traffic control services. This could be easily 
achieved under the new model. A commitment to remote tower technology 
(currently outside the budget capability of the FAA) and other 
technical innovations would increase operational capacity, stimulate 
economic development, and improve safety for smaller and rural airports 
across the country.
    The new proposed model is a boon for small communities.

    Question 2. A recent report by Congressional Research Service (CRS) 
indicated that the creation of a private non-profit corporation with 
the ability to set user fees, appoint leaders, and control the national 
airspace may be unconstitutional. How do you respond to those findings?
    Answer. The memo raised important concerns that should be addressed 
in any enabling legislation. However, it appears the authors of the 
memo were unclear on a central concept related to the creation of a 
new, not-for-profit entity to operate the air traffic control system. 
That is that the new ATC entity would be required to perform air 
traffic control services in accordance with performance standards and 
other rules and regulations promulgated from time to time by the FAA. 
The new entity would not set the regulations; it would apply the 
regulations that are promulgated by the FAA just as airlines apply the 
regulations of the FAA with respect to the use of electronic devices on 
board. The new entity's conduct falls squarely within the 
``ministerial'' exception to the private non-delegation doctrine.
    Similarly, the new entity would not have enforcement power. When 
there are infractions, the new entity would report the infraction to 
the FAA, which would then decide if and how enforcement is undertaken.
    Finally, as is a common practice with government-sanctioned 
monopolies (like electric utilities), all of its fee assessments would 
be appealable to the DOT or some other governmental entity.

    Question 3. Congress is actively involved in exercising oversight 
to ensure that the U.S. air traffic control system is the safest in the 
world. What degree of oversight do you envision Congress exercising 
under your proposal?
    Answer. As noted in my response to the previous question, the FAA 
would retain responsibility for insuring the safety of the airspace 
and, as a government agency, be accountable to Congress. What is being 
proposed is that a non-profit entity provide air traffic control 
services, regulated by the FAA. This would meet international standards 
for the separation of the operator from the regulator, eliminating the 
conflict of interest inherent to the current government-run structure.

    Question 4. What would be the role of Congress in setting user 
fees? If there is no role for Congress, how can we be assured that the 
Board will not assess fees in a manner that functionally limits access 
to certain users or groups?
    Answer. While the new non-profit entity would set user fees for air 
traffic control services, there should be a mechanism in any enabling 
legislation that would allow users to appeal to the Secretary of 
Transportation or another appropriate government entity if the fees are 
unreasonable. Further, Congress may find it appropriate to exempt 
certain user groups--such as noncommercial general aviation--from 
paying user fees.

    Question 5. The national airspace is a national asset; will the 
Board be obligated to ensure that all users continue to have access to 
it?
    Answer. As noted in my earlier responses, the new non-profit entity 
would be responsible for providing air traffic control services, 
regulated by the FAA. Any enabling legislation should make clear that 
the new entity not be able to discriminate in its provision of services 
based upon whether a given aircraft is a small private plane or a 
Boeing 747 operated by a major airline.

    Question 6. What is the amount of Federal funding that you believe 
would be required to stand up a new air traffic control entity? At what 
point would this new entity be self-sustaining? How long would Federal 
funding for air traffic control be required and how much funding do you 
anticipate would be required?
    Answer. The new entity should set user fees so that it is self-
sustaining as soon as any congressionally mandated transition period is 
complete.

    Question 7. Congress was very concerned by proposed contract tower 
closures in the wake of sequestration. We worked hard to ensure that 
towers would remain open, in spite of funding challenges. Wouldn't a 
new entity most likely consolidate towers (and, therefore, close 
towers) to save costs?
    Answer. No. Please see my response to your first question.

    Question 8. Under your proposal, would the new entity be required 
to buy air traffic control facilities and assets from the FAA? If so, 
with what funds? Would it be responsible for disposing of properties 
that are no longer needed and any remediation required to do so?
    Answer. As far as transferring existing assets to the new entity, 
the enabling legislation will need to determine whether the new entity 
should pay a fee to acquire the assets and, if so, who should set that 
fee. The Secretary of Transportation may be best positioned to make 
such an assessment. If a purchase price is required, the new entity 
will have more than adequate borrowing capacity at very attractive 
rates for paying such purchase price.

    Question 9. Does your proposal contemplate annual funding for 
airport development grants? What amount do you anticipate being 
available each year? Would that funding come from user fees or another 
source of funding?
    Answer. Enabling legislation would need to ensure that Airport 
Improvement Grants remain funded at the current level. We believe this 
can be achieved largely through continuing the Federal Government's 
current average contribution from the general fund to FAA and AIP.

    Question 9a. Would the new ATO entity, under your proposal, follow 
Federal acquisition practices? If not, what acquisition practices would 
be followed to ensure that there was fair and open competition?

    Question 9b. Would there be a process for unsuccessful bidders to 
protest contract awards? What forum would have jurisdiction over such 
claims?

    Question 9c. The FAA must comply with Presidential directives, 
constitutional standards, public laws, and DOT Secretary Policy 
Statements to promote, expand, and aggressively provide procurement 
opportunities for small businesses, small businesses owned by socially 
and economically disadvantaged individuals, women-owned small 
businesses, and service-disabled veteran owned small businesses. Would 
a private entity follow those same principles and adopt similar set-
asides to encourage small business development and contract awards to 
businesses owned by women, service-disabled veterans, and socially and 
economically-disadvantaged individuals? Would the new entity follow Buy 
American preferences?
    Answer. One of the greatest benefits of this proposal is to get the 
air traffic control system out from under the current Federal 
acquisition process, which is badly broken. The Canadian system, the 
second-largest air traffic control system in the world which is 
operated by a not-for-profit corporation, NavCanada, provides the best 
example. Touch-screen automated route tracking technology developed by 
NavCanada is now sold around the world, while U.S. controllers are 
still printing paper strips inserted in little plastic holders passed 
from controller to controller to keep track of each plane in the sky. 
Also, NavCanada is a principal investor and lead strategic partner in 
the Aireon satellite-based ADS-B technology, which the FAA has not been 
able to afford to embrace. NavCanada, like U.S. corporations that are 
technology-driven service enterprises, value incremental technology 
improvement. Because of the nature of the U.S. Federal procurement 
system, the FAA is stuck making generational leaps every twenty to 
thirty years, and those leaps tend to fall short of the mark.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Brain Schatz to 
                            Hon. John Engler
    Question 1. Currently, air traffic control operations are covered 
by the Airport and Airway Trust Fund plus General Fund appropriations. 
At a minimum, those federally appropriated funds would have to be 
replaced under a privatized or corporatized model. It is not realistic 
to assume that efficiency improvements alone would be enough to make up 
for the loss of these funds, and funds raised through bonds would 
result in debt that would eventually have to be serviced.

    If the air traffic control system is moved to a separate, self-
funding entity, what model would you propose to generate sufficient 
funds to cover the cost of operations?

    Question 1a. Would it lead to cuts to air traffic controller costs 
(by reducing salaries, benefits, and pensions), raise user fees, or 
both?
    Answer. The new non-profit entity would be funded by user fees to 
cover operating and financing costs and capital expenditures would be 
funded through bonds issued in the capital markets. This would enable 
new technology, such as NextGen, to be more quickly built-out and 
delivered at a predictable date. The Canadians are the best example of 
another system that has followed this model. Efficiencies delivered 
under this model have enabled them to better compensate employees and 
deliver higher-tech services while reducing real user fees over time.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                           Hon. Byron Dorgan
    Question 1. Senator Dorgan, some argue that a significant air 
traffic control reform effort is not necessary and that government-
focused changes are sufficient to improve the air traffic control 
system. But more than 15 years ago, Congress made a substantial change 
that gave the FAA broad relief from Federal personnel and procurement 
rules. What are the major impediments that have prevented the FAA from 
utilizing these authorities to achieve faster progress on NextGen's 
programs?
    Answer. What we found through our work with the Eno Center for 
Transportation NextGen Working Group was that while the FAA was given 
the authority to be exempt from Federal personnel and procurement 
rules, in practice the FAA did not take advantage of this authority. A 
GAO report from 2003 (``National Airspace System: Reauthorizing FAA 
Provides Opportunities and Options to Address Challenges'') concluded 
that this was both because the FAA improperly managed implementation, 
and also because other government agencies with oversight roles acted 
as a barrier to full implementation.

    Question 2. As you may know, a legal memorandum by the 
Congressional Research Service was recently made public that outlined 
certain constitutional concerns with separating the Air Traffic 
Organization from the FAA. What is your assessment of the legal issues 
that might arise from making a transition to a new governance 
structure, and how might they be addressed?
    Answer. The CRS memorandum is based on the premise that the new 
entity would be ``establishing air traffic control procedures, similar 
to those currently existing in FAA Order JO7110.65V''. This would mean 
that the new entity would be making the rules, while simultaneously 
operating the system. This, however, is not what has been proposed. 
What I, and stakeholders proposing bold reform, envision for a reform 
air traffic control system, is that the new system will be comprised of 
two entities. The first entity would be the new provider, which will 
operate the system. The second entity would be the FAA, which will 
regulate the operator from a safety standpoint. We do not want a system 
where the new regulator creates its own rules. The rule-making process 
is a governmental prerogative and should remain so.
    It will always be necessary to ensure that any new governance 
structure complies with all legal issues, and these should not be taken 
lightly. But compliance can certainly be accomplished within a reformed 
air traffic control structure, including the ones we have proposed.

    Question 3. How might a new air traffic control organization 
finance and acquire the billions of dollars of existing air traffic 
control facilities, infrastructure, and equipment? Why would that model 
be better than the way the government currently finances such 
facilities?
    Answer. This new organization would finance itself, similar to 
airports. It would issue bonds that would be paid over time by the 
revenues it would collect from its customers. This model would be a 
significant improvement to the one currently in place. This new entity 
would allow capital planning over several years, instead of the current 
system where the FAA relies on annual appropriations from Congress that 
may or may not come in time, and are unpredictable in times of fiscal 
constraint. For example, FAA recently finished the deployment of a long 
awaited new computer system, the En Route Automation Modernization 
(ERAM), which replaced the 40-year old HOST system. ERAM was $370 
million over budget, from which $40 million can be attributed to the 
budget sequester. With proper capital planning, those costs overruns 
due to budget uncertainty will be less likely to happen.
    Additionally, this model would be better for at least one other 
reason. The current model depends on annual Congressional 
appropriations, which creates an incentive for the FAA to only request 
funding for projects that are most likely to get funded, regardless of 
their effectiveness in improving safety or efficiency. In a new model 
like what we envision, where the stakeholders have a strong role in 
governing the system, projects would be chosen not be chosen because 
they are more likely to be funded by Congress, but because it would 
they make sense to the national airspace system and its users to 
implement those projects.

    Question 4. How does a standalone, commercialized air traffic 
control model address concerns about funding stability, continuity of 
operations, and the confidence among users regarding prospects for 
accelerating NextGen benefits in a way that cannot be achieved by more 
reforms within the government?
    Answer. As the Mineta Commission stated in 1997, the FAA has ``too 
many cooks''--USDOT, White House, Congress, etc.--making accountability 
and authority ``too diffused to run a 24 hour-a-day, high technology, 
rapidly changing operating system for a major commercial industry''. 
That is unlikely to change if air traffic control remains part of FAA. 
By being a standalone entity, regardless if a government corporation or 
a nonprofit organization model is selected, the air traffic control 
provider will have the ability to focus on its core mission of 
providing safe, efficient, and cost-effective, air traffic control to 
commercial airlines, as well as business and general aviation, instead 
of having to dedicate a significant portion of its resources to please 
all these ``cooks''.

    Question 5. Approximately how long might the transition to a new 
air traffic control model take? What are some of the lessons learned 
from the transition experience in other countries around the world to 
ensure smooth and seamless transition?
    Answer. How the transition takes place and how long it takes must 
be negotiated between the different parties involved, including the new 
provider, the FAA, and Congress. Three things that should be thoroughly 
considered beforehand are 1) whether the FAA has a safety regulation 
structure in place to effectively oversee the safety of the safety, 2) 
how to transition from financing from the Airport and Airway Trust Fund 
to user fees (in Canada, for example, user fees were imposed after two 
years), and 3) how employees are moved from Federal workers to the new 
entity.
    Lessons from other countries show us that we need to ensure that 
all relevant parties are involved in the transition process. Everyone 
will have different expectations as to what the system should look like 
after it is created. That is why the stakeholder involvement we propose 
for the governance of the system is so important. By having users 
governing the system, the transition can be made smoother.
    For example, in the Eno NextGen Working Group Final Report we 
discuss the case of Canada. In this case, the main transition issues 
identified regarded the culture change required of the management cadre 
inherited from government and in the high wage expectations of certain 
labor groups. The first issue resulted from differences in the new 
corporate culture at NAV CANADA, which as an independent company was 
different from the government institution it replaced. Negotiated 
retirements and layoffs, along with the ability for some employees to 
return to the public sector, helped ameliorate this problem. As for the 
demand for salary increases, this was a result of a number of years 
without them under Transport Canada, the government agency that was 
responsible for air traffic control, much like the FAA is today in the 
United States. In fact, one of the reasons unions were in support of 
the move to a non-profit model was because their salaries had been 
frozen for a number of years. When NAV CANADA was created, unions began 
demanding salary increases to make up for those years. The good 
financial situation of NAV CANADA following its creation allowed for 
deals to eventually be reached with the unions.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Deb Fischer to 
                           Hon. Byron Dorgan
    Question 1. I have read the concerns expressed by the general 
aviation community regarding ``commercialization'' or ``privatization'' 
of the air traffic control (ATC) system. Do you believe there is a way 
for us to reform this system to ensure safety, efficiency, and 
innovation, while protecting the concerns of general aviation?
    Answer. Yes, I do believe that is possible. First of all, both the 
Federal Government and general aviation will play a role in the 
governance of the air traffic control provider, protecting the public 
interest, namely of those communities where general aviation is 
essential. As we envision a governance system where no single 
stakeholder will have the majority, the presence of general aviation 
and the Federal Government will help shape the development of the air 
traffic control system going forward. The FAA and Congress could also 
intervene, where necessary, by regulating the air traffic control 
provider and mandating certain minimum requirements of operation that 
it must comply with.
    Moreover, an independent air traffic control provider would likely 
be better suited to offer new technologies that would increase services 
available to general aviation users. For example, the independent 
Swedish air traffic control provider is already operating ``remote 
towers,'' where a tower in an airport control traffic in more than one 
airport, using high-definition cameras and other technologies to offer 
these services remotely. The Irish and German systems have also 
recently awarded contracts to implement remote towers in their 
countries. This technology allows air traffic control services to be 
offered where it would otherwise be uneconomical to offer them 
(hundreds of airports around the Nation do not have any sort of air 
traffic control built on site). The FAA is testing this technology in 
Virginia in a pilot project, but many of these types of FAA pilot 
projects never leave the prototype stage, either because the FAA lacks 
the resources or the nimbleness to implement them. With an independent 
provider, it is more likely that such innovations could be offered that 
could ultimately expand services available to smaller and rural 
communities.

    Question 2. Senator, in your written testimony you compared the 
FAA's ATC system to the Federal Railroad Administration, noting that 
the FRA does not provide dispatching services for freight and passenger 
trains, but has a core mission of focusing on safety. Could you explain 
how, not only efficiency and innovation, but most importantly the 
mission of safety might be compromised due to our current ATC system?
    Answer. First of all, we have to thank the men and women at the FAA 
that made the current national airspace system the safest in the world. 
This is a tremendous achievement that should never be downplayed. 
However, we should not rest on our laurels, we should make sure that we 
are able to maintain and improve these amazing levels of safety going 
forward.
    One way in which other countries have done so is by separating the 
provision of air traffic control from its safety regulation. This has 
shown to improve accountability, eliminate conflicts of interest by 
having the same entity regulating itself, allowing both the provider 
and the safety regulator to focus on their core mission. In fact, ICAO, 
the UN agency for international aviation, has, since the early 2000s, 
recommended this functional separation as a way to improve safety 
outcomes. A recent study commissioned by the FAA and produced by MITRE, 
concluded that ``the separation of the [ATC provider] from the CAA 
[Civil Aviation Authority] was reasonably successful'' and that ``MITRE 
did not discover any views that the system prior to separation was 
preferred.'' An increased focus on safety, from both regulator and the 
ATC provider, was found to be one benefit that the separation provided. 
By creating a standalone ATC provider, while retaining the FAA as the 
safety regulator, we would be achieving this very important goal of 
separating these two functions.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Bill Nelson to 
                           Hon. Byron Dorgan
    Question 1. Would a non-governmental air traffic control provider 
ensure that there is continued service and access to small communities 
and rural areas?
    Answer. Under all circumstances, any air traffic control structure 
in the U.S. would need the Federal Government to play a role in the 
governance of the air traffic control provider. The Federal Government 
has and will continue to have a role as the guarantor of the public 
interest. As such, such critical decisions as removing service from 
certain communities would most likely have to be made with agreement of 
the Federal Government. The FAA and Congress could also intervene, 
where necessary, by regulating the air traffic control provider and 
mandating certain minimum requirements of operation that it must comply 
with.
    Moreover, an independent air traffic control provider would likely 
be better suited to offer new technologies that would increase service 
in small communities. For example, the independent Swedish air traffic 
control provider is already operating ``remote towers'', where a tower 
in an airport control traffic in more than one airport, using high-
definition cameras and other technologies to offer these services 
remotely. The Irish and Germany systems have also recently awarded 
contracts to implement remote towers in their countries. This 
technology allows air traffic control services to be offered where it 
would otherwise be uneconomical to offer them (hundreds of airports 
around the Nation do not have any sort of air traffic control built on 
site). The FAA is testing this technology in Virginia in a pilot 
project, but many of these types of FAA pilot projects never leave the 
prototype stage, either because the FAA lacks the resources or the 
nimbleness to implement them. With an independent provider, it is more 
likely that such innovations could be offered that could ultimately 
expand access to smaller and rural communities.

    Question 2. The United States has historically treated the airspace 
as a national asset, ensuring access to communities of all sizes and 
all users. Do you believe the air space should continue to be treated 
as a public resource? If so, how would you ensure that all users 
continue to have equal access to the airspace if air navigation service 
resources are no longer allocated by an impartial, governmental entity?
    Answer. We have numerous types of ``public resources'' in this 
country. Few, however, are managed and regulated by government 
entities. Most essential public resources, such as water, 
communications, or electricity, are managed and put into the market by 
private entities. Governments regulate these providers to ensure access 
to communities of all sizes and users. The national airspace is one of 
the few public resources that is not only regulated by the government, 
but also managed by government--with the very same entity both 
regulating and managing operation. This is highly unusual in this 
country and around the world.
    A non-governmental national airspace provider would continue to be 
regulated by the government to ensure access to airspace, which would 
be guaranteed just as it is today; FAA would regulate airmen and 
airplanes, and make the rules to say who can and cannot access the 
airspace. It would also regulate the air traffic control provider, who 
would have to provide the services for anyone that is certified to 
access controlled airspace.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Brian Schatz to 
                           Hon. Byron Dorgan
    Question 1. Currently, air traffic control operations are covered 
by the Airport and Airway Trust Fund plus General Fund appropriations. 
At a minimum, those federally appropriated funds would have to be 
replaced under a privatized or corporatized model. It is not realistic 
to assume that efficiency improvements alone would be enough to make up 
for the loss of these funds, and funds raised through bonds would 
result in debt that would eventually have to be serviced.

    If the air traffic control system is moved to a separate, self-
funding entity, what model would you propose to generate sufficient 
funds to cover the cost of operations?
    Answer. The new provider would be able to fund itself by charging 
airspace users, like airlines, directly. This would replace the current 
system, where the users are not charged directly. Instead, the current 
system is funded by indirect taxes (like the jet fuel tax) and by the 
passengers, who pay the 7.5 percent ticket tax, among others. Some 
Federal funds would still be required to enable the parts of FAA that 
would remain in the Federal Government--everything except the air 
traffic control system--to function. This would include, at a minimum, 
all safety regulation as well as the Airport Improvement Program. 
According to our working group's analysis of air traffic control 
systems around the world, fees levied on airspace users by the new 
provider would be sufficient to cover the costs of the system including 
any debt necessary for future expansion and technology upgrades.
    This move to direct payments would bring a number of benefits. 
First, it would ensure that the air traffic control providers would 
have a stable and predictable funding stream. Second, there will be a 
connection between the cost of providing air traffic control and the 
fees the airlines have to pay. For example, today four airplanes 
carrying 200 people in total might pay as much (depending on the ticket 
prices) to the system as one airplane carrying the same 200 people, but 
naturally the cost to control four airplanes is much higher than 
controlling a single one. By moving into a system where costs are 
aligned with user fees, there is an incentive for efficiency, for both 
the air traffic control provider and the airlines.
    While Eno's working group has not proposed any specifics about the 
user fees, including what amounts should be charged, we do not go into 
this blindly, not is this an experiment. ICAO, the UN agency for 
international aviation, has a set of guidelines for air traffic control 
fees that all developed countries but the U.S. already follow (in fact, 
the U.S. even has similar user fees in the case of overflights, i.e., 
flights that do not land or depart in the U.S., like a Toronto--Mexico 
City flight, e.g). These guidelines state, for example, that any 
charging scheme should be simple, transparent, and equitable among 
airspace users. While ICAO principles must be adapted to the U.S. 
situation and legislation, they offer a starting point for what they 
should look like.

    Question 1a. Would it lead to cuts to air traffic controller costs 
(by reducing salaries, benefits, and pensions), raise user fees, or 
both?
    Answer. We cannot say with certainty what would happen to labor or 
fees. With respect to labor, given increasing instability of 
Congressional funding, there is no guarantee that salaries benefits or 
pensions would not be reduced even if FAA remains under government 
control. However, the experience in Canada has been that, in general, 
the employees of the new non-profit provider have been satisfied with 
the transition and are typically happier working there than they were 
when they were government employees. Regarding fees, experiences in 
other countries have shown us that the independent air traffic control 
providers are better at improving efficiency, namely by adapting new 
technologies faster than governmental entities, allowing fees to be 
kept in check. In the case of Canada, for example, fees are today 5 
percent lower than they were in 2004, while inflation increased by more 
than 20 percent during the same period. Because the new entity is 
governed directly by users of the system, they have a strong incentive 
to keep fees in check and ensure that their employees happy.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                           Jeffery A. Smisek
    Question 1. How does a standalone, commercialized air traffic 
control model address concerns about funding stability, continuity of 
operations, and the confidence among users regarding prospects for 
accelerating NextGen benefits in a way that cannot be achieved by more 
reforms within the government?
    Answer. Chairman Thune, Airlines for America (A4A) does not believe 
the FAA has the best possible governance and funding structure to 
deliver the most efficient and modern air traffic control (ATC) system 
that the American consumers deserve. A government agency funded by 
taxes and subject to the annual budget process comes with far too many 
constraints and uncertainty to efficiently deliver ATC services and 
particularly the NextGen advances that the system requires.
    There is an abundant amount of independent and insightful 
information on FAA's NextGen progress and efforts. In June 2014 the 
Assistant Inspector General for Aviation Audits at the U.S. Department 
of Transportation testified before the Commerce, Science and 
Transportation Committee stating--

        ``Since the effort began almost a decade ago, we [DOT IG] have 
        reported on longstanding challenges and barriers that have 
        limited FAA's progress in delivering NextGen capabilities, such 
        as the Agency's inability to set realistic plans, budgets, and 
        expectations, and clearly identify benefits for stakeholders.''

    In May 2015 the National Academies of Sciences, Engineering and 
Medicine put out a congressionally mandated report on NextGen. A small 
excerpt from that release is below--

        ``The original vision for the Next Generation Air 
        Transportation System is not what is being implemented today, 
        and the Federal Aviation Administration should ``reset 
        expectations'' for the program meant to modernize and transform 
        the national airspace, says a new congressionally mandated 
        report from the National Research Council.

        NextGen, as the system is known, was designed to overhaul the 
        U.S. air transportation system through procedural and 
        technological improvements, including the use of newer 
        technologies such as precision satellite navigation systems and 
        a digital communications infrastructure, to increase capacity, 
        reduce delays, and improve safety. Instead, NextGen today is a 
        set of incremental changes that primarily emphasizes replacing 
        aging equipment and systems. Although progress has provided 
        some new capabilities and a foundation for further evolution, 
        not all parts of the original vision will be achieved in the 
        foreseeable future. The report says that FAA should realign 
        stakeholder expectations by qualifying the early vision in a 
        way that clearly articulates the new realities.''

    Most recently, in August 2015, the U.S. Department of 
Transportation's Office of Inspector General (IG) reported that delays 
and cost overruns continue to plague the FAA's transition to NextGen. 
Focusing on the FAA's deployment of automation tools to optimize 
benefits of performance-based navigation (PBN) the IG report noted 
that, ``FAA has not provided basic support to encourage its use, and 
additional enhancements are still required to further optimize PBN.'' 
The IG also concluded that the FAA is still ``several years away'' from 
deploying new controller technology to manage airport arrivals.
    Recognizing the need to `reset expectations', A4A sought to 
benchmark and do a fact-based assessment of the governance, financial 
and operational performance of the U.S., Canadian and European ATC 
models. A4A's analysis suggests some basic principles for success in 
any Air Navigation Service Provider (ANSP). There must be:

  (1)  Separation of the ATC operations from ATC safety regulation, in 
        which a new, independent ANSP directs ATC operations and future 
        ATC investment decisions, and safety regulation is provided by 
        the Federal Government through a performance-based oversight 
        system;

  (2)  Independent, multi-stakeholder board governance free from 
        political influence over decision-making;

  (3)  A professional, effective management team of the ATC provider, 
        incentivized to pursue safety and efficiencies without the 
        constraints imposed on government agencies that hamper their 
        ability to manage more nimbly and effectively;

  (4)  A fair, self-funding user fee model based on the cost of ATC 
        services allowing for access to capital markets and a steady, 
        predictable and reliable stream of funding that is not subject 
        to governmental budgetary constraints such as those that have 
        recently resulted in sequester and furloughs of air traffic 
        controllers;

  (5)  The ability to manage assets and capital investments in a way 
        that enables far greater speed to market of technological 
        modernization; and

  (6)  Transparency in user fees so that users and their customers 
        alike know what they are paying, allowing users full ability to 
        recover costs.

    These success factors would lead to an effective operation because 
an independent ANSP would then operate with long-term funding and 
governance certainty, subject of course to strong safety regulation and 
oversight by the FAA. This new ANSP organization would be accountable 
to stakeholders and users of the system, driving effective decision 
making, long-term investments and efficient operations to capture the 
full benefits of the ATC system. Based on our analysis and the 
principles noted above, it is A4A's position that a nongovernmental, 
nonprofit type governance structure for air traffic control--with the 
FAA retaining the role of safety regulator--would deliver the greatest 
benefits for a reformed ANSP because such a structure would continue to 
put safety first, while driving value for all stakeholders, including 
the traveling public.
    Recent events have made clear that the current ATC system, while 
safe, is not without its own operational vulnerabilities that can lead 
to public failures. In late 2014, a fire set by a contract worker at 
the Federal Chicago Air Route Traffic Control Center snarled flights in 
the Midwest for an extended period of time. In August 2015, a glitch in 
a software upgrade at an FAA facility in Leesburg, VA canceled and 
delayed hundreds of flights throughout the Washington, D.C. 
metropolitan region.
    The risk of doing nothing is high and working within the existing 
governmental system will not yield the necessary changes needed to 
modernize the U.S. ATC system. We cannot afford the status quo of a 
safe system that does not meet the ever growing and changing demands of 
our diverse aviation system. By following the principles described 
above we can achieve a U.S. ATC system that is both incredibly safe and 
greatly more efficient.

    Question 2. One goal of efforts to modernize the air traffic 
control system has been to leverage technology to consolidate aging and 
costly air traffic control facilities. What are some of the 
efficiencies that you would expect a corporatized air navigation 
service provider would be able to achieve with respect to facility 
consolidation versus a government provider?
    Answer. Predicting or forecasting specific changes to the system at 
this time is nearly impossible. A4A proposes that there be a two-year 
moratorium on significant changes to service levels after a new ANSP 
assumes responsibility for ATC. The new ANSP will need to initially 
work through transition issues and develop a day-to-day understanding 
of all the assets.
    In the longer-term, for any assets owned by the ANSP, the entity 
should have the ability to dispose, replace or consolidate those assets 
as appropriate to deliver more effective and efficient services without 
politically driven restrictions. However, the FAA should retain safety 
oversight to review the ANSP's safety assessment of any proposed 
changes and should have the ability to intervene for safety reasons 
only. There should also be a notice and comment process for any 
facility closure or significant changes in service level, and facility 
realignment should be undertaken through a data-driven process in 
collaboration with the ANSP's labor unions.

    Question 3. Among the international Air Navigation Service 
Providers that you have examined, were any going through a 
modernization effort similar to NextGen when they were separated from 
the safety regulator? How, if at all, would a transition to a new air 
traffic control governance model impact NextGen implementation?
    Answer. A4A is advocating for an entirely new U.S. ANSP that takes 
the best attributes of established international models and effectively 
adapts them to create an ANSP that works for the complex U.S. system 
and its unique operating environment.
    Directly comparing this undertaking to another country's experience 
creates an ``apples to oranges'' scenario. However, there are 
international examples of complex airspace with a diverse set of users 
where ATC reform has been successful, and the sector-based approach to 
air traffic control, coupled with the use of modern technology, make 
the business inherently scalable.
    Please see answer to Question 1 for NextGen implementation 
information.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Deb Fischer to 
                           Jeffery A. Smisek
    Question 1. I have read the concerns expressed by the general 
aviation community regarding ``commercialization'' or ``privatization'' 
of the air traffic control (ATC) system. Do you believe there is a way 
for us to reform this system to ensure safety, efficiency, and 
innovation, while protecting the concerns of general aviation?
    Answer. Yes. It is the A4A position that a nongovernmental, 
nonprofit governance structure for air traffic control--with the FAA 
retaining the role of safety regulator--would deliver the greatest 
benefits for a reformed ANSP because such a structure would continue to 
put safety first, while driving value for all stakeholders, including 
general aviation and the traveling public. A more modern and 
efficiently run entity making decisions that benefit and are 
accountable to the users of the system will benefit all stakeholders.

    Question 2. As the CEO of a major airline, can you please provide 
the committee with some examples of the challenges your company faces 
due to the inability of our current ATC system to keep up with the 
speed of innovation by private airlines? Can you also provide examples 
of how business is enhanced by private sector-oriented ATC systems in 
other nations?
    Answer. From United's perspective, the best example I can give is 
that when I started in the industry in the mid-1990s, a flight from 
Reagan National to our hub in Newark was booked for 54 minutes. Now 
that same flight is booked for 84 minutes to account for delays 
resulting from our antiquated air ATC system. Airlines and our 
customers have also recently been plagued by major failings of the 
government-run ATC system. For example, in late 2014 a fire set by a 
contract worker at the Federal Chicago Air Route Traffic Control Center 
snarled flights in the Midwest for an extended period of time. In 
August 2015, a glitch in a software upgrade at an FAA facility in 
Leesburg, VA canceled and delayed hundreds of flights throughout the 
Washington, DC metropolitan region.
    It is the A4A position that a nongovernmental, nonprofit type 
governance structure for air traffic control--with the FAA retaining 
the role of safety regulator--would deliver the greatest benefits for a 
reformed ANSP because such a structure would continue to put safety 
first, while driving value for all stakeholders, including general 
aviation and the traveling public. A more modern and efficiently run 
entity making decisions that benefit and are accountable to the users 
of the system will benefit all stakeholders.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Bill Nelson to 
                           Jeffery A. Smisek
    Question 1. How would a non-governmental air traffic control 
provider ensure that there is continued service and access to small 
communities and rural areas?
    Answer. United Airlines, like most carriers serves small 
communities and rural areas. Passengers and revenue from these 
communities help sustain our service networks, so we are committed to 
seeing this service continue as part of transformational reform. Making 
the air traffic control (ATC) system more efficient will make the 
entire U.S. aviation system healthier. In turn, when the system is 
healthy, airlines do well, and when airlines are doing well, we invest 
in our people, products and new service. Fixing the system will 
transform how we operate today. We believe that will be a plus for 
smaller communities.

    Question 2. The United States has historically treated the airspace 
as a national asset, ensuring access to communities of all sizes and 
all users. Do you believe the air space should continue to be treated 
as a public resource? If so, how would you ensure that all users 
continue to have equal access to the airspace if air navigation service 
resources are no longer allocated by an impartial, governmental entity?
    Answer. An ATC system that is responsive to the users of the system 
is good for all stakeholders and most importantly the traveling public. 
A primary advantage of ATC reform is the opportunity for the ATC 
organization to provide services that are more focused and responsive 
to the wide cross-section of system users. Specifically, any new air 
navigation service provider should be run by a Board of Directors 
nominated by entities that represent various stakeholders. A well-
functioning Board of Directors with consultation from all users is 
critical to the success of any new ANSP.

    Question 3. In your testimony on behalf of Airlines for America, 
you indicate that the airline industry believes fundamental reform is 
necessary. But your written statement specifically notes that Delta Air 
Lines is not represented by your testimony. Further, Delta submitted 
extensive comments for the record, outlining significant concerns about 
the negative consequences that would result from wholesale removal of 
Air Traffic Control from the FAA. Can you explain the significant 
difference of opinion among our country's largest airlines?
    Answer. The majority of A4A's members support transformational 
reform.

    Question 4. In the past, airlines have disagreed over the tax 
structure applicable to the industry. Most notably, a major battle 
erupted in the mid-1990s as legacy airlines sought to shift costs to 
low cost carriers through tax changes. In the wake of the September 11 
attacks, airlines disagreed about the amount and structure of the new 
security fee imposed to fund the TSA and other security initiatives. A 
new system of user fees is likely to be imposed if air traffic control 
is privatized. How can we be assured the airlines will avoid the ugly 
disagreements of the past?
    Answer. The majority of A4A's members now support transformational 
reform and recommend that the new ANSP's Board of Directors establish 
fees under a charging structure that is consistent with well-
established international models and International Civil Aviation 
Organization (ICAO) charging principles.

    Question 5. The operations of cargo airlines differ substantially 
from those of passenger airlines. They have different needs and impose 
a different burden on the air traffic control system, largely because 
most cargo airlines operate during nighttime hours. Likewise, cargo 
airlines support the costs of the system with unique taxes on air 
cargo. Do cargo airlines endorse the position to which you have 
testified here today? Do they agree that fundamental change is 
necessary--likely including a new system of user fees?
    Answer. The majority of A4A's members support transformational 
reform and recommend that the new ANSP's Board of Directors establish 
fees under a charging structure that is consistent with well-
established international models and International Civil Aviation 
Organization (ICAO) charging principles.
                                 ______
                                 
 Response to Written Question Submitted by Hon. Richard Blumenthal to 
                           Jeffery A. Smisek
    Question. I am a proud sponsor of S. 911, the Saracini Aviation 
Safety Act of 2015, which would require airlines to install secondary 
barriers on most commercial aircraft. These barriers would prevent 
access to the flight deck of the aircraft. The legislation is named in 
honor of Victor J. Saracini, a pilot killed when terrorists hijacked 
United Flight 175 on September 11, 2001. The FAA has encouraged and 
issued guidance on secondary barriers, but the FAA has not mandated 
their installation. What steps has United Airlines taken to install 
secondary barriers? Would those efforts prevent the type of hijacking 
we saw on United Flight 175?
    Answer. We oppose Federal legislation to mandate secondary barriers 
on commercial aircraft. The U.S. airline industry remains committed to 
a multi-layered, dynamic and risk-based security system. Prior to the 
installation of fortified cockpit doors after 9/11, United Airlines 
voluntarily installed secondary barriers on some of our aircraft, 
however United and the industry believe that the decision about whether 
to install secondary barriers should be left to individual carriers. 
Resources spent to provide additional security for our passengers and 
crew should be dedicated based on areas of highest risk and in 
accordance with a multi-layered, dynamic approach to security.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Brian Schatz to 
                           Jeffery A. Smisek
    Question 1. Currently, air traffic control operations are covered 
by the Airport and Airway Trust Fund plus General Fund appropriations. 
At a minimum, those federally appropriated funds would have to be 
replaced under a privatized or corporatized model. It is not realistic 
to assume that efficiency improvements alone would be enough to make up 
for the loss of these funds, and funds raised through bonds would 
result in debt that would eventually have to be serviced.
    If the air traffic control system is moved to a separate, self-
funding entity, what model would you propose to generate sufficient 
funds to cover the cost of operations?
    Answer. A4A recommends that the new ANSP's Board of Directors 
establish fees under a charging structure that is consistent with well-
established international models and International Civil Aviation 
Organization (ICAO) charging principles to pay for the operations of 
the new ANSP.

    Question 1a. Would it lead to cuts to air traffic controller costs 
(by reducing salaries, benefits, and pensions), raise user fees, or 
both?
    Answer. Employees transferred to the new ANSP should be ``held 
harmless'' financially in the transfer. Compensation and benefits, 
including accumulated pension benefits, should remain the same and 
carry over, intact, to the new organization. Existing labor union 
representation and collective bargaining agreements should carry over 
to the new ANSP, with an arbitration process to resolve modifications 
necessary to account for the new ANSP being a commercial entity rather 
than a government agency.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Cory Booker to 
                           Jeffery A. Smisek
    Question. Your written testimony advocates for transformational 
reform of the air traffic control system and acknowledges that the 
Congressional process to achieve transformational reform is complex 
with lots of business risks. If Congress were to embrace some form of 
transformational reform, how would this impact the regular air traveler 
at Newark Liberty Airport, for instance? Will they notice a difference? 
How long would it take?
    Answer. An ATC system that is responsive to the users of the system 
is good for all stakeholders and the traveling public especially those 
traveling through large hub airports like Newark. We have the safest 
ATC system in the world. We should also be striving to be the most 
efficient and most modern. General agreement has existed for years that 
we cannot continue to run the ATC system the same way as it has been 
since the 1950s and expect different results. A string of reports from 
presidentially appointed aviation commissions, the Department of 
Transportation Inspector General, the Government Accountability Office 
and independent private sector experts indicates that the FAA's ATC 
modernization efforts have been plagued by significant cost overruns 
and delays and call into question the ability of the FAA, under the 
existing funding and governance structure, to deliver the results that 
travelers, operators and the general public in the United States 
require.
    The best example I can give is that when I started in the industry 
in the mid-1990s, a flight from Reagan National to Newark was booked 
for 54 minutes. Now that same flight is booked for 84 minutes to 
account for delays resulting from our antiquated air ATC system. A more 
efficient system will benefit all travelers including those at large 
hub airports like Newark.
    We recommend a four year transition process that involves 
stakeholders working with the USG to ensure a safe and efficient 
transition, with the least disruption possible being the guiding 
principle.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Deb Fischer to 
                            Paul M. Rinaldi
    Question. I have read the concerns expressed by the general 
aviation community regarding ``commercialization'' or ``privatization'' 
of the air traffic control (ATC) system. Do you believe there is a way 
for us to reform this system to ensure safety, efficiency, and 
innovation, while protecting the concerns of general aviation?
    Answer. Many foreign nations have successfully separated the 
operation and regulation of their aviation system into an air 
navigations service provider and a civil aviation administration 
respectively. In September 2015, the DOT Inspector General did a report 
comparing the systems in the Canada, United Kingdom, Germany, and 
France. Report No. AV-2015-084. Citing a MITRE Study commissioned by 
the FAA, dated October 2014, the DOT IG wrote, ``Studies we reviewed, 
including a recent report commissioned by the FAA, indicated that 
separating air navigation and safety/regulatory functions has not 
impacted safety.'' The DOT IG noted that the United States has the 
largest, most complex air transportation system in the world and has 
the most operations and a larger general aviation community than any of 
the foreign ANSPs. Any reform must preserve that size, complexity, and 
diversity. General aviation can continue to thrive in a new system as 
long as it ensures that there are no new financial barriers for non-
commercial flight and flight schools and by ensuring that we maintain 
the current first come, first served model rather than a best equipped, 
best served model.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Bill Nelson to 
                            Paul M. Rinaldi
    Question. At the hearing you seemed to express openness to 
restructuring the current ATC system along the lines of the private, 
not-for-profit, NavCanada model. After NavCanada split off from the 
government agency Transport Canada, new air traffic control hires were 
no longer provided the same benefits package that existing air traffic 
controllers received, instead receiving a weaker pension. In the 
aviation world, airlines have negotiated these so-called ``B Scales'' 
for a number of their employee unions, with fewer benefits provided for 
new workers. Are NATCA members and leadership concerned that 
privatizing the air traffic control will lead to the creation of a two 
tiered benefit system for controllers?
    Answer. NATCA is concerned about the possibility of reduced pay and 
benefits in a reform plan that would take air traffic control 
operations outside of the Federal Government. But, we are confident 
that H.R. 4441 provides for very strong protections for employee 
rights, pay, and benefits, as well as union rights to negotiate over 
wages, hours, and other terms and conditions of employment, including 
benefits. In order for NATCA to support any reform it must contain 
protections for employees and collective bargaining. Ranking Member 
DeFazio praised the labor code in the Chairman's bill as extremely 
workforce friendly.
    Specifically, H.R. 4441 provides that employees on the date of 
transfer would have the option of retaining their Federal employee 
retirement plan (either Civil Service Retirement System or Federal 
Employee Retirement System, as currently applicable) and Federal 
Employee Health Benefit Plan. The employer would be required to pay the 
government's share to both programs and employees would receive credit 
for service with the corporation toward their retirement calculation. A 
new plan for the employer would be subject to negotiations and if NATCA 
and the employer could not reach agreement it would be subject to 
mediation and ultimately binding third-party arbitration, the same way 
other subjects of bargaining would be resolved under the bill's 
provisions. We are confident that under this system we would be able to 
successfully negotiate fair pay and benefits for our membership, both 
current and future.
    Presently, Federal employees are subject to an A-scale, B-scale, C-
scale, and D-scale for the purposes of retirement, if you consider the 
A-scale CSRS, B-scale FERS, C-scale FERS-RAE, and D-scale FERS-FRAE. 
This does not include CSRS-offset or other even smaller pools of 
retirement programs. When these plans changed there was no duty to 
bargain nor binding arbitration; employees and their representatives 
were not part of the process, yet each provided for higher employee 
contributions and/or reduced benefits.
    Under the Canadian system, the A-scale provides for a higher 
pension calculation, but a significant employee contribution. While the 
B-scale provides for a lower pension calculation, it also includes a 
100 percent employer funded contribution, saving employees 
approximately 9 percent that they had previously had to contribute to 
their own retirement. It is definitely not a clear-cut case of reduced 
benefits, if employees contribute that 9 percent to a personal 
retirement-investment account, even though the pension calculation 
itself is lower.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Brian Schatz to 
                            Paul M. Rinaldi
    Question 1. As you mentioned in your testimony, increasing hiring 
efforts this year and next year will not make up for the attrition in 
the air traffic controller workforce since 2013, unless training and 
placement processes are made a higher priority.
    In the context of FAA reauthorization, what will be required to 
ensure facilities are adequately staffed with people who have the 
necessary levels of experience?
    Answer. NATCA has consistently stated that the status quo is 
unacceptable when it comes to funding and air traffic controller 
staffing. There are many reasons that controller staffing has reached 
crisis level and, as a result, NATCA believes that the FAA must take a 
holistic, collaborative approach to resolve its critical staffing 
issues. The first step is for Congress to pass an FAA Reauthorization 
bill that provides for the kind of stable, predicable funding that is 
necessary.
    As for short-term staffing solutions, one option that NATCA 
supports is the passage of H.R. 5292 (The Air Traffic Controller Hiring 
Improvement Act of 2016), which would help ease some of the FAA's 
hiring and staffing problems. NATCA supports a continuously open 
vacancy announcement and preferential consideration for certified 
controllers with at least 52 consecutive weeks of experience involving 
the active separation of air traffic for the FAA, DOD, within the 
Federal Contract Tower program, and H.R. 5292 provides an avenue for 
such a program. NATCA also supports the reduction and/or removal of the 
bureaucratic red tape that has plagued the FAA's hiring, placement, and 
transfer processes for years.
    In addition to these changes, NATCA supports Congress's adoption of 
the FAA and NATCA's jointly-developed certified professional controller 
(CPC) staffing target numbers as opposed to the FAA's flawed Controller 
Workforce Plan (CWP) staffing numbers, which counts a brand new 
developmental trainee as equal to a 20 year plus veteran CPC when 
measuring facility staffing levels. In essence, the CWP is misleading 
because it uses finance numbers rather than operations numbers for 
assessing the FAA's current staffing situation by lumping together CPCs 
with other controllers who are not yet fully certified. Adopting the 
FAA and NATCA's jointly developed staffing numbers is critical to 
ensure that each facility is staffed with controllers who have the 
necessary levels of experience. Otherwise, it will appear as if the FAA 
has fixed some of its staffing issues in certain critical facilities 
when, in fact, the Agency merely flooded the facility with 
developmental trainees fresh out of the Academy.

    Question 2. Currently, air traffic control operations are covered 
by the Airport and Airway Trust Fund plus General Fund appropriations. 
At a minimum, those federally appropriated funds would have to be 
replaced under a privatized or corporatized model. It is not realistic 
to assume that efficiency improvements alone would be enough to make up 
for the loss of these funds, and funds raised through bonds would 
result in debt that would eventually have to be serviced.

    a. If the air traffic control system is moved to a separate, self-
funding entity, what model would you propose to generate sufficient 
funds to cover the cost of operations?

    b. Would it lead to cuts to air traffic controller costs (by 
reducing salaries, benefits, and pensions), raise user fees, or both?
    Answer. NATCA has made clear that it does not support any one 
particular reform model over another, but that any proposed FAA reform 
model must accomplish the following four things: (1) ensure that 
NATCA's bargaining unit employees are fully protected; (2) retain 
safety and efficiency as top priorities; (3) provide for a stable and 
predictable funding stream that adequately supports air traffic control 
services, staffing, hiring and training, long-term modernization, 
preventative maintenance, and ongoing modernization to infrastructure; 
and (4) maintain a dynamic aviation system that continues to provide 
services to all segments of the aviation community, from commercial 
passenger carriers and cargo haulers to business jets and general 
aviation, at all major airports and small airports in rural areas. In 
its current form, House T&I Committee Chairman Bill Shuster's long-term 
FAA Reauthorization legislation (AIRR Act) addresses these four primary 
issues of concern. The International Civil Aviation Organization (ICAO) 
weight and distance model that has been adopted in most nations would 
provide the backbone for any funding scheme, however NATCA is agnostic 
with regard to applying any particular rates or fees to the different 
segments of the aviation community.
    NATCA does not and would not support any solution to providing 
stable predicable funding that would come at the expense of employee 
salaries, benefits, or pensions. The AIRR Act preserves negotiated 
agreements including pay and benefits, and provides that current 
Federal employees who transfer to the corporation would be eligible to 
remain in the Federal Employee Health Benefit Plan and the Civil 
Service Retirement System or Federal Employee Retirement System, as 
applicable. Employees newly hired by the corporation and transferring 
employees who elect to do so, would participate in plans negotiated by 
NATCA and provided to corporation employees. The protection of current 
employees' benefits and the ability for NATCA to be involved in the 
collective bargaining process to negotiate benefits for corporation 
employees is critical to our support of any reform legislation.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Cory Booker to 
                            Paul M. Rinaldi
    Question. You reference in your written testimony that NavCanada 
had a ``difficult and lengthy transition period.'' From an air traffic 
controllers' perspective, what were the difficulties, how might these 
be exacerbated by the complexity of the U.S. airspace, and how were 
they overcome?
    Answer. In October 2014, MITRE Corp. released a report summarizing 
the governance, autonomy, structure, and funding of the Civil Aviation 
Authority (CAA) in six countries and discussed any lessons learned from 
their separation from the Air Navigation Service Provider (ANSP). The 
study included the United Kingdom, Canada, New Zealand, Australia, 
France, and Germany.
    In the section regarding transition, the study found:

        Three particular lessons learned and associated recommendations 
        were repeatedly expressed: operate the CAA and the ANSP as 
        functionally separate units for a few years prior to complete 
        separation, use that time to develop and review comprehensive 
        written regulations that will form the foundation for the 
        relationship between the CAA and the ANSP, and establish a 
        clear understanding as to the broader division of roles and 
        responsibilities between the CAA and the ANSP.

    Each of these other nations is quite different than the U.S. 
National Airspace System, in terms of size, density, complexity, 
traffic diversity, and other factors, so none of the other nations' 
transitions can be directly comparable. A successful transition will 
require the appropriate amount of time for the regulatory FAA and the 
new air traffic entity to establish appropriate boundaries and 
procedures. When NATCA received a briefing by the MITRE report authors, 
we learned that too short a transition period could actually lead to a 
longer period of time before the new entity and the regulator are 
successful.
    NavCanada's transition was particularly difficult because it was 
required to purchase the air navigation system from the government. To 
do so, the newly formed corporation had to take on considerable debt. 
Then, in the aftermath of the terrorist attacks of September 11, 2001, 
it faced an immediate traffic and revenue decline of 10 percent 
resulting in a C$145 million shortfall in 2002 and an anticipated 
cumulative shortfall of C$360 from 2002-2005, making debt service 
extremely difficult. NavCanada was forced to undergo financial 
restructuring in order to generate cash flow to support operations and 
required capital spending. The AIRR Act does not require the new ATC 
Corporation to purchase the assets from the FAA, which would make the 
transition significantly easier and prevent significant air traffic 
downturns from immediately affecting the corporation's ability to be 
successful.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Deb Fischer to 
                                Ed Bolen
    Question. I have read the concerns expressed by the general 
aviation community regarding ``commercialization'' or ``privatization'' 
of the air traffic control (ATC) system. Do you believe there is a way 
for us to reform this system to ensure safety, efficiency, and 
innovation, while protecting the concerns of general aviation?
    Answer. Our airspace belongs to the American public. It does not 
belong to any private company, or group of companies. It doesn't belong 
to any segment of the aviation industry, or even the aviation industry 
itself. The airspace belongs to the American public, and it should be 
operated for the public's benefit. We stand by our oral and written 
testimonies given and submitted to the Committee on May 19, 2015.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Brian Schatz to 
                                Ed Bolen
    Question 1. Currently, air traffic control operations are covered 
by the Airport and Airway Trust Fund plus General Fund appropriations. 
At a minimum, those federally appropriated funds would have to be 
replaced under a privatized or corporatized model. It is not realistic 
to assume that efficiency improvements alone would be enough to make up 
for the loss of these funds, and funds raised through bonds would 
result in debt that would eventually have to be serviced.
    If the air traffic control system is moved to a separate, self-
funding entity, what model would you propose to generate sufficient 
funds to cover the cost of operations?

    Question 1a. Would it lead to cuts to air traffic controller costs 
(by reducing salaries, benefits, and pensions), raise user fees, or 
both?
    Answer. As you said, in today's system, we have trust fund and 
general fund monies that make up the FAA budget. If you restructure FAA 
and move to a privatized or corporatized model, the general fund money 
goes away. Users are then left with three options to fund the system: 
cut costs; increase taxes, fees and charges for users; or borrow money 
which will increase costs to users since the debt needs to be serviced. 
Sequestration has shown us that cutting costs is difficult and can 
affect service to small and rural communities. Increasing taxes, fees, 
and charges or borrowing money increases costs for the users of the 
system and no stakeholder has said they will pay more.
    As a result, we believe costs will go up for the users and service 
to small, rural and mid-sized communities throughout the country will 
be cut and/or severely decreased.

                                  [all]