    [Senate Hearing 117-777]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 117-777

                            AVIATION INFRASTRUCTURE
                              FOR THE 21ST CENTURY

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

                                    HEARING

                                   before the

          SUBCOMMITTEE ON AVIATION SAFETY, OPERATIONS, AND INNOVATION

                                     of the

                             COMMITTEE ON COMMERCE,
                          SCIENCE, AND TRANSPORTATION
                              UNITED STATES SENATE

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JUNE 23, 2021

                                   __________

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

                     [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                    Available online: http://www.govinfo.gov

                                   ______

                     U.S. GOVERNMENT PUBLISHING OFFICE

    54-181 PDF                WASHINGTON : 2023

           SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 FIRST SESSION

                       MARIA CANTWELL, Washington, Chair

    AMY KLOBUCHAR, Minnesota             ROGER WICKER, Mississippi, Ranking
    RICHARD BLUMENTHAL, Connecticut      JOHN THUNE, South Dakota
    BRIAN SCHATZ, Hawaii                 ROY BLUNT, Missouri
    EDWARD MARKEY, Massachusetts         TED CRUZ, Texas
    GARY PETERS, Michigan                DEB FISCHER, Nebraska
    TAMMY BALDWIN, Wisconsin             JERRY MORAN, Kansas
    TAMMY DUCKWORTH, Illinois            DAN SULLIVAN, Alaska
    JON TESTER, Montana                  MARSHA BLACKBURN, Tennessee
    KYRSTEN SINEMA, Arizona              TODD YOUNG, Indiana
    JACKY ROSEN, Nevada                  MIKE LEE, Utah
    BEN RAY LUJAN, New Mexico            RON JOHNSON, Wisconsin
    JOHN HICKENLOOPER, Colorado          SHELLEY MOORE CAPITO, West
    RAPHAEL WARNOCK, Georgia                 Virginia
                                         RICK SCOTT, Florida
                                         CYNTHIA LUMMIS, Wyoming

                        David Strickland, Staff Director
                     Melissa Porter, Deputy Staff Director
           George Greenwell, Policy Coordinator and Security Manager
                     John Keast, Republican Staff Director
                Crystal Tully, Republican Deputy Staff Director
                          Steven Wall, General Counsel

                                     ------

          SUBCOMMITTEE ON AVIATION SAFETY, OPERATIONS, AND INNOVATION

    KYRSTEN SINEMA, Arizona, Chair       TED CRUZ, Texas, Ranking
    TAMMY DUCKWORTH, Illinois            JOHN THUNE, South Dakota
    JON TESTER, Montana                  ROY BLUNT, Missouri
    JACKY ROSEN, Nevada                  JERRY MORAN, Kansas
    JOHN HICKENLOOPER, Colorado          MIKE LEE, Utah
    RAPHAEL WARNOCK, Georgia             SHELLEY MOORE CAPITO, West
                                             Virginia

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on June 23, 2021....................................     1
    Statement of Senator Sinema......................................     1
    Statement of Senator Cruz........................................    29
    Statement of Senator Rosen.......................................    48

                                   Witnesses

    Danette Bewley, President and CEO, Tucson Airport Authority......     3
        Prepared statement...........................................     5
    Paul Cullen, Vice President of Real Estate, Southwest Airlines...    11
        Prepared statement...........................................    13
    Paul Rinaldi, President, National Air Traffic Controllers
      Association....................................................    15
        Prepared statement...........................................    16
    Dr. Benjamin Miller, The RAND Corporation........................    30
        Prepared statement...........................................    32
    Sean Donohue, CEO, Dallas Fort Worth International Airport.......    41
        Prepared statement...........................................    42

                                    Appendix

    Letter dated June 25, 2021 to Hon. Maria Cantwell, Hon. Roger
      Wicker, Hon. Kyrsten Sinema and Hon. Ted Cruz from Matt
      Atkinson, President, Alaska Air Carriers Association and Jane
      Dale, Executive Director, Alaska Air Carriers Association......    53
    Response to written question submitted by Hon. Tammy Duckworth
      to:
        Danette Bewley...............................................    55
        Paul Cullen..................................................    55
        Sean Donohue.................................................    56

                            AVIATION INFRASTRUCTURE
                              FOR THE 21ST CENTURY

                                  ----------

                            WEDNESDAY, JUNE 23, 2021

                                   U.S. Senate,
      Subcommittee on Aviation Safety, Operations, and
                                            Innovation,
            Committee on Commerce, Science, and Transportation,
                                                        Washington, DC.
        The subcommittee met, pursuant to notice, at 3:16 p.m., in
    room SR-253, Russell Senate Office Building, Hon. Kyrsten
    Sinema, Chairman of the Subcommittee, presiding.
        Present: Senators Sinema [presiding], Rosen, and Cruz.

               OPENING STATEMENT OF HON. KYRSTEN SINEMA,
                       U.S. SENATOR FROM ARIZONA

        Senator Sinema. Welcome to the Senate Subcommittee on
    Aviation Safety, Operations, and Innovation. In our first
    subcommittee hearing, this subcommittee looked at how the U.S.
    aviation system has addressed its most significant challenge in
    many years, COVID-19. To overcome that challenge, we saw all
    aviation stakeholders, including airports, air carriers, labor,
    manufacturers and concessionaires work together with Democrats
    and Republicans to keep our aviation system functioning and
    ready to rebound as we vaccinate Americans from COVID-19.
        As we start to see air travel recover, this subcommittee
    will now turn its focus to aviation infrastructure. Over the
    past month, I have been leading bipartisan negotiations with
    Senator Portman to invest broadly in our Nation's
    infrastructure. Our bipartisan proposal has the support of 21
    Senators, including 10 Democrats and 11 Republicans. As we
    continue to negotiate that package, this is an appropriate time
    for our subcommittee to consider our aviation system and its
    infrastructure needs.
        We have over 3,300 public airports in the United States,
    including 200 just in Arizona. Throughout this vast system, we
    need to ensure that we have the aviation infrastructure to
    remain the world leader on safety, to improve the efficiency of
    air travel, and to modernize air travel for the 21st century.
    Studies on the current state of aviation infrastructure show
    that we need to do better. For example, the American Society of
    Civil Engineers report card on America's infrastructure gave
    our country's aviation structure--infrastructure a D+. And
    other reports have indicated there are over $100 billion of
    aviation infrastructure projects necessary over the coming
    years.
        Before the pandemic, we saw record levels of airline
    passenger traffic, which put pressure on our existing
    infrastructure. This increased demand highlighted the need to
    improve runways and taxiways, terminals and air traffic control
    towers, to prevent overcrowding and delays. While COVID
    temporarily decreased passenger traffic, the pandemic set us
    further behind in our efforts to address our aviation
    infrastructure needs. I was proud that the bipartisan Air Act I
    introduced with Senator Fischer was included in the December
    coronavirus relief bill. Our law helped stabilize Federal
    funding for airports during the pandemic.
        But despite congressional relief efforts, the abrupt
    collapse of passenger traffic cut off many airport resources
    and halted or delayed many projects scheduled to begin last
    year. As passenger traffic rebounds, we will again see the
    concerns associated with increased demand for passenger and
    cargo flights. To address these concerns, we have to understand
    what improvements are needed for our tarmac, terminals, and
    towers, whether the structure to help pay for these
    improvements needs to be revised, and how to ensure that all
    airports can meet their needs regardless of whether they serve
    a city like Tucson or smaller communities like Tombstone or
    Tuba City.
        Additionally, Congress should consider other options to
    encourage aviation infrastructure development. For example, I
    just reintroduced, along with Senator Young and Senator Cruz,
    the Expedited Delivery of Airport Infrastructure Act. This
    bipartisan legislation would allow airports to use airport
    improvement program funds to incentivize contractors to finish
    airport construction projects ahead of schedule. Currently,
    airports cannot use AIP funds to incentivize early completion
    of airport projects, even if the early completion would result
    in significant capacity or efficiency gains for the airport.
    Our bill allows airports to use up to $1 million in AIP money
    to incentivize contractors to complete projects early,
    resulting in cost savings and efficiency gains.
        We have an excellent panel joining us today, with
    representatives from airports, air carriers, air traffic
    controllers, and an economist who has studied aviation
    infrastructure to provide the Subcommittee with their testimony
    about how to improve our aviation infrastructure, how to pay
    for those improvements, and how to ensure that the U.S.
    aviation system remains the best in the world. In particular, I
    want to welcome an Arizonan to our panel today, Danette Bewley,
    the President and CEO of the Tucson Airport Authority. I am
    pleased that she is here to describe the infrastructure needs
    at Tucson International Airport, and the comprehensive airfield
    safety enhancement project underway at the airport. Thank you
    all so much for being here today. And I turn the time over to
    Senator Cruz for his opening statement.
        If we are still waiting for Senator Cruz, then what I will
    do is go ahead and introduce our panel and allow Senator Cruz
    to provide his opening statement upon his availability. So I
    would like to now recognize Senator Cantwell, if she is with
    us, for her opening remarks. Alright, we are going to continue
    to wait for Senator Cantwell as well. Senator Wicker--I just
    want to check. Senator Wicker is not with us yet. Great.
        So when they join we will allow them to do their opening
    remarks. And we will move right to our introduction of our
    witnesses. So I will introduce our witnesses for today's
    hearings. Our first witness is Danette Bailey, the President
    and CEO of the Tucson Airport Authority, which operates Tucson
    International Airport and Ryan Airfield. She served as the
    President and CEO of the Airport Authority since 2019, and she
    has over 30 years of experience in airport management.
        Thank you so much for your work and for joining us today.
    And now you are recognized for your opening statement.

    STATEMENT OF DANETTE BEWLEY, PRESIDENT AND CEO, TUCSON AIRPORT
                               AUTHORITY

        Ms. Bewley. Good afternoon, Chair Sinema, Ranking Member
    Cruz, and members of the Subcommittee. Thank you for holding
    this important hearing to examine America's aviation
    infrastructure needs. I think we all agree that America's
    airports are fundamental component of our Nation's
    transportation infrastructure and are essential to our Nation's
    economic success.
        We have a footprint in every community, annually supporting
    $1.4 trillion in economic output and over 11 million jobs. To
    meet the capacity demands of the future with safe, efficient,
    and modern facilities that passengers and cargo shippers
    expect, airports need to make new investments to maintain and
    upgrade their infrastructure. Airport infrastructure suffered
    from chronic underfunding even before the pandemic forced the
    delay or postponement of many planned projects.
        For far too long, instead of investing in larger, higher
    impact projects that would improve facilities and increase
    capacity, airports have been forced to prioritize smaller,
    immediate needs, like maintenance of aging structures and
    systems. Inadequate airport infrastructure that fails to meet
    basic needs puts in jeopardy economic recovery in American
    cities, states, and regions. In addition to creating jobs, new
    investments in airports can be valuable tools in helping local
    communities attract air service, which increases competition
    and leads to lower airfares for passengers.
        Airports Council International North America, the trade
    association representing airports throughout the country,
    released an updated infrastructure needs report detailing the
    more than $115 billion in infrastructure needs over the next 5
    years across the national airport system. Since this survey was
    conducted in the middle of the pandemic, it does not fully
    account for all of the new public health infrastructure
    upgrades airports need to make, such as HVAC improvements,
    physical distancing space near gates, and touchless technology
    to assist passengers through the airport.
        Coupled with the current debt burden of nearly $90 billion
    from past projects, the report shows that our airports are
    falling further behind in their efforts to upgrade their
    facilities and improve the overall experience for their
    customers. We need your help. At Tucson International, we
    support a complex mix of aircraft, including commercial,
    commuter, general aviation, and military. This airport is the
    home of the Arizona Air National Guard's 162nd Wing.
        In addition to providing national security, the Wing trains
    our allied nation partners in the F-16 aircraft. To safely
    support the needs of our many operators and meet current FAA
    safety and standards, the TAA broke ground last fall on the
    Airfield Safety Enhancement Project. That groundbreaking,
    however, was a product of years of planning and preparation and
    only a small step forward in the overall project. The $330
    million project in today's dollars took nearly a decade to
    clear Federal hurdles, including a planning study, EIS process,
    record of decision, and multiparty negotiations with a myriad
    of stakeholders.
        This is one of several multimillion dollar infrastructures
    that the TAA has on its list. However, without a committed and
    reliable stream of Federal funding that is delivered
    efficiently, it will be years before we can accomplish these
    essential projects. As you know, airports are economic engines
    for their respective communities. Small and medium hub airports
    feed the national aviation system and serve the needs of
    millions of travelers each year.
        Unfortunately, many small and medium hub airports have
    infrastructure that has long outlived their useful life spans
    and are now operating in a rent to fail mode because they lack
    reliable sources and streams of funding. Terminal improvements
    at large hub airports through which many of our passengers
    connect also helps smaller airports become--because greater
    capacity at those hubs allows for greater service to smaller
    communities. If the hubs are constrained, incumbent carriers
    will maximize profit on routes between large cities and new
    entrants will not be able to access the market.
        These market distortions drive up airfares and reduce
    flight choices for consumers. Implementing the following policy
    recommendations for infrastructure legislation will help
    airports pay for their growing list of capital projects, as
    well as support jobs, stimulate local economies, and prepare
    for rising passenger levels in the recovery ahead. Provide
    direct funding, Federal funding for airport infrastructure
    projects by providing at least $50 billion in new funding over
    the next 5 years for all sized airports. That includes broad
    flexibility to allow for a variety of needed projects.
        Direct Federal investment in this period of economic
    recovery would help airports pay for the growing list of
    capital projects while other funding sources remain
    constrained. Modernize the outdated Federal cap on airport
    local user fees by considering a gradual phased in approach
    that would restore the original purchasing power of the $4.50
    PFC. To that end, bipartisan legislation has been introduced in
    the House that starting in 2023 would allow airports to
    increase the PFC by $1 annually for 4 years and then index it
    annually for inflation.
        This would provide America's airports a long term, locally
    controlled, and reliable funding source to maintain and upgrade
    their aging facilities and remain competitive. Help airports
    finance critical infrastructure projects by allowing airports
    to continue to finance critical infrastructure projects with
    tax exempt municipal bonds and private activity bonds and
    eliminate the alternative minimum tax penalty on airport
    private activity bonds.
        Expand the Transportation Infrastructure, Finance and
    Innovation Act for airport development projects. Exclude
    airport private activity bonds--funds completely from the
    alternative minimum tax. Reinstate advanced re-funding on all
    municipal bonds, including private activity bonds. Restore the
    interest exemption for banks investing in airports. And support
    and fund the contract tower program. TAA and the Nation's
    airports are in critical need of infrastructure funding.
        On behalf of the TAA and our great Nation's airports, thank
    you for inviting me to speak today about airport infrastructure
    needs. Your support is appreciated. Thank you.
        [The prepared statement of Ms. Bewley follows:]

           Prepared Statement of Danette Bewley, President and CEO,
                            Tucson Airport Authority
        Chair Sinema, Ranking Member Cruz, and members of the subcommittee,
    thank you for holding this important hearing to examine America's
    aviation infrastructure needs. I am Danette Bewley, President and CEO
    of the Tucson Airport Authority. The TAA operates Tucson International
    Airport (TUS), the region's major commercial airport, and Ryan Airfield
    (RYN), a general aviation airport west of Tucson. Our authority is a
    unique nonprofit created and developed by community business leaders
    and established by Arizona state charter in 1948.
    Airports Can Build the Runway to Economic Recovery and Growth
        As we have demonstrated in Tucson, America's airports are a
    fundamental component of our Nation's transportation infrastructure and
    are essential to our Nation's economic success. We have a footprint in
    every community, annually supporting $1.4 trillion in economic output
    and 11.5 million jobs. To meet the capacity demands of the future with
    safe, efficient, and modern facilities that passengers and cargo
    shippers expect, airports need to make new investments to maintain and
    upgrade their infrastructure.
        Airport infrastructure suffered from chronic underfunding even
    before the steep decline in air travelers and airport revenue during
    the COVID-19 pandemic forced the delay or postponement of many planned
    projects. For too long instead of investing in larger, higher-impact
    projects that would improve facilities and increase capacity, airports
    have been forced to prioritize smaller, immediate needs like
    maintenance of aging structures and systems.
        Inadequate airport infrastructure that fails to meet the growing
    needs of local businesses and tourists puts in jeopardy economic
    recovery in American cities, states, and regions. In addition to
    creating jobs, new investments in airports can be valuable tools in
    helping local communities attract air service, which increases
    competition and leads to lower airfares for passengers. Airports need
    additional resources to build the terminals, gates, runways, and ramps
    necessary to attract new air carriers and entice existing ones to
    expand service. The traveling public gets more choices and lower
    airfares when airports can build the facilities that provide more
    airline options and more service alternatives.
    Airports Continue to Face Substantial Infrastructure Needs
        As travelers begin to return to America's airports, one thing has
    not changed: our airports continue to face substantial infrastructure
    needs. In March, Airports Council International--North America (ACI-
    NA), the trade association representing airports throughout the
    country, release an updated infrastructure needs report detailing the
    more than $115 billion in infrastructure needs over the next five-year
    across the national airport system. Since this survey was conducted in
    the middle of the pandemic last summer, it does not fully account for
    all the new public-health infrastructure upgrades airports need to
    make, such as HVAC improvements, physical distancing space near gates,
    and touchless technology to assist passengers through the airport.
    Coupled with a current debt burden of nearly $90 billion from past
    projects, the report shows that our airports are falling further behind
    in their efforts to upgrade their facilities and improve the overall
    experience for their customers.
    Tucson International Airport (TUS) Infrastructure Projects
        Tucson International Airport (TUS) supports a complex mix of
    aircraft: commercial air carrier, commuter, general aviation, and
    military. TUS is the home of the Arizona Air National Guard 162nd Wing.
    In addition to providing national security, the Wing trains our allied
    nations in the F-16 aircraft.

            Airfield Safety Enhancement Project

            To safely support the needs of our many operators and meet
            current FAA safety and standards, the TAA broke ground on the
            largest project in its history last fall. That groundbreaking,
            however, was a product of years of planning and preparation,
            and only a small step forward in the overall project. The
            Airport Safety Enhancement Project, an approximate $330M
            project (in todays' dollars), took nearly a decade to clear
            Federal hurdles, including a Planning Study, Environmental
            Impact Statement (EIS) and Record of Decision (ROD), and multi-
            party negotiations with a myriad of stakeholders.

            The project was born out of the exceptionally high number of
            runway incursions, wrong surface landings and pilot deviations
            due to confusion in various areas, referred to as ``hot
            spots,'' which compromise the safety of all operators and
            users, and have the potential to cause loss of life. To
            mitigate these issues, the project includes bringing portions
            of the airfield up to current FAA safety standards. In essence,
            the project will demolish and relocate a parallel runway (to
            ensure adequate safety separation between the two parallel
            runways), add a center taxiway between the parallel runways for
            added safety, and adds new taxiways to support the new airfield
            layout and infrastructure. Successful completion of this
            project is contingent on a committed source and steady stream
            of Federal funding that will allow the project to proceed
            efficiently and minimizes excessive project costs that come
            with a longer, multi-year process. As you know, time is money.
            Optimally, our plan is to complete this essential safety and
            infrastructure project within 4-6 years. That timing is
            entirely dependent on Federal funding. This is an aggressive
            schedule; however, safety is paramount.

            Terminal Infrastructure

                    Integrated In-Line Explosive Detection System

                    The Tucson Airport Authority is engaged in a Terminal
                    Study to outline a phased approach to improve the
                    terminal to meet the long-term needs at TUS. The first
                    phase of work includes the construction of an
                    Integrated In-Line Explosive Detection System (security
                    screening for passenger checked baggage) to replace
                    five (5) outdated, disconnected and undersized pods
                    that the TSA utilize. The existing stand-alone system
                    is outdated, and because of its' age has multiple
                    points of failure that require regular heavy
                    maintenance. In addition, the system forces the TSA to
                    staff these individual areas, which is an inefficient
                    use of labor resources. The new Integrated In-Line
                    Explosive Detection System will provide an updated and
                    efficient approach to checked baggage security
                    screening and decrease TSA labor costs. The cost for
                    this project will not be determined until the study is
                    complete. However, without available infrastructure
                    funding it could be years before the TAA can invest in
                    this essential security project.

                    Concourse Expansion

                    To meet passenger growth and demand, future phases of
                    terminal improvements require concourse expansions to
                    both Concourse A and Concourse B at TUS. This includes,
                    and is not limited to, gate additions with appropriate
                    hold room space to meet capacity demand and airline
                    fleet requirements (aircraft size), concessions space
                    to provide passengers with expected amenities and allow
                    the airport with a source of revenue generation,
                    airline support space, etc. The cost for expansion will
                    not be determined until the study is complete. However,
                    without available infrastructure funding it could be
                    years before the TAA can invest in this essential
                    capacity project.

            Landside

            The TAA is a stakeholder in a Transit Study underway by the
            City of Tucson. The project will evaluate ways to improve
            multi-modal access between downtown Tucson and TUS through Bus
            Rapid Transit or Light Rail. The TAA will need to plan and
            construct a transit center close to the terminal. Cost
            estimates are not yet available. However, without available
            infrastructure funding it could be years before the TAA can
            invest in this multi-modal project.

            Cargo Infrastructure

            A result of the COVID-19 pandemic is a significant increase in
            air cargo traffic at TUS (and nationwide). TUS is in the
            planning stage for additional Cargo Apron space (construction)
            to meet the demand. While the air cargo operators have
            traditionally paid for their building and sortation facilities,
            airports must pay for the basic infrastructure costs (concrete,
            utilities, etc.) through Airport Improvement Program (AIP)
            funds, other grant sources or other funding sources.
            Preliminary estimates for the first phase of cargo apron
            expansion range between approximately $15-$20M dollars (in
            todays' dollars), depending on capacity.

            Roadway Infrastructure

            To meet both the anticipated growth in multi-modal cargo needs
            and improve passenger access to the TUS terminal, TAA is in the
            process of preliminary design to extend Country Club Road, a
            main access road, to the south. This $15-$20M project (in
            todays' dollars) will also provide access to airside and
            landside parcels which will increase economic development
            opportunities. Related to this project is the current ADOT Tier
            1 study to construction the Sonoran Corridor. The Corridor will
            provide a connection between I-19 and I-10 south of TUS and
            will relieve congestion at the current interchange, improve
            access to TUS for passengers traveling from south side of the
            region, and enhance the cargo and logistic flow coming from
            Mexico to the entire county.
    Other Airports
        In addition to being economic engines for their respective
    communities, small-and medium-hub airports feed the national aviation
    system and serve the needs of millions of travelers each year. Yet many
    small-and medium-hub airports have infrastructure that has long
    outlived their useful lifespans and are now operating in a ``run to
    fail'' mode because they lack reliable sources and streams of funding.
    These airports are forced to deal with infrastructure issues related to
    facility age, exceeded design capacities, outdated technology,
    congestion, environmental issues, etc., which causes inefficiencies,
    higher costs, lower levels of service, and loss of business through
    missed opportunities. The delivery of sound and reliable airport
    infrastructure is an essential factor for economic growth and for the
    health of the national aviation system.
        Terminal improvements at large-hub airports, through which many of
    our passengers connect, also help smaller airports because greater
    capacity at those hubs allows for greater service to smaller
    communities. If the hubs are constrained, incumbent carriers will
    maximize profit on routes between large cities and new entrants will
    not be able to access the market. These market distortions drive up
    airfares and reduce flight choices for consumers.
        I also want to highlight a few of the airport infrastructure
    projects slated to be underway over the next few years at airports
    across the country. The needs are great at all airport hub sizes and
    collectively as an industry the needs are greatest for terminal
    construction. The ACI-NA infrastructure study shows $40 billion in
    terminal projects alone.

            Salt Lake City International Airport (SLC)

            The Salt Lake City International Airport has a $768 million new
            terminal project that will allow for more efficient and
            sustainable state-of-the art facility with the ability to meet
            changing passenger needs for decades to come. It consolidates
            all air-carrier passenger-processing operations into a single,
            multi-level terminal building, replacing three older unit
            terminals. Accommodating both domestic and international
            flights, the terminal includes areas for all essential spaces
            needed for passenger and airline operations.

            The terminal building also includes a new baggage system that
            will cost $199 million and consists of both inbound and
            outbound baggage-handling equipment. The new consolidated
            outbound system has baggage entry points at the ticketing level
            of the terminal, the terminal curb, and remote check-in
            counters. The outbound baggage system includes a fully
            integrated centralized in-line baggage screening matrix
            including six explosive detection system machines. The second
            phase of construction will extend the outbound sortation system
            to remote Concourse B via high-speed conveyors.

            Kansas City International Airport (MCI)

            My colleagues in Kansas City are also working on a new $1.5
            billion terminal. The new terminal is over one-million square
            feet, making it the largest single infrastructure project in
            the city's history. It will have a lasting economic impact on
            the region in the form of supporting new jobs and opportunities
            for local and small businesses, as well as creating a first-
            class traveler experience for airport users. The terminal will
            open with 39 gates, with the ability to expand to 50 gates in
            the future. When complete, the facility will replace the
            airport's dated and aging terminals, which opened in 1972.

        The shift in consumer buying to e-commerce has presented a unique
    opportunity for airports to expand cargo capacity and operations.
    Airports of all sizes need the necessary infrastructure in place to
    capitalize on these opportunities.

            Savannah-Hilton Head International Airport (SAV)

            Savannah Hilton Head Airport has a $60 million project that
            will offer growth opportunities for the airport's current air
            cargo providers, as well as provide additional space for new
            tenants. It will allow expanded ramp parking to handle up to
            five Boeing 767 aircraft with room for ground service equipment
            storage, in addition to the 60,000 square feet of cargo tenant
            space. With close access to local highways, businesses could
            expect to have shipments sorted and on the road within two
            hours of a flight landing. Additionally, the facility will be
            situated close to the local Customs and Border Protection
            office, allowing for quick access to shipment clearance.

        Other projects detailed in the ACI-NA infrastructure report include
    COVID-related HVAC and smart-restroom upgrades at Dallas-Fort Worth, a
    new international arrivals facility in Seattle, and a terminal
    expansion in Atlanta.
    Airport Priorities for Infrastructure Legislation
        Given these significant needs across the country, it is time to
    find the means to rebuild our Nation's aviation infrastructure and
    improve the passenger experience for millions of travelers. The cost of
    doing nothing is further paralysis of the aviation system as we seek to
    rebuild our economy from the devastating impacts of the COVID-19
    pandemic. Implementing the following policy recommendations for
    infrastructure legislation would go a long way towards helping airports
    pay for their growing list of capital projects, as well as support
    good-paying jobs, stimulate local economies, and prepare for rising
    passenger levels in the recovery ahead.
        Provide Direct Federal Funding for Airport Infrastructure Projects:
    As airport capital needs and the list of necessary repairs for aging
    facilities continue to mount, Congress can help by providing direct
    Federal funding for new airport capital projects in the infrastructure
    package. Specifically, we urge you to provide at least $50 billion in
    new funding over the next five years for all-sized airports that
    includes broad flexibility to allow for a variety of needed projects,
    such as runways, taxiways, terminal upgrade/expansions, public health
    improvements, security enhancements, and roadway/transit access
    improvements. Direct Federal investment in this period of economic
    recovery would go a long way toward helping airports pay for their
    growing list of capital projects while other funding sources remain
    constrained. We appreciate that crucial funding for airport
    infrastructure projects has been included in proposals put forward by
    President Biden and Senators from both sides of the aisle who are
    seeking a final agreement on a comprehensive infrastructure package.
        Modernize the Outdated Federal Cap on Airport Local User Fees: To
    ensure continuity in funding airport infrastructure projects once the
    additional Federal funding is exhausted, airports urge Congress to
    adjust the outdated Federal cap on local Passenger Facility Charges
    (PFCs). Since PFCs are local user fees (not taxes) imposed by states or
    units of local government, they are not collected by the Federal
    government, not spent by the Federal government, and not deposited into
    the U.S. Treasury. Instead, PFCs go directly to fund local airport
    projects approved by the FAA--with input from airlines and local
    communities--at no cost to the Federal government.
        Last changed more than 20 years ago, the PFC cap has not kept pace
    with rising construction costs and inflation since it was last adjusted
    to $4.50 in 2000, and its purchasing power has eroded by 40 percent.
    Modernizing the outdated Federal cap on the PFC in this time of scare
    Federal resources would give airports the self-help they need to invest
    in the terminals, gates, and ramps necessary to attract new air
    carriers and entice existing ones to expand--thereby promoting
    competition and lowering airfares for their communities.
        TAA's PFC authorization, used for a $33M terminal infrastructure
    project in 2015, and other purposes, is currently burdened for
    approximately 2.5 or more years of collection, assuming a steady return
    of passengers. You understand how that limits TAA's ability to utilize
    this more flexible local funding mechanism to address TAA's ongoing
    infrastructure needs.
        Considering the pandemic, Congress must consider a gradual, phased-
    in approach that would restore the original purchasing power of the
    $4.50 PFC. To that end, bipartisan legislation has been introduced in
    the House that starting in 2023 would allow airports to increase their
    PFC by $1.00 annually for four years and then index it annually for
    inflation. This would provide America's airports a long-term, locally
    controlled, and reliable funding source to maintain and upgrade their
    aging facilities, plan for the future, and remain competitive in an
    increasingly interconnected world.
        Help Airports Finance Critical Infrastructure Projects: With
    limited Federal funds available and an outdated Federal cap on local
    user fees, airports often turn to the bond market to help finance their
    infrastructure projects. To help lower airport borrowing costs,
    Congress should ensure that airports can continue to finance critical
    infrastructure projects with tax-exempt municipal bonds and private
    activity bonds and eliminate the alternative minimum tax penalty on
    airport private activity bonds. While not a substitute for new, direct
    investment in airports, we suggest the following modifications to tax
    and lending law to help facilitate greater airport infrastructure
    upgrades nationwide

       Expand the Transportation Infrastructure Finance and
            Innovation Act (TIFIA) to airport development projects.

       Exclude airport private activity bonds completely from the
            alternative minimum tax.

       Reinstate advance refundings on all municipal bonds,
            including private activity bonds.

       Restore the interest exemption for banks investing in
            airports.

        Airports often use bonds to construct and renovate terminals,
    maintenance facilities, parking garages, and other facilities. Over the
    past decade, about 60 percent of bonds issued to finance airport
    capital projects were issued as private activity bonds, a special type
    of municipal bond that is issued to finance a facility that serves a
    public purpose for the benefit of a private user like an airline.
    Without access to cost-efficient financing many airports will be unable
    to undertake many needed infrastructure-improvement projects--and as a
    result, the anticipated job creation and economic activity from these
    activities will not be realized.
    PFC Is the Long-Term Solution to Address Airports' Infrastructure
            Funding Shortfalls
        With America's airports facing over $115 billion in infrastructure
    needs across the system, it is time to find the means to rebuild our
    Nation's aviation infrastructure and improve the passenger experience
    for millions of air travelers.
        It is a common misconception that airports are funded with taxpayer
    dollars or a general tax on all citizens. Though, infrastructure
    projects at U.S. airports are funded primarily with Federal grants
    through the FAA's AIP, the PFC, and airport-generated revenue from
    tenant rents, non-aeronautical development, and fees on other
    commercial activity at airport. Airports often turn to private-capital
    markets to debt-finance projects, using both PFC-revenue and airport-
    generated revenue to repay the bonds.
        Traditionally AIP grants--which prioritize safety improvements--
    have been used on airfield projects, while PFC user fees--with greater
    funding flexibility--have gone towards terminal, ground-access, and
    major-runway projects. Both are essentially reimbursement programs used
    to pay for past or existing projects. In the case of PFCs, airports
    often have committed this revenue-stream for years or decades into the
    future to repay past projects, meaning they have no new money coming
    into the system to fund future projects. Federal law requires airports
    to be self-sustaining, yet it also artificially distorts and constrains
    the very funding mechanisms designed to ensure market competition and
    airport-infrastructure growth, as the Federal cap on the PFC has been
    in place since 2000, and Federal entitlement grants through the AIP
    have remained stagnant for over a decade.
        Thus, under the industry's current financing-funding model airports
    lack stable, predictable funding sources that keep pace with travel
    growth, rising construction costs, and inflation for these intensive
    capital projects. The PFC cap--last adjusted twenty years ago--has seen
    its purchasing power eroded by 40 percent in the past two decades. And
    Federal airport grants through the AIP remain stagnant each year under
    the most recently enacted FAA reauthorization legislation. Moreover,
    many airports--even those with sterling credit ratings--have reached
    their debt capacity and either cannot finance new projects or have had
    to phase in their projects over a longer timeframe, increasing the
    costs and delaying the benefits for passengers
        Fortunately, we can rebuild America's airports without raising
    taxes or adding to deficit spending by modernizing the Federal cap on
    the PFC. Modestly adjusting the anti-competitive Federal cap on local
    PFCs would allow airports to take control of their own investment
    decisions and become more financially self-sufficient. Airports could
    build the appropriate facilities--terminals, gates, baggage systems,
    security checkpoints, roadways, and runways--to meet the travel demands
    and customer expectations of their community.
        It is important to remember PFCs are not taxes (the Tucson Airport
    Authority has no taxing authority and cannot impose a tax as airport
    sponsor on passengers)--they are local user fees determined locally and
    used locally to help defray the costs of building airport
    infrastructure that benefits customers by improving the passenger
    experience and spurring airline competition. PFCs are imposed by states
    or units of local government; so, they are not collected by the Federal
    government, not spent by the Federal government, and not deposited into
    the U.S. Treasury. Instead, PFCs go directly to fund local airport
    projects approved by the FAA, with input from airlines and local
    communities.
        At a time of mounting pressure on our Federal budget, modernizing
    the Federal government's cap on the PFC is the simplest and most free-
    market option for providing airports with the locally controlled self-
    help they need to fund vital infrastructure projects. It would give
    airports more flexibility to self-finance and leverage private
    investment without the need for additional taxpayer dollars, thereby
    allowing airports of all sizes to generate more local revenue for
    terminals, gates, runways, and taxiways that would increase capacity,
    stimulate competition, enhance safety and security, and improve the
    overall passenger experience. Ultimately, modernizing the PFC is the
    best way to meet the travel challenges of today and build for a strong
    economy in the 21st century.
    Separating Fact from Fiction on the PFC
        Finally, I would like to correct the record on numerous
    misstatements being made about the current state of U.S. airports. The
    truth is that modernizing airport facilities, growing air service
    options, cultivating new economic prospects, and improving the
    passenger experience is the best interest of every local community.

    CLAIM:            We should not be raising taxes during a pandemic.

    FACT:             First, the PFC is a user fee, not a tax. The fee is
                       collected by the airline and then sent right back to
                       the airport that the passenger utilized. The money
                       never goes to the Federal treasury or the FAA trust
                       fund in Washington. It is collected locally and spent
                       locally.

                      Second, airports are leading the COVID-19 recovery,
                       investing in a range of projects to move swiftly to
                       respond to and mitigate the spread of COVID-19. For
                       the long haul, airports must continue to be leaders
                       in health infrastructure, and they will need adequate
                       funding to ensure they are well-equipped to handle
                       similar crises in the future. COVID-19 may have
                       caused a temporary drop-off in passenger levels, but
                       we must prepare for their return. With the current
                       trajectory of cases and vaccinations, we expect
                       passenger levels to increase in the months and years
                       ahead. Airports must be ready to support the
                       increased movement of people and goods to enable a
                       stronger economy. Without these much-needed
                       investments, limited capacity and outdated facilities
                       will hold back airports and our economic recovery.

    CLAIM:            It is unfair to price-sensitive passengers to raise
                       the cap on the PFC.

    FACT:             Despite the pandemic, airports need to repair aging
                       facilities, invest in critical infrastructure, and
                       prepare for the recovery ahead. To help with those
                       ongoing efforts, airports are continuing to urge
                       Congress to raise or eliminate the outdated PFC cap.
                       Because of the challenges presented by the pandemic
                       Congress could also consider a gradual, phased-in
                       approach to adjusting the Federal cap on the PFC.
                       Under either scenario, adjusting the local user fee
                       will lead to improved airports by:

    CLAIM:            We do not need to raise the cap on the PFC because
                       airports have either halted many construction
                       projects, or there is not the need for these projects
                       post-pandemic.

    FACT:             Many airports have deferred projects due to the
                       pandemic, but once travel resumes many of these
                       projects will need to be completed. Airports need a
                       long-term source of revenue to make necessary
                       improvements to the health, safety, security, and
                       physical infrastructure of our facilities. These
                       projects are not about fancy terminals, but about
                       making necessary upgrades to decades-old terminals,
                       increasing capacity for the rapid rise in passenger
                       travel, and contributing much-needed growth to local
                       and regional economies. Airports can be either an
                       accelerator to growth or a bottleneck to it. We need
                       to ensure that airports can withstand similar
                       emergencies in the future by investing in important
                       technologies and expanding capacity at our airports
                       to safely accommodate many passengers. Better airport
                       infrastructure can not only help us recover more
                       quickly but can also make that recovery stronger and
                       more sustainable.

    CLAIM:            Airports are flush with cash.

    FACT:             Airports are projected to experience at least $40
                       billion in lost revenue and increased costs from
                       March 2020--March 2022 because of the pandemic, and
                       airports hold about $87 million in old debt. Prior to
                       the pandemic airports did maintain cash reserves to
                       comply with bond covenants and save in rainy-day
                       accounts. With that rainy day here, airports have had
                       to tap into these cash reserves to make debt payments
                       and maintain operations. Additionally, airports have
                       reduced costs to airlines and provided millions in
                       relief to renters and concessionaires to help them
                       stay afloat during the pandemic. As a result,
                       airports have had spent down their reserves and seek
                       emergency relief funds from Congress just to stay
                       open, maintain operations, and keep their staff.

    CLAIM:            If there are infrastructure needs at airports,
                       airlines will pay for them.

    FACT:             While most airport infrastructure projects were not
                       financed by airlines before the pandemic, they
                       certainly are in no financial position to improve
                       airport infrastructure now. In fact, nearly 90
                       percent of all airport funding comes from airport-
                       generated income, Federal grants, and PFC
                       collections. Even in previous cases when airlines did
                       ``fund'' airport infrastructure projects it was
                       rarely direct money, rather payments that came from
                       their regular landing fees and use-and-lease
                       agreements at airports. Moreover, the airlines tend
                       to focus their investments on their hubs while
                       providing little to no infrastructure investment at
                       smaller commercial service airports around country.

        Senator Sinema. Thank you so much. Our next witness is Paul
    Cullen, the Vice President for real estate at Southwest
    Airlines. He has been with Southwest for over 15 years and is
    responsible for managing Southwest airport and facility assets,
    including long-term airport and facilities planning,
    development, design and construction. Mr. Cullen, thank you for
    joining us today. And you are now recognized for your opening
    statement.

       STATEMENT OF PAUL CULLEN, VICE PRESIDENT OF REAL ESTATE,
                           SOUTHWEST AIRLINES

        Mr. Cullen. Thank you. Good afternoon, Chair Sinema,
    Senator Cruz, and members of the Aviation subcommittee. My name
    is Paul Cullen and I serve as Vice President of Real Estate for
    Southwest Airlines. Today, I am excited for the opportunity to
    share how Southwest continues to partner with airports to
    invest scores of billions into airport infrastructure. Before
    the pandemic, from a real estate perspective, anyway, the wind
    was at our back. We had just launched our inaugural service to
    Hawaii, and we had recently moved in to brand new facilities in
    La Guardia and in New Orleans.
        Furthermore, we were excited about our upcoming moves into
    new facilities that were being constructed in airports such as
    Natural, Salt Lake City, Los Angeles LAX, and Portland, Oregon.
    Putting aside the projects that were already under
    construction, we are also actively engaged with our airport
    partners on future terminal projects, projects that we are
    still in the planning or concept phase.
        In aggregate, those projects total the pipeline of well
    over $50 billion, and that is just airports that Southwest
    serves. When the pandemic hit, passengers essentially
    disappeared overnight, and the financial gravity of the
    situation quickly became apparent. At Southwest, our focus
    immediately turned to two key concerns. Number one, protecting
    our employees and our customers, and number two, preserving and
    generating cash. To that second point, I want to express our
    gratitude to leaders on this committee for the support provided
    to both airports and airlines during the pandemic to save jobs
    and support the survival of our industry. Concerning the
    airlines, we will be forever grateful for Congress--for the
    Congress's enactment of the payroll support program, or PSP.
        Southwest takes considerable pride in never having had a
    furlough or lay off during our 50 year history. That streak was
    in serious jeopardy of being broken if not for PSP. So on
    behalf of my 56,000 fellow employees, I want to extend my
    heartfelt appreciation for you being there during our darkest
    hour. I am also happy to report that Southwest did not cease
    service to any of our domestic airports at any point during the
    pandemic. In fact, not only do we not cease service, we
    actually welcomed 18 new airports to our route map, and in
    doing so, millions more Americans now have access to our low
    fares and our legendary customer service and hospitality.
        Today, passengers are starting to return, but please don't
    interpret that to mean that everything is back to normal. At
    Southwest, our revenues remain well below 2019 levels, and we
    have yet to break even in any month since the pandemic began.
    Going back to those new airport facilities that were under
    construction before the pandemic began, those largely continued
    as planned. And by way of example, earlier this month, we
    celebrated the on time opening of the new terminal 1.5 at LAX.
        Looking to next year, we are particularly excited about the
    growth opportunities provided by the soon to be completed
    terminal expansions in Phoenix and in Denver and Las Vegas. And
    looking into 2023, we are excited about future growth
    opportunities in Nashville and Kansas City, where multibillion
    dollar terminal investments are scheduled to complete.
    Regarding the over $50 billion pipeline of airport projects
    that were in the planning or concept phase before the pandemic,
    progress there understandably paused as airports and airlines
    wanted to see what the post pandemic environment might look
    like. But that temporary pause is over, and momentum is
    starting to pick back up.
        Turning quickly to financing, we believe that the current
    system of funding airport investment through multiple streams
    of dedicated revenue has been highly successful in meeting
    airports' infrastructure improvement needs. At Southwest, we
    strongly believe that increased taxes and fees on passengers
    does the most harm to price sensitive customers and to smaller
    markets. Furthermore, we cannot lose sight to the fact that the
    vast majority of airline consumers today are flying for
    leisure, and leisure passengers have always been very price
    sensitive.
        Thankfully, similar to the last decade, none of the future
    projects included in the over $50 billion pipeline is dependent
    or contingent upon an increase to the passenger facility charge
    or PFC. In closing, Southwest Airlines appreciates this
    committee's commitment to a thriving aviation sector and your
    recognition of the importance of air travel.
        And we thank you for your support you provided to both
    airports and airlines during the pandemic. Thank you again for
    the opportunity to testify. I will await your questions.
        [The prepared statement of Mr. Cullen follows:]

       Prepared Statement of Paul Cullen, Vice President of Real Estate,
                             Southwest Airlines Co.
        Good afternoon Chair Sinema, Senator Cruz, and members of the
    Aviation Subcommittee. My name is Paul Cullen, and I have the privilege
    of serving as the Vice President of Real Estate at Southwest Airlines.
    My Team's responsibility includes activities such as long-term planning
    and development, facility design and construction, and lease and
    contract negotiations. I'm excited for the opportunity to share how
    Southwest is partnering with our airports to invest scores of billions
    into airport and aviation infrastructure, as we collectively work to
    keep costs low while we recover from the pandemic.
                                  PRE-PANDEMIC
        Before the pandemic, from a real estate perspective, the wind was
    at our back. We had just launched our inaugural service to Hawaii--a
    major milestone for us. And we had recently moved into brand new
    facilities in LaGuardia Airport and Louis Armstrong New Orleans
    International Airport. Furthermore, we were excited about our upcoming
    moves into new facilities that were being constructed in airports such
    as Nashville, Salt Lake City, Los Angeles, and Portland, Oregon.
        Putting aside those projects that were already under construction,
    we were also actively engaged with our airport partners on future
    terminal projects--projects that were still in the planning or
    conceptual stage. In aggregate, those projects totaled a pipeline of
    well over $50 Billion--and that's just at airports served by Southwest
    Airlines. For reference, this pipeline includes projects such as the
    new terminal at Pittsburgh International, and the terminal replacement
    in Burbank/Hollywood, California.
                                  THE PANDEMIC
        When the pandemic hit, passengers essentially disappeared
    overnight. Bustling terminals became ghost towns, and the financial
    gravity of the situation quickly became apparent. It is certainly no
    exaggeration to say that the past 15 months (and counting) have been
    the worst financial period in the history of commercial passenger
    aviation.
        To illustrate the devastating impacts of the pandemic, Southwest
    Airlines' operating revenues in April 2020 decreased by 92 percent
    year-over-year. While our financial situation steadily improved since
    then, it is important to note that our last public earnings release
    reported that our March 2021 operating revenues were still down 54
    percent compared with March 2019.
        When the pandemic first hit and we realized the severity of the
    situation, Southwest's focus quickly turned to two overarching
    concerns: 1) protecting our Employees and our Customers, and 2)
    preserving and generating cash.
        To that point, I want to express our gratitude to leaders on this
    Committee for the support provided to both airports and airlines during
    the pandemic to save jobs and support the survival of our industry.
    Concerning the airlines, we will be forever grateful for the Congress's
    enactment of the Payroll Support Program (or PSP). Southwest takes
    considerable pride in never having had a layoff or furlough during our
    50 year
        history. That streak was in serious jeopardy of being broken this
    year if not for PSP. So, on behalf of my 56,000 fellow Employees, I
    want to extend my heartfelt appreciation for you being there during our
    darkest hour.
        I am also happy to report that Southwest did not cease service to
    any of our domestic airports at any point during the pandemic. In fact,
    not only did we not cease service, we actually welcomed 18 new airports
    to our route map. We added smaller markets like Bellingham, Washington;
    Eugene, Oregon; Bozeman, Montana, and Jackson, Mississippi, while also
    opportunistically adding larger airports like Chicago O'Hare, Houston
    Bush Intercontinental, and Miami International Airports.
        Growing our network during the pandemic may seem counterintuitive,
    but demand across our pre-pandemic network was significantly depressed.
    At these depressed levels of travel demand, leisure travelers have
    outpaced business travelers, and adding these new airports allowed us
    to keep our Employees working and our idle aircraft productive, while
    generating new revenue in many leisure-oriented destinations. And, as
    an added bonus, millions more Americans now have access to our low
    fares, and our award winning Customer Service and Hospitality.
        Today, passengers are starting to return--still primarily leisure
    passengers--but please don't interpret that to mean everything is back
    to normal. At Southwest, our revenues remain at significantly depressed
    levels relative to 2019, and we have yet to breakeven in any month
    since the pandemic began. Per data supplied by our trade association--
    Airlines for America--revenues for the U.S. airlines collectively
    during the month of May 2021 were down 45 percent from May 2019 levels.
                  AIRPORT CONSTRUCTION TODAY & LOOKING FORWARD
        Going back to those new airport facilities that were under
    construction before the pandemic--those largely continued as planned
    and we made considerable progress throughout the past 15 months. In the
    case of LAX, for example, we just celebrated the opening of the new
    Terminal 1.5 earlier this month. This was a project that Southwest
    Airlines led, and it was completed on-time, and well below budget.
        Looking to next year, we are particularly excited about the growth
    opportunities provided by the soon to be completed terminal expansions
    at Denver International, Phoenix Sky Harbor International, and Las
    Vegas McCarran International Airports. And looking into 2023, we are
    excited about future growth opportunities in Nashville and Kansas City,
    where multi-billion dollar terminal investments are scheduled to come
    online on-time and on-budget. These are all examples of construction
    projects occurring right now.
        Regarding the $50-plus billion pipeline of airport projects that
    were in the planning or concept phase before the pandemic--progress
    there understandably paused as airports and airlines waited to see what
    the post-pandemic world might look like. But that temporary pause is
    over as project teams have been reengaging, and momentum continues to
    pick up. That's not to say that airports and airlines will agree on
    everything--like many things--we'll debate ``the needs'' and ``the
    wants'', but we have a long track record of finding a common ground.
        Turning quickly to financing, we believe that the current system
    for funding airport improvements through multiple streams of dedicated
    revenue has been highly successful in meeting airports' critical
    infrastructure improvement needs--be those related to safety, security,
    the environment, the customer experience, or capacity for future
    growth. We strongly believe that increased taxes and fees on passengers
    does the most harm to price-sensitive Customers and to smaller markets,
    such as many of the 18 new airports we have added or announced since
    the pandemic began.
        We cannot lose sight of the fact that that the vast majority of all
    airline consumers today are flying for leisure or personal reasons, and
    those types of passengers have always been incredibility price-
    sensitive and thus the reason for historically low airfares since the
    pandemic began. Until business traffic returns to pre-pandemic levels--
    which no one can confidently predict when that will occur--we expect
    average airfares to remain relatively low for the foreseeable future.
    Thankfully, none of the over $50 billion in the pipeline is dependent
    or contingent upon an increase in the Passenger Facility Charge (PFC).
        I want to again recognize the importance of the financial support
    that Congress has provided airports and airlines throughout the
    pandemic, including $8 billion in untapped airport grants stemming from
    the American Relief Act, which became law in February. That money has
    yet to be distributed by the FAA and will go a long way to support the
    aviation ecosystem as we continue to climb out of the hole created by
    COVID.
        In closing, Southwest Airlines appreciates this Committee's
    commitment to a thriving aviation sector and your recognition of the
    importance of air travel. We thank you for the support you've provided
    to both airports and airlines during this pandemic.
        Thank you again for inviting me to testify. I'll await your
    questions.

        Senator Sinema. Thank you so much. Our third witness is
    Paul Rinaldi, the 6th President of the National Air Traffic
    Controllers Association. He served in this role since October
    2009 and is currently serving a fourth term as NATCA's
    President. In this position, he represents nearly 20,000
    aviation safety professionals. Mr. Rinaldi, thank you for
    joining us today. And you are recognized for your opening
    statement.

      STATEMENT OF PAUL RINALDI, PRESIDENT, NATIONAL AIR TRAFFIC
                        CONTROLLERS ASSOCIATION

        Mr. Rinaldi. Good afternoon, Chair Sinema, Ranking Member
    Cruz, and members of the Subcommittee. Thank you for the
    opportunity to participate in this hearing on behalf of the
    20,000 aviation safety professionals that NATCA represents.
    Over the years, we have highlighted that a stop and go funding
    stream negatively affects the national airspace system. It
    undermines the Air Traffic Control Service's staffing, hiring,
    training, and prevents timely implementation of a long term
    modernization projects. It also negatively affects preventive
    maintenance for the FAA's physical infrastructure.
        As we were recovering from the long Government shutdown in
    2019, we then faced the unthinkable, the COVID-19 pandemic. The
    pandemic was devastating to aviation systems worldwide,
    including here in this country and all the things I just
    mentioned about stop and go funding. But over the last 16
    months, the FAA and NATCA, through collaboration, have
    accomplished some remarkable things to keep the frontline
    workforce safe and the aviation system up and running during
    this pandemic. Now, with a vaccinated workforce, traffic levels
    are quickly returning to roughly 80 percent of pre-pandemic
    levels.
        So out of the chaos of COVID-19, we have this historic
    opportunity to invest in our Nation's aviation system, both in
    the physical infrastructure and technology, to ensure that the
    United States remains the gold standard in aviation worldwide.
    Airspace physical infrastructure is aging, and it is in
    desperate need of attention. Our enroute centers are almost 60
    years old. Many of our towers and TRACONs are in need of major
    repairs and replacement. Many of these facilities have exceeded
    their life expectancy.
        Some of these facilities need critical replacement of
    systems such as roofs, windows, HVAC systems, elevators, and
    plumbing. For example, at Dallas Fort Worth International
    Control Tower, there are several areas where the drywall is
    crumbling and falling apart due to water leaks that have been
    repaired for over the years. In the same facilities, several of
    the restroom fixtures no longer work and are leaking. This
    building frequently does not have hot water.
        Additionally, the West Tower at Dallas Fort Worth has large
    gaps in the foundation of the building, which allows rodents to
    get into the building and nest. More examples at Phoenix Sky
    Harbor Air Traffic Control Tower, the elevator fails more than
    once per month, leading to frequent outages. Requiring
    controllers to climb up over 20 flights of stairs to report for
    duty in a tower cab is just completely unacceptable.
    Additionally, at this facility, the countertops in the
    operational area are falling apart.
        The staff has improvised with the solution of duct tape and
    pool noodles to cover sharp edges of the countertops to prevent
    injury and clothing being torn. At Falcon Field in Mesa,
    Arizona, this facility has a serious roof issue, an elevator
    that is in disrepair because the parts are no longer made, has
    an air conditioning heating problem, and ongoing plumbing
    issues. These are just a few examples of the aging
    infrastructure that is in desperate need of attention.
        As far as technology infrastructure or next gen, NATCA has
    collaborated with the FAA for over 12 years in modernizing and
    making the system safer. We have many successes, and we
    continue to anticipate to have many more. Moving forward in new
    technology, our top priorities are maintaining and upgrading
    our automation platforms, including ERAM for enroute, TAMRA for
    terminals, ATOP which is our oceanic procedures.
        Some of our other priorities is to find a replacement for
    micro-EARTS systems, enhance our long range radar service, a
    new voice communication system, and support tools in automation
    and decisionmaking.
        Again, I thank you for the opportunity to participate
    today, and I look forward to your questions and a continued
    dialog to improve the FAA's infrastructure.
        [The prepared statement of Mr. Rinaldi follows:]

      Prepared Statement of Paul Rinaldi, President, National Air Traffic
                    Controllers Association, AFL-CIO (NATCA)
        Thank you for the opportunity to testify on behalf of the National
    Air Traffic Controllers Association, AFL-CIO (NATCA) at today's hearing
    titled ``Aviation Infrastructure for the 21st Century.'' NATCA is the
    exclusive representative for nearly 20,000 employees, including the
    Federal Aviation Administration's (FAA) air traffic controllers,
    traffic management coordinators and specialists, flight service station
    air traffic controllers, staff support specialists, engineers and
    architects, and other aviation safety professionals, as well as
    Department of Defense (DOD) and Federal Contract Tower (FCT) air
    traffic controllers.
    I. Executive Summary
        As NATCA has been highlighting for years, a stop-and-go funding
    stream negatively affects all aspects of our National Airspace System
    (NAS). It undermines air traffic control services, staffing, long-term
    modernization projects, preventative maintenance, and ongoing
    modernization to the physical infrastructure. It also slows the hiring
    and training process while preventing the timely implementation of
    modernization programs and the integration of new users into the
    system.
        Without a stable, predictable funding stream, the FAA will be hard-
    pressed to maintain pre-pandemic capacity, let alone modernize the
    physical and technological infrastructure of the system while expanding
    it for new users including unmanned aircraft systems, commercial space
    launches, and supersonic aircraft. NATCA's testimony will focus on
    NATCA's greatest priorities in the areas of physical infrastructure as
    well as the modernization and technological needs of the system.
        The FAA's physical infrastructure needs immediate attention and
    upgrading our aging air traffic control (ATC) facility infrastructure
    is a top priority for NATCA. The FAA's Air Route Traffic Control
    Centers (ARTCC) are almost 60 years old, and many of the towers and
    Terminal Radar Approach Control facilities (TRACONS) are in desperate
    need of repair or replacement. Many of these facilities have exceeded
    their life expectancy, while others need replacement of critical
    physical infrastructure systems including roofs, windows, HVAC systems,
    elevators, and plumbing.
        In addition, NATCA and our front-line controller members have been
    collaborating with the FAA to implement NextGen modernization programs
    for the past 12 years. We have had many successes and we anticipate
    many more. Our top priorities are to maintain and upgrade our
    foundational air traffic automation platforms in our en route and
    terminal facilities that deliver flight plan and surveillance
    information to controllers on a real-time basis. Our other top
    priorities include replacing the antiquated automation platform that
    supports Alaska, Hawaii, Puerto Rico, and Guam as well as the continued
    operability and future enhancement of long-range radar surveillance.
        Our other technological modernization priorities are in the areas
    of communications, notices to airmen, which disseminate critical safety
    information to airspace users, support tools in automation, and traffic
    management tools for existing users and new entrants including UAS and
    commercial space.
        We now have an historic opportunity to invest in our Nation's
    aviation system, both its physical infrastructure and technology, to
    ensure the NAS remains the gold standard around the world.
    II. NATCA Urges Support for a Robust Funding Authorization for Air
            Traffic Control Facility Infrastrucure
        The FAA operates more than 300 air traffic control facilities of
    varying ages and conditions all across the United States. The FAA's 20
    Air Route Traffic Control Centers (ARTCCs) located in the continental
    United States were built in the 1960s and are almost 60 years old. The
    FAA's large, stand-alone Terminal Radar Approach Control facilities
    (TRACONs) are, on average, more than 25 years old. In addition, the FAA
    has 132 combined TRACON/Towers, which average about 35 years are old.
    Finally, the FAA has another 131 stand-alone towers, which average more
    than 30 years old. Many of these facilities have exceeded their life
    expectancy. Please see the Appendix for a breakdown of the ages of the
    FAA's air traffic facilities.
        Many of these facilities have identifiable defects that require
    immediate attention. These issues range from workplace safety issues to
    airspace safety concerns. Some of these issues have led to periodic
    airspace shutdowns and many others lead to health and safety concerns
    for the workforce. When major systems fail or facilities have integrity
    problems, it can lead to a less efficient airspace. Although the FAA
    has begun the process of addressing its aging infrastructure through a
    combination of realignments, sustaining and maintaining some
    facilities, and replacing a handful of others, that process has been
    slow and hampered by the stop-and-go funding stream.
        NATCA believes that over one-third of FAA's facilities have only
    minor concerns or no concerns. For the most part, these facilities need
    only maintenance of their current physical infrastructure in order to
    continue to provide a safe environment for the workforce and a
    functional building to perform the FAA's mission.
        However, on the other end of the spectrum, there are roughly 10
    percent of facilities that are of our highest concern and another
    approximately 20 percent of facilities that have major concerns
    regarding overall facility condition. To this end, NATCA has identified
    seven general areas of facility infrastructure needs across the FAA:
    building integrity, HVAC conditions, restrooms, elevator/stairs,
    building security, lighting, and OSHA issues.
    1. Building Integrity
        NATCA defines building integrity as the condition of the building's
    roof, windows, doors, and ceiling. NATCA believes that over 25 percent
    of all facilities have an immediate need regarding building integrity.
        For example, at David Wayne Hooks Air Traffic Control Tower (ATCT,
    DWH) near Houston, the tower cab roof has continued to leak water into
    the inside of the tower cab windows for days after every significant
    rainstorm. It is unknown where this water drains, but it goes into the
    area under the consoles where the wiring is located. Since 2011, at
    least five of the 12 tower cab windows have rivulets of water going
    down them after moderate to heavy rainstorms. Further, the tower cab
    infrastructure cannot support double shades for the windows. The
    building is not secure against small pests and rodents. Multiple times
    each year employees will encounter snakes, large spiders, and mice
    inside the building. The tower cab roof access ladder is dangerous as
    well.
        At Falcon Field ATCT (FFZ), in Mesa, Ariz., the roof lifts off the
    building when the wind is at or above 15 knots. The building shakes,
    the floor vibrates, and controllers can hear the room moving.
        At Peoria ATCT (PIA) in Illinois, when it rains, water leaks
    through the ceilings and down the walls. Rainwater splashes over and
    around the windows to the point that controllers use towels to absorb
    it. Although the FAA has patched the roof, the water finds its way
    inside. Almost every room and hallway in the basement shows signs of
    water damage, including standing water in many locations. In the
    basement, there is asbestos-laden piping insulation that has degraded
    and crumbles from the ceiling. Electrical boxes and extension cords in
    the basement needed for operation of the lights are exposed to standing
    water and water leaks. Bird carcasses are not uncommon in a room
    regularly used by employees. The roof of the mechanical room is
    settling, creating gaps for water to find its way inside. Even after
    roof patching and asbestos containment measures, more leaks have
    developed on a floor with many sensitive electronics that are essential
    for providing air traffic control services.
        These types of building integrity issues are not limited to the
    smaller air traffic facilities. For instance, at Newark Liberty
    International Airport (EWR), there are leaks in the roof of the tower
    and the main building. There are buckets in the hallways to catch the
    water falling, which constitutes hazards for walking, the break room
    windows leak, and sheetrock is crumbling.
    2. HVAC Systems
        NATCA defines HVAC systems as air conditioner, heater, and exhaust
    vents. Approximately one-third of all facilities have significant HVAC
    system issues. NATCA has identified roughly 30 facilities of the
    highest concern for HVAC system condition and an additional 75 with
    HVAC systems as a major concern.
        For example, at Wilmington International Airport ATCT (ILM) in
    Delaware, the HVAC unit breaks several times a year causing the
    temperature inside the tower to rise to almost 90 degrees during the
    summer and drop to the mid-50s in the winter. Even when operational,
    the system fails to hold a consistent temperature, requiring
    controllers to alternate between employing fans or multiple space
    heaters, which pose their own hazards in the operational area.
        At McClellan-Palomar ATCT (CRQ) in Carlsbad, Calif., the air
    conditioner unit was recently replaced. However, jet fuel exhaust from
    the fixed base operator at the base of the tower and the terminal ramp
    enters the tower stairwell through the unprotected fire suppression
    exhaust system. This fills the tower cab, offices in the tower, and
    tower break rooms with the smell of jet fuel. Floating particulates
    inside the tower cab often gather on the tower shades, creating
    visibility issues. When employees or contractors attempt to clean the
    shades, the particulates leave permanent scratches on the shades. The
    air intake in the center of the tower cab is caked with dirt and
    debris.
        At Seattle-Tacoma International Airport ATCT (SEA), controllers in
    the tower cab and on the 12th floor periodically experience headaches
    and dizziness as a result of the strong smell of jet fuel.
    3. Restroom Conditions
        Restroom conditions include fixtures, stalls, door locks, and
    plumbing. NATCA has the highest concern about restroom conditions at
    more than 20 facilities. We consider about 50 facilities' restroom
    conditions a major concern. Based on our observations, over 20 percent
    of all facilities have serious issues regarding their restroom
    conditions.
        For example, at Buchanan Field ATCT (CCR) in Concord, Calif., there
    is only one toilet. When testers arrive at the facility to perform
    random drug and alcohol screenings of employees, the restroom is
    unavailable for any other purposes for periods of approximately three
    hours.
        At Washington ARTCC (ZDC) in Leesburg, Va., there are consistent
    plumbing issues. As a result of issues with the main plumbing stack
    identified by a plumbing contractor, the men's restroom in one wing of
    the building has the constant smell of sewage. The main women's
    restroom in the facility has been closed several times because of the
    similar sewage smell. Since at least 2006, the basement men's restroom
    sinks clog regularly. Additionally, when the town of Leesburg had a
    water main break in 2020, ZDC lost the use of all water and restrooms
    for multiple days and restroom trailers were brought on site. Although
    that issue was corrected, since then, ZDC's water pressure has
    significantly decreased, causing additional plumbing issues.
        At Jacksonville International Airport ATCT (JAX), there is sewage
    smell in the main men's restroom at least once a month. The s-trap
    dries up and allows the gas to back up into the restroom. The women's
    primary restroom had a sewer backup earlier this year and flooded the
    women's restroom with sewage. The tower cab restroom and tech ops
    restroom have similar sewage smells.
    4. Elevators/Stairs
        NATCA defines elevator and stairs problems as those affecting
    elevator panels, emergency phones, stair lighting, stair steps, and
    head clearance. NATCA has identified nearly 20 facilities where either
    elevators or stairs are of the highest concern. NATCA has identified
    more than 40 additional facilities with elevators/stairs as a major
    concern. Approximately 20 percent of facilities have significant issues
    regarding their elevators or stairs.
        For example, at Fayetteville Regional Airport ATCT (FAY) in North
    Carolina, the elevator has never been operational.
        At Memphis International Airport ATCT (MEM), like many towers,
    there is a single elevator that accesses the tower cab. The elevator
    breaks down frequently. Multiple employees have been trapped in the
    elevator on different occasions. When the elevator is non-operational,
    the only option is a long, 330-foot vertical climb up the stairs, which
    is a particular problem in the summer because the stairs are not
    climate controlled.
    5. Building Security
        NATCA has identified over 20 facilities for which we have the
    highest concern for the building's security. We identified more than 40
    additional facilities where building security is a major concern. Just
    under approximately 20 percent of all facilities have significant
    building security concerns.
        For example, at Juneau International Airport ATCT (JNU) in Alaska,
    the cipher lock system is provided by the city and it automatically
    unlocks all of the doors in the event of a power outage. Additionally,
    tower access is located in the main airport lobby area, outside of TSA
    security, meaning anyone could come into the control tower. When
    employees relayed their concern to the airport, they said that is by
    design so they could use the control tower stairwell as a fire exit.
    Additionally, the tower security camera fails often and the door
    intercoms do not work well.
        At General Mitchell International Airport (MKE), in Milwaukee, the
    front gate to the employee parking lot malfunctions frequently. On many
    occasions, the gate is left open and there have been several instances
    of unauthorized vehicles driving into the lot, posing security
    concerns.
    6. Lighting
        NATCA is aware of internal and external lighting condition issues
    at several facilities. NATCA has identified three facilities where
    lighting is at the highest concern level. We also have identified more
    than 20 additional facilities in which lighting is a major concern.
    Approximately 8 percent of facilities have significant lighting
    concerns.
        For example, at Dallas-Fort Worth International Airport ATCT (DFW),
    NATCA identified lighting issues in the tower cab. DFW has focused
    cannister lights for overhead lighting with shielding panels that
    should be able to control both the intensity and coverage area for each
    individual light. The placement of these cannister lights occurred when
    the towers were built more than 25 years ago. Their placement was based
    on the equipment and operational practices in use at that time.
        A great deal has changed since then, but the lighting system and
    associated issues have not. There are several areas where controllers
    must supplement the lighting system with hand-held flashlights due to
    the deficiencies in lighting coverage. The under-counter lighting has
    similar issues, and is also prone to breaking due to the many space
    heaters that get stored beneath the countertops as well as deficiencies
    in the quality of installation. In the emergency stairwells, there are
    frequent lighting outages due to inattention to required maintenance,
    often resulting in a trip hazard due to the reduced visibility.
    7. OSHA Concerns
        NATCA defines OSHA concerns as including noise, water quality,
    indoor air quality, and appropriate number of emergency exits. There
    are approximately 25 facilities that NATCA has identified as having the
    highest concern for OSHA issues. We identified more than 60 additional
    facilities at which OSHA issues are a major concern. Approximately 30
    percent of all facilities have significant OSHA concerns.
        For example, at the Great Lakes Regional Office in Des Plaines,
    Ill. the water has had high lead readings for three years requiring
    employees to use bottled water for drinking.
        At San Diego International Airport (SAN), approximately 10 years
    ago, it was discovered that the drinking water was not potable. The FAA
    has attempted various fixes over the years, but has been unsuccessful.
    Today, the FAA is forced to provide hand sanitizer stations because the
    water is not safe enough for hand washing, but the dishwasher and
    showers are somehow considered acceptable. Drinking water is provided
    via a bottled water contract, however the water dispensers are not
    cleaned or tested regularly. And, these water bottles must be carried
    up the tower steps by the controllers, leading to risk of injury.
        At Pittsburgh International Airport ATCT (PIT), when there is heavy
    precipitation, water leaks into the facility near electrical fixtures.
    Ultimately, it pools on the floor creating multiple safety hazards.
    Portions of the break room ceiling as well as restroom ceiling are
    crumbling and falling near employees.
        At El Paso International Airport ATCT (ELP) in Texas, there are
    several occupational safety and health concerns. Several times in
    recent years water lines to the tower cab have failed leaving
    controllers without access to fresh, clean drinking water. The latest
    occurrence was earlier this year and lasted for about two weeks. The
    elevator is of equal concern. It has been failing at an alarming rate
    over the past few years and has left multiple controllers stranded
    inside of it for several hours. ELP has had to call the local fire
    department and the contractor responsible for the maintenance and
    repair of the elevator to help free stuck employees. The building
    itself contains both friable and non-friable asbestos and there have
    been several occurrences where work projects have been suspended upon
    its discovery. A simple carpet installation was delayed for over 18
    months due to finding non-friable asbestos in the mastic of the floor
    tiles underneath the existing carpeting.
        In summary, aviation is a critical part of our Nation's
    infrastructure, and the repair or replacement of aging air traffic
    control facilities will be essential to allow the United States to
    maintain the safest, most efficient airspace system in the world. NATCA
    strongly supports legislative efforts to bring air traffic control
    facilities up to standard. President Biden has also called on Congress
    to invest in upgrades to FAA assets to ensure safe and efficient air
    travel and as part of his American Jobs Plan. Most recently, he
    indicated his support for modernizing the air traffic control system in
    his FY 2022 budget proposal. Providing additional funding for the
    repair or replacement of aging air traffic control facilities will
    result in more jobs for the American people and deliver benefits to our
    struggling economy and the flying public alike.
    III. Modernization and Maintenance of Key Programs and Platforms
        Modernization to air traffic control technology also has been
    hampered as a result of an unstable, unpredictable funding stream,
    which has jeopardized the safety and efficiency of the NAS. To that
    end, NATCA believes that the following platforms and programs are the
    most critical to maintaining and upgrading the system. We have sorted
    these platforms and programs into five tiers based on their
    relationship and necessity to the continued safe and efficient
    operation of the NAS.
    1. Tier 1 Funding Priority--Automation Platforms and Surveillance
        En Route Automation Modernization (ERAM), Terminal Automation
    Modernization Replacement (TAMR), and Advanced Technologies & Oceanic
    Procedures (ATOP) are all automation platforms that deliver flight plan
    and surveillance information to air traffic controllers on a real-time
    basis. These platforms are the foundational systems that keep our NAS
    operating safely day and night. The FAA must be able to sustain and
    upgrade each of these automation platforms. For instance, the base
    equipment (hardware, monitors, and servers) used to operate ERAM will
    reach its end of lifecycle (i.e., the manufacturer-determined date upon
    which the equipment will need to be replaced based on its anticipated
    use) by 2025 and NATCA is concerned with funding constraints that could
    jeopardize the program. These systems operate 24 hours a day, 7 days a
    week and, therefore, the hardware must be monitored and replaced at
    scheduled intervals.
        Microprocessor En-Route Automated Radar Tracking System (Micro-
    EARTS) is the automation platform that supports Guam, Puerto Rico,
    Hawaii, and Alaska. The FAA has identified the need to replace Micro-
    EARTS with ERAM and/or TAMR. These replacement programs will improve
    NAS interoperability and reduce cost by standardizing the training,
    maintenance, and development efforts by bringing these facilities under
    the NextGen automation umbrella.
        Long-Range Radar services for both en route and terminal
    environments remain critical to the safe and efficient operation of the
    NAS. Even with the wide deployment of ADS-B Out, there is still a need
    for non-cooperative surveillance tools such as Long-Range Radar
    services, which allow controllers to see aircraft that are not ADS-B
    Out equipped. These services are critical to controllers fulfilling
    their safety functions.
    2. Tier 2 Funding Priority--Communications
        Voice over Internet Protocol Communications Enterprise (VoICE) is
    the program and new equipment that will replace the aging (physical)
    communications technology that controllers use to communicate with
    pilots and other air traffic facilities. The current equipment is
    outdated, is approaching end of lifecycle on multiple systems, and
    replacement parts are getting harder to acquire because the existing
    systems are no longer supported by their manufacturers.
        Time Division Multiplexing (TDM)--to--Internet Protocol (IP) (TDM-
    to-IP) is the program that will upgrade all copper wiring
    infrastructure with fiber optic cable wiring. This program is critical
    because major U.S. telecommunications carriers have communicated their
    intention to discontinue current TDM-based services (supported by the
    current copper wiring) as early as this year. The FAA is highly
    dependent on these services to receive and transmit information at
    approximately 6,000 sites. Any discontinuation or disruption of TDM
    services without first transitioning to IP communication services would
    lead to potential safety risks and/or delays in air traffic services.
        Operational and Supportability Implementation System (OASIS II) is
    a critical piece of the communications system that is used at all 17
    Flight Service Stations (FSS) throughout Alaska. OASIS II must be
    maintained until a replacement system can be implemented. OASIS II is
    used by Flight Service Air Traffic Control Specialists in Alaska to
    provide weather briefing and flight planning services to general
    aviation pilots. However, OASIS II is beyond its end of lifecycle and
    is beginning to experience system failures.
    3. Tier 3 Funding Priority--NOTAMS
        The Federal Notice to Airmen (NOTAM) System (FNS) provides critical
    information to controllers and pilots about issues in the NAS, for
    which timely knowledge of the issue is essential for personnel
    concerned with flight operations. NOTAM modernization is an FAA Top 5
    safety priority and requires appropriate funding levels to sustain and
    upgrade the system.
    4. Tier 4 Funding Priority--Support Tools in Automation
        The legacy weather systems must be maintained until NextGen Weather
    Processor (NWP) can be implemented. NWP is a program that will
    consolidate multiple weather systems into one, while also incorporating
    new weather products. The consolidated program will allow air traffic
    managers to evaluate weather effects and plan initiatives.
        Funding for legacy Information Display Systems must be maintained
    until the Enterprise Information Display Systems (E-IDS) can be
    deployed in approximately 2025-27. E-IDS will provide a wide variety of
    information to air traffic controllers such as current weather,
    airspace delegation, access to approach plates, NOTAMS, SIGMETS, flight
    route verification and aircraft information. However, FAA facilities
    currently utilize several different systems that are beyond the ``end
    of lifecycle'' stage and replacement parts are becoming harder to
    acquire.
    5. Tier 5 Funding Priority--Decision Support Tools and Commercial Space
            Operations
        Traffic Flow Management System (TFMS), which is a strategic
    planning tool for identifying and managing air traffic flow constraints
    in NAS related to congestion in certain geographical areas, must be
    maintained until a replacement system can be implemented. TFMS
    processes all available data sources such as flight plan messages,
    flight plan amendment messages, and departure and arrival messages.
    TFMS identifies constraints such as a weather event or major sporting
    event and helps the FAA plan for and execute that plan to minimize its
    negative effects on the NAS. However, due to contractual issues related
    to a recent court ruling that will limit new enhancements to the
    system, TFMS will need to be replaced with a new system to ensure
    minimal disruption to the NAS. Maintaining and upgrading TFMS will be
    necessary to Commercial Space operations. By providing the FAA with
    these critical decision support tools, the agency can minimize the
    disruption to the NAS during the launch and scheduled re-entry of
    Commercial Space vehicles, rather than segregating approximately 1,000
    square miles of airspace with temporary flight restrictions for each
    launch and recovery.
        Funding must be maintained for the development, testing, and
    deployment of Terminal Flight Data Manager (TFDM), which will provide
    improvements to flight data coordination and management for air traffic
    users, as well as enhanced surface traffic flow management
    capabilities. Among other things, TFDM will replace ATCT paper
    flight strips with electronic flight strips, provide automation for
    electronic flight and airport data management, and interface with other
    NAS systems to share electronic flight data. In order for TFDM to
    deliver its proposed benefits for air traffic controllers and the
    industry, the FAA must maintain the original list of facilities
    scheduled to get electronic flight strips. NATCA is concerned that any
    decreased functionality or reduction to that list of facilities may
    affect the improvements that will be relied upon by other NAS systems.
    IV. FAA Would Benefit from Reformed Procurement System
        NATCA continues to urge Congress and the FAA to take a close look
    at the FAA's procurement rules, which are fundamentally flawed in
    regard to planning and funding for technology and modernization
    programs, and to consider further procurement reform for the FAA.
    Twenty-five years ago, the FAA Reauthorization Act of 1996 (Pub. L.
    104-264) included procurement reform, which granted the FAA the
    authority to create its own acquisition management system and adopt its
    own procurement rules to allow the FAA to be more nimble in this area.
    However, in practice, the FAA merely created a set of procurement rules
    that mirror the rest of the Federal government, which defeated the
    purpose of the reform.
    V. Conclusion
        NATCA believes that we must take this opportunity to secure the
    critical funding necessary to maintain, repair, and replace the FAA's
    ailing physical infrastructure, as well as to modernize the NAS to meet
    both today's needs and those of the future. Without these investments,
    the FAA will be hard-pressed to maintain pre-pandemic air traffic
    capacity, let alone modernize the system or expand it for new users
    such as UAS and commercial space operators.
        NATCA thanks Chair Sinema and Ranking Member Cruz, as well as Chair
    Cantwell and Ranking Member Wicker, for the opportunity to offer
    testimony on these critical issues.
                                     ______

                                    Appendix
                        Air Traffic Control Facility Age

                                    FAA's Air Route Traffic Control Centers (ARTCCs)
    ----------------------------------------------------------------------------------------------------------------
           Code                                            Facility Name                                       Age
    ----------------------------------------------------------------------------------------------------------------
                  ZAB   Albuquerque Air Route Traffic Control Center                                             58

                  ZAN   Anchorage Air Route Traffic Control Center                                               52

                  ZTL   Atlanta Air Route Traffic Control Center                                                 61

                  ZBW   Boston Air Route Traffic Control Center                                                  58

                  ZAU   Chicago Air Route Traffic Control Center                                                 59

                  ZOB   Cleveland Air Route Traffic Control Center                                               60

                  ZDV   Denver Air Route Traffic Control Center                                                  59

                  ZFW   Fort Worth Air Route Traffic Control Center                                              59

                  ZHU   Houston Air Route Traffic Control Center                                                 56

                  ZID   Indianapolis Air Route Traffic Control Center                                            59

                  ZJX   Jacksonville Air Route Traffic Control Center                                            60

                   ZKC  Kansas City Air Route Traffic Control Center                                             59

                  ZME   Memphis Air Route Traffic Control Center                                                 59

                  ZMA   Miami Air Route Traffic Control Center                                                   65

                  ZMP   Minneapolis Air Route Traffic Control Center                                             59

                  ZNY   New York Air Route Traffic Control Center                                                58

                  ZLA   Los Angeles Air Route Traffic Control Center                                             58

                  ZOA   Oakland Air Route Traffic Control Center                                                 61

                   ZLC  Salt Lake Air Route Traffic Control Center                                               59

                  ZSE   Seattle Air Route Traffic Control Center                                                 59

                   ZDC  Washington Air Route Traffic Control Center                                              58
    ----------------------------------------------------------------------------------------------------------------
                        Average Age:                                                                           58.9
    ----------------------------------------------------------------------------------------------------------------

                                                   FAA's Large TRACONs
    ----------------------------------------------------------------------------------------------------------------
           Code                                            Facility Name                                       Age
    ----------------------------------------------------------------------------------------------------------------
                  A80   Atlanta TRACON                                                                           20

                  A90   Boston TRACON                                                                            17

                     C90Chicago TRACON                                                                           25

                  D10   Dallas--Ft Worth TRACON                                                                  25

                  D01   Denver TRACON                                                                            29

                    JCF High Desert TRACON                                                                       60

                  I90   Houston TRACON                                                                            8

                  N90   New York TRACON                                                                          43

                    NCT Northern California TRACON                                                               19

                  P31   Pensacola TRACON                                                                         12

                    PCT Potomac TRACON                                                                           19

                  S46   Seattle TRACON                                                                           17

                    SCT Southern California TRACON                                                               28

                  T75   St Louis TRACON                                                                          19
    ----------------------------------------------------------------------------------------------------------------
                        Average Age:                                                                           24.4
    ----------------------------------------------------------------------------------------------------------------

                                        Core 30 Airport Towers and Tower/TRACONs
    ----------------------------------------------------------------------------------------------------------------

    ----------------------------------------------------------------------------------------------------------------
                  ATL   Atlanta Tower                                                                          15

                  BWI   Baltimore Tower                                                                        71

                  BOS   Boston Tower                                                                           48

                     CLTCharlotte Tower                                                                        43

                  ORD   Chicago O'Hare Tower                                                                   25

                 ORDA   O'Hare North Tower                                                                     12

                 ORDB   O'Hare South Tower                                                                      6

                  DFW   Dallas Fort Worth Tower Center                                                         47

                 DFWA   Dallas Fort Worth Tower MA2                                                            27

                 DFWB   Dallas Fort Worth Tower MB2                                                            27

                  DEN   Denver Tower                                                                           26

              DTW/D21   Detroit Tower & TRACON                                                                 29

                  IAD   Dulles Tower                                                                           14

                  FLL   Fort Lauderdale Tower                                                                  30

                  HNL   Honolulu Tower                                                                         20

                  IAH   Houston Intercontinental ATC Tower                                                     24

                  JFK   Kennedy Tower                                                                          27

                  LGA   La Guardia Tower                                                                       11

              LAS/L30   Las Vegas Tower & TRACON                                                                5

                  LAX   Los Angeles Tower                                                                      25

              MEM/M03   Memphis Tower & TRACON                                                                 10

                  MIA   Miami Tower                                                                            19

                  MDW   Midway Tower                                                                           24

              MSP/M98   Minneapolis Tower & TRACON                                                             26

                  EWR   Newark Tower                                                                           18

                    MCO Orlando Tower                                                                          19

                  PHL   Philadelphia Tower                                                                     40

              PHX/P50   Phoenix Tower & TRACON                                                                 14

                   SLC/SSalt Lake City Tower & TRACON                                                          22

                  SAN   San Diego Tower                                                                        25

                  SFO   San Francisco Tower                                                                     5

                  SEA   Seattle Tower                                                                          17

                  TPA   Tampa Tower                                                                            49

                    DCA Washington National Tower                                                              24
    ----------------------------------------------------------------------------------------------------------------
                        Average Age:                                                                         24.8
    ----------------------------------------------------------------------------------------------------------------

                                              Remaining ATC Towers/TRACONs
    ----------------------------------------------------------------------------------------------------------------

    ----------------------------------------------------------------------------------------------------------------
                  ABI   Abilene Tower                                                                           9

                  ADS   Addison Tower                                                                          16

                     CAKAkron-Canton Tower                                                                     59

                  ALB   Albany Tower                                                                           22

                  ABQ   Albuquerque Tower                                                                      27

                   AGC  Allegheny Tower                                                                        79

                  ABE   Allentown Tower                                                                        26

                  AFW   Alliance Tower                                                                         29

                  AMA   Amarillo Tower                                                                         62

                   ANC/AAnchorage Tower & TRACON                                                               46

                  ADW   Andrews Tower                                                                          55

                  ARB   Ann Arbor Tower                                                                        48

                  AVL   Asheville Tower                                                                        40

                  ASE   Aspen Tower                                                                            48

                    ACY Atlantic City Tower                                                                    34

                  AGS   Augusta Tower                                                                          46

                  ARR   Aurora Tower                                                                           45

                  AUS   Austin Tower                                                                           23

                  BFL   Bakersfield Tower                                                                      46

                  BGR   Bangor Tower                                                                           25

                  BAD   Barksdale RAPCON                                                                       53

                  BTR   Baton Rouge Tower                                                                      39

                  BPT   Beaumont Tower                                                                         17

                  BIL   Billings Tower                                                                         15

                  BGM   Binghamton Tower                                                                       70

                  BHM   Birmingham Tower                                                                       20

                  BIS   Bismarck Tower                                                                         48

                  BFI   Boeing Tower                                                                           60

                  BOI   Boise Tower                                                                             8

                  LOU   Bowman Tower                                                                           58

                   POC  Brackett Tower                                                                         56

              BDL/Y90   Bradley Tower & TRACON                                                                 22

                   BJC  Broomfield Tower                                                                        9

                  BUF   Buffalo Tower                                                                          27

                  BUR   Burbank Tower                                                                          30

                  BTV   Burlington Tower                                                                       32

                     CDWCaldwell Tower                                                                         43

                     CMACamarillo Tower                                                                        30

                     CPRCasper Tower                                                                           67

                     CIDCedar Rapids Tower                                                                     40

                  APA   Centennial Tower                                                                       36

                  F11   Central Florida TRACON                                                                 38

                     CMIChampaign Tower                                                                        61

                     CHSCharleston Tower (N.C.)                                                                42

                     CRWCharleston Tower (WVa.)                                                                74

                     CHAChattanooga Tower                                                                      39

                  PWK   Chicago Executive Tower                                                                24

                     CNOChino Tower                                                                            28

                     CVGCincinnati Tower                                                                       25

                     CKBClarksburg Tower                                                                       35

                     CLECleveland Tower                                                                         6

                     COSColorado Springs Tower                                                                 42

                     CAEColumbia Tower                                                                         53

                     CMHColumbus Tower (Ohio)                                                                  17

                     CSGColumbus Tower (Georgia)                                                               30

                     CCRConcord Tower                                                                          60

                     CRPCorpus Christi Tower                                                                   19

                   MIC  Crystal Tower                                                                          58

                  DAL   Dallas Love Tower                                                                      29

                  DAY   Dayton Tower                                                                           10

                  DAB   Daytona Beach Tower                                                                    35

                  DVT   Deer Valley Tower                                                                      14

                  PDK   DeKalb--Peachtree Tower                                                                33

                  DSM   Des Moines Tower                                                                       46

                   MKC  Downtown Tower (Kansas City)                                                           34

                     CPSDowntown Tower (St. Louis)                                                             13

                  DLH   Duluth Tower                                                                           70

                  DPA   Dupage Tower                                                                           24

                  EMT   El Monte Tower                                                                         48

                  ELP   El Paso Tower                                                                          54

                  ELM   Elmira Tower                                                                           61

                  OMA   Eppley Tower                                                                           46

                  ERI   Erie Tower                                                                             64

                  EUG   Eugene Tower                                                                           34

                  EVV   Evansville Tower                                                                       45

                  FAI   Fairbanks Tower                                                                        44

                  FFZ   Falcon Tower                                                                           37

                  FAR   Fargo Tower                                                                            42

                  FRG   Farmingdale Tower                                                                      38

                  FAY   Fayetteville Tower                                                                     48

                 FNTA   Flint Tower                                                                            46

                  FLO   Florence Tower                                                                         47

                    FCM Flying Cloud Tower                                                                     58

                  FXE   Fort Lauderdale Executive Tower                                                         7

                  RSW   Fort Myers Tower                                                                       39

                  FSM   Fort Smith Tower                                                                       22

                  FWA   Fort Wayne Tower                                                                       14

                  FAT   Fresno Tower                                                                           59

                  SEE   Gillespie Tower                                                                        59

                    GCN Grand Canyon Tower                                                                     18

                  GFK   Grand Forks Tower                                                                      34

                  GRR   Grand Rapids Tower                                                                     57

                  MWH   Grant County Tower                                                                     22

                  GTF   Great Falls Tower                                                                      57

                  GRB   Green Bay Tower                                                                        48

                  GSO   Greensboro Tower                                                                       47

                  GSP   Greer Tower                                                                            59

                  GPT   Gulfport Tower                                                                          9

                  BED   Hanscom Tower                                                                          18

                  MDT   Harrisburg Intl Tower                                                                  32

                  HWD   Hayward Tower                                                                          60

                  HLN   Helena Tower                                                                           25

                  HIO   Hillsboro Tower                                                                        55

                  ITO   Hilo Tower                                                                             42

                  HOU   Hobby Tower                                                                            21

                    HCF Honolulu CERAP                                                                         21

                  DWH   Hooks Tower                                                                            42

                  HTS   Huntington Tower                                                                       60

                  HSV   Huntsville Tower                                                                       13

                  IND   Indianapolis Tower                                                                     15

                  ISP   Islip Tower                                                                            10

                  JAN   Jackson Tower                                                                          58

                  JAX   Jacksonville Tower                                                                     53

                  SNA   John Wayne Tower                                                                       39

                  JNU   Juneau Tower                                                                           35

                  AZO   Kalamazoo Tower                                                                         7

                    MCI Kansas City Tower                                                                      25

                  TYS   Knoxville Tower                                                                        35

                  LFT   Lafayette Tower (Louisiana)                                                            46

                  LAF   Lafayette Tower (Indiana)                                                              35

                    LCH Lake Charles Tower                                                                     60

                  NEW   Lakefront Tower                                                                        34

                  LAN   Lansing Tower                                                                          63

                  LEX   Lexington Tower                                                                        52

                  LNK   Lincoln Tower                                                                          48

                  LIT   Little Rock Tower                                                                      20

                  LVK   Livermore Tower                                                                        47

                  LGB   Long Beach Tower                                                                       53

                  GGG   Longview Tower                                                                         44

                  LBB   Lubbock Tower                                                                          45

                  MSN   Madison Tower                                                                          53

                  HEF   Manassas Tower                                                                         29

                  MHT   Manchester Tower                                                                       15

                  MFD   Mansfield Tower                                                                        47

                  OGG   Maui Tower                                                                             33

                  FTW   Meacham Tower                                                                          56

                  NMM   Meridian TRACON                                                                        60

                  MRI   Merrill Tower                                                                          22

                  MAF   Midland Tower                                                                          38

                  MKE   Milwaukee Tower                                                                        35

                  MOB   Mobile Tower                                                                           32

                  MSY   Moiusantt Tower (New Orleans)                                                          26

                  MLU   Monroe Tower                                                                           26

                  MRY   Monterey Tower                                                                         59

                  MYF   Montgomery Tower (San Diego)                                                           56

                  MGM   Montgomery Tower (Alabama)                                                             25

                  MMU   Morristown Tower                                                                       61

                  MKG   Muskegon Tower                                                                         54

                  MYR   Myrtle Beach Tower                                                                     40

                    ACK Nantucket Tower                                                                        61

                   APC  Napa Tower                                                                             57

                  BNA   Nashville Tower                                                                        40

                  ORF   Norfolk Tower                                                                          28

                  VGT   North Las Vegas Tower                                                                  19

                  PNE   Northeast Philadelphia Tower                                                           48

                  OAK   Oakland Tower                                                                           8

                   OKCA Oklahoma City Tower                                                                    54

                  R90   Omaha TRACON                                                                           56

                  ONT   Ontario Tower                                                                          35

                  ORL   Orlando Executive, FL ATCT Tower                                                       27

                  PAE   Paine Tower                                                                            18

                  PBI   Palm Beach Tower                                                                        7

                  PSP   Palm Springs Tower                                                                      8

                  PAO   Palo Alto Tower                                                                        53

                     CRQPalomar Tower                                                                          48

                   PSC  Pasco Tower                                                                            48

                  PHF   Patrick Henry Tower                                                                    14

                  PNS   Pensacola Tower                                                                        26

                  PIA   Peoria Tower                                                                           62

                  PIT   Pittsburgh Tower                                                                       36

                  PTK   Pontiac Tower                                                                          24

                  PDX   Portland Tower (Ore.)                                                                  23

                  PWM   Portland Tower (Maine)                                                                 47

                  P80   Portland TRACON (Ore.)                                                                 63

                  POU   Poughkeepsie Tower                                                                     48

                   PRC  Prescott Tower                                                                         33

                  PVD   Providence Tower                                                                       31

                  PUB   Pueblo Tower                                                                           56

                  MLI   Quad City Tower                                                                        47

                  RDU   Raleigh-Durham Tower                                                                   34

                  RDG   Reading Tower                                                                          55

                  RHV   Reid-Hillview Tower                                                                    54

                  RNO   Reno Tower                                                                             11

                   RIC  Richmond Tower                                                                         17

                  RVS   Riverside Tower                                                                        56

                  ROA   Roanoke Tower                                                                          17

                   ROC  Rochester Tower (N.Y.)                                                                 38

                  RST   Rochester Tower (Minn.)                                                                61

                  RFD   Rockford Tower                                                                         63

                 ROWA   Roswell Tower                                                                          23

                  SMF   Sacramento Tower                                                                       54

                  MBS   Saginaw Tower                                                                          56

                 SATA   San Antonio Tower                                                                      35

                   SJC  San Jose Tower                                                                         27

                  SJU   San Juan Tower                                                                         26

                  SFB   Sanford Tower                                                                          24

                  SBA   Santa Barbara Tower                                                                    23

                  SMO   Santa Monica Tower                                                                     55

                  SRQ   Sarasota Tower                                                                          3

                  SAV   Savannah Tower                                                                         16

                  SDL   Scottsdale Tower                                                                       32

                  SHV   Shreveport Tower                                                                       45

                  FSD   Sioux Falls Tower                                                                      55

                  SUX   Sioux Gateway Tower                                                                    29

                  STS   Sonoma Tower                                                                           59

                  SBN   South Bend Tower                                                                       41

                  SUS   Spirit Tower                                                                           35

                  GEG   Spokane Tower                                                                          14

                  SGF   Springfield Tower                                                                      43

                  SPI   Springfield Tower                                                                      41

                  STL   St Louis Tower                                                                         22

                  FPR   St Lucie Tower                                                                         30

                  STP   St Paul Tower                                                                          22

                  PIE   St Petersburg Tower                                                                    27

                  STT   St Thomas Tower                                                                        37

                  SDF   Standiford Tower                                                                       23

                    SCK Stockton Tower                                                                         64

                  SYR   Syracuse Tower                                                                         22

                  TLH   Tallahassee Tower                                                                      25

                  TMB   Tamiami Tower                                                                          53

                  HUF   Terre Haute/Hulman ATCT/TRACON                                                         64

                  TEB   Teterboro Tower                                                                        47

                  TOL   Toledo Tower                                                                           66

                  TOA   Torrance Tower                                                                         60

                   TVC  Traverse City Tower                                                                     8

                  TRI   Tri-Cities Tower                                                                       35

                  TUS   Tucson Tower                                                                            4

                  U90   Tucson TRACON                                                                          41

                  TUL   Tulsa Tower                                                                            63

                  TWF   Twin Falls Tower                                                                       46

                  VNY   Van Nuys Tower                                                                         54

                  VRB   Vero Beach Tower                                                                       18

                    ACT Waco Tower                                                                             39

                  ALO   Waterloo Tower                                                                         34

                  HPN   Westchester Tower                                                                      52

                    ICT Wichita Tower                                                                          40

                  AVP   Wilkes-Barre Tower                                                                      9

                 YIPA   Willow Run Tower                                                                       34

                  ILM   Wilmington Tower                                                                       34

                  ILG   Wilmington Tower                                                                       20

                  YNG   Youngstown Tower                                                                       51
    ----------------------------------------------------------------------------------------------------------------
                        Average Age:                                                                         38.1
    ----------------------------------------------------------------------------------------------------------------

        Senator Sinema. Thank you so much. Now, before I introduce
    our next witness, I would like to recognize our Ranking Member
    of the Subcommittee, Senator Cruz. Senator Cruz, you are
    recognized for your opening statement.

                      STATEMENT OF HON. TED CRUZ,
                        U.S. SENATOR FROM TEXAS

        Senator Cruz. Thank you, Madam Chair. It is good to be with
    you. Thank you for holding today's hearing on aviation
    infrastructure for the 21st century. Over a year ago, we held
    the first congressional hearing on the role of global aviation
    in containing the spread of what was then a relatively new
    infectious disease, COVID-19.
        At that time, none of us could have imagined the ultimate
    scope of this public health emergency, how quickly it would
    snowball into a crisis, and the pain it would inflict upon the
    United States, including our aviation system.
        At the lowest point last year, barely 100,000 passengers
    were flying each day, compared with over 2 million at the same
    time the year before. To address the crisis at hand, Congress
    acted quickly through the CARES Act to provide relief to the
    nation, including the aviation sector, and to preserve millions
    of jobs, and to ensure that when America got back up and
    running, it could do so without delay. What a difference a year
    makes.
        Today, more than half of the U.S. population has received
    at least one dose of COVID vaccine. More than 60 percent of
    adults have received at least one dose. And more than 40
    percent have been fully vaccinated. And it shows. Get on an
    airplane going almost anywhere in the country, and it is highly
    likely that the plane will be almost completely full, bookings
    are up, losses are down, and airports have started to hum with
    activity once again. This is good news and deserves to be
    celebrated.
        As welcomed as this light at the end of the tunnel is
    though, we would be remiss if we walked away from this crisis
    without learning several important lessons, especially as we
    undertake discussions on an infrastructure package, something
    the chair of this subcommittee is all too familiar with. As I
    said back in April, during the first hearing of our
    subcommittee, COVID showed us clearly just how important it is
    that we are prepared to deal with a fast moving, far reaching
    crisis, especially our aviation enterprise.
        Now that we are rounding the corner on COVID, Government
    and industry need to sit down and strategize about how we make
    our aviation enterprise even more resilient across the board,
    from carriers to concessionaires and air traffic control to
    airports themselves. Although none of us could have predicted
    how quickly COVID would devastate aviation, I very much believe
    we will have missed an important opportunity to bolster our
    aviation enterprise, making it more resilient and capable of
    addressing an unforeseen crisis if we go about business as
    usual once we are fully back to normal.
        And the time is right to begin discussing how to do that in
    earnest. With FAA authorization coming up for renewal in 2023,
    we can and should really begin discussing how to best modernize
    our aviation enterprise, including infrastructure, not just for
    the next 5 years, but for the next 50. And I firmly believe
    that no idea should be off the table in these discussions. For
    too long, we have done things much the same way as we always
    have, especially when it comes to how we pay for projects and
    what our air traffic control system looks like.
        And for too long we have just accepted that business as
    usual is the only way things will get done. But I believe that
    in the Nation that gave the world the first airplane and put
    the first man on another celestial body, it is not too much to
    think that we are capable of asking the tough questions,
    challenging existing paradigms and coming up with bold and
    creative solutions.
        So I look forward to hearing the perspectives each of our
    witnesses brings to today's hearings, as well as their ideas
    for how we can move aviation in the United States into the
    future. Thank you.
        Senator Sinema. Thank you, Senator Cruz. Thank you for
    joining today and thank you for your opening comments. I will
    move now to our fourth witness. Our fourth witness is Dr.
    Benjamin Miller, an economist at the Rand Corporation and a
    professor at the Pardee Rand Graduate School. His research
    includes the study on airport infrastructure funding and
    financing mandated by Section 122 of the Federal Aviation
    Administration Reauthorization Act of 2018. Dr. Miller, thank
    you for your patience and thank you for joining us today. You
    are recognized for your opening statement.

         STATEMENT OF DR. BENJAMIN MILLER, THE RAND CORPORATION

        Dr. Miller. Thank you. Good afternoon, Chair Sinema,
    Ranking Member Cruz, and distinguished members of the
    Committee. Thank you for inviting me to testify on the funding
    and financing of infrastructure at our Nation's airports. In
    the FAA Reauthorization Act of 2018, Congress directed the
    Secretary of Transportation to engage an independent research
    organization to make recommendations regarding the funding and
    financing of infrastructure commercial service airports.
        The FAA awarded the contract to conduct this study by the
    Rand Corporation. The Rand Corporation is a nonprofit,
    nonpartisan research institution and I lead this particular
    study. The study was informed by a diverse panel of
    stakeholders, including representatives from airports of all
    sizes, as well as airlines, travelers, and other stakeholder
    groups. We also analyzed data from the FAA, the Bureau of
    Transportation Statistics, and other sources. My remarks today
    are drawn from the study, which my team and I published in
    January 2020. We made seven recommendations in our report.
        I will focus my comments today on three of those
    recommendations given their relevance and importance. Those
    recommendations include, first, increasing the passenger
    facility charge cap and indexing it to inflation. Second,
    removing the automatic doubling of primary entitlements in the
    airport improvement program. And third, establishing a rainy
    day reserve for the airport and airways trust fund. Our first
    recommendation is for Congress to increase the PFC cap and
    index it to inflation. With the approval of the FAA, commercial
    service airports concurrently applied to collect $4.50 from
    each passenger boarding a plane, similar to drivers paying a
    toll to use a highway.
        The PFC is also a user fee that ensures airport
    infrastructure is paid for by the individuals who use it. The
    PFC does not currently adjust with inflation, so the value per
    passenger has declined over time. We are not aware of any
    compelling justification for a particular level for a new cap,
    but if the PFC indexed to inflation when last updated in 2001,
    it would be approximately $7.50 today. Regardless of what level
    is selected, indexing the PFC cap to inflation is important for
    ensuring that it remains a stable source of funds for airport
    infrastructure in the long run.
        Raising the PFC cap does not automatically increase
    collections, but rather allows commercial service airports to
    apply for permission to collect a higher PFC. If the cap is
    raised, ticket prices for passengers will likely increase at
    airports where applications for PFC collections are approved.
    Overall, we found that disagreements around whether to increase
    the PFC cap came down to differences of opinion regarding the
    urgency of pending infrastructure projects. We found that while
    the most critical projects will likely be built eventually,
    increasing the PFC cap will enable airports to complete
    essential projects sooner and at lower cost.
        We also found that existing guardrails are sufficient and
    effective in requiring airports to demonstrate that the
    benefits of PFC funded projects justify increase in
    collections. For these reasons, we recommend increasing the PFC
    cap. Our second recommendation is that Congress should move the
    automatic doubling of primary entitlements in the airport
    improvement program. Under current law, whenever Congress
    appropriates at least $3.2 billion to the AIP, primary
    entitlements per passenger double. This decreases the amount of
    money available for other AIP funds, including discretionary
    grants.
        As a consequence of this policy, annual AIP funding has
    spread across all primary airports according to their
    employments, and the FAA has less discretion to effectively
    direct funds to current high priority projects in specific
    airports. This discretion is important because the expensive
    and long term nature of infrastructure investments means that
    well-timed but less frequent large grants may be of more
    practical use than station small grants, particularly for
    smaller airports.
        Our third recommendation is that Congress establish a rainy
    day fund to serve as a backstop within the Airport and Airways
    Trust Fund. The AATF is funded by taxes and fees related to air
    travel and is used to fund the AIP and many other FAA programs.
    A rainy day fund of approximately $4 to $6 billion would be
    valuable for ensuring that AATF outflows remain stable through
    common downturns such as recessions or other periods of low air
    travel.
        Such a backstop may be particularly important as the
    diminished trust fund is reestablished after having been drawn
    down considerably during the pandemic. These changes in policy,
    along with other recommendations detailed in our report, could
    help make airports--could help airports make the infrastructure
    investments needed to better position themselves for the
    future.
        Thank you for inviting me to testify, and I am happy to
    answer any questions.
        [The prepared statement of Dr. Miller follows:]

      Prepared Statement of Benjamin M. Miller\1\--The RAND Corporation\2\
    ---------------------------------------------------------------------------
        \1\ The opinions and conclusions expressed in this testimony are
    the author's alone and should not be interpreted as representing those
    of the RAND Corporation or any of the sponsors of its research.
        \2\ The RAND Corporation is a research organization that develops
    solutions to public policy challenges to help make communities
    throughout the world safer and more secure, healthier and more
    prosperous. RAND is nonprofit, nonpartisan, and committed to the public
    interest. RAND's mission is enabled through its core values of quality
    and objectivity and its commitment to integrity and ethical behavior.
    RAND subjects its research publications to a robust and exacting
    quality-assurance process; avoids financial and other conflicts of
    interest through staff training, project screening, and a policy of
    mandatory disclosure; and pursues transparency through the open
    publication of research findings and recommendations, disclosure of the
    source of funding of published research, and policies to ensure
    intellectual independence. This testimony is not a research
    publication, but witnesses affiliated with RAND routinely draw on
    relevant research conducted in the organization.
    ---------------------------------------------------------------------------
    Funding and Financing Infrastructure at U.S. Airports: Overview of the
                        2020 RAND Report Recommendations
        Good afternoon, Chairwoman Sinema, Ranking Member Cruz, and
    distinguished members of the subcommittee. Thank you for inviting me to
    testify on the funding and financing of infrastructure at our Nation's
    airports. Billions of dollars are spent every year on infrastructure at
    U.S. airports; aviation connects our country by moving millions of
    people and hundreds of millions of pounds of cargo every day. In the
    Federal Aviation Administration (FAA) Reauthorization Act of 2018,
    Congress directed the Secretary of Transportation to engage an
    independent research organization to consider issues concerning the
    status of airport infrastructure and issues of funding and finance at
    commercial service airports.\3\ The FAA awarded the contract to RAND to
    conduct this study. My remarks today are drawn from our study,
    published in January 2020.\4\ I will focus my discussion on
    highlighting how needs, available resources, and the impacts of the
    coronavirus pandemic differ across airports of different types and
    sizes. Our recommendations, which I detail below, include increasing
    the Passenger Facility Charge (PFC) cap and indexing it to inflation,
    removing the automatic doubling of Airport Improvement Program (AIP)
    entitlements, and establishing a rainy day reserve for the Airport and
    Airway Trust Fund (AATF).
    ---------------------------------------------------------------------------
        \3\ Per Section 122 of the Federal Aviation Administration
    Reauthorization Act of 2018 (Pub. L. 115-254).
        \4\ Benjamin M. Miller, Debra Knopman, Liisa Ecola, Brian Phillips,
    Moon Kim, Nathaniel Edenfield, Daniel Schwam, and Diogo Prosdocimi,
    U.S. Airport Infrastructure Funding and Financing: Issues and Policy
    Options Pursuant to Section 122 of the 2018 Federal Aviation
    Administration Reauthorization Act, Santa Monica, Calif.: RAND
    Corporation, RR-3175-FAA, 2020 (https://www.rand.org/pubs/
    research_reports/RR3175.html).
    ---------------------------------------------------------------------------
    The Nation's Airports
        There are more than 19,000 landing areas within the United States
    of varying size and type, 5,099 of which are considered public-use
    airports.\5\ The FAA includes 3,321 public-use airports in the National
    Plan of Integrated Airport Systems (NPIAS), which is an FAA-managed
    plan to develop an integrated system of public-use airports and
    identify priorities for Federal airport infrastructure funding.
    Notably, an airport must be included in the NPIAS to receive Federal
    grants.
    ---------------------------------------------------------------------------
        \5\ FAA, National Plan of Integrated Airport Systems (NPIAS): 2019-
    2023, Washington, D.C., 2018. A public-use airport is defined as
    publicly owned, privately owned but designated by the FAA as a
    ``reliever'' for congestion at commercial service airports, or
    privately owned but having scheduled service and at least 2,500 annual
    enplanements. Enplanements is the industry's term for the number of
    passengers boarding aircraft at an airport.
    ---------------------------------------------------------------------------
        Almost all commercial service airports in the United States are
    publicly owned. Large-, medium-, and small-hub airports served 96
    percent of commercial passenger traffic in 2018. However, the vast
    majority of airports in the NPIAS are general aviation (GA) airports,
    which do not focus on commercial transportation of passengers. GA
    airports serve a wide variety of users (typically, small noncommercial
    transport of people, cargo, or mail); support emergency preparedness
    and response, local economic activity, and access for local or remote
    areas; and provide a safety net for the National Airspace System.\6\
    ---------------------------------------------------------------------------
        \6\ FAA, ``Interim Guidance on Land Uses Within a Runway Protection
    Zone,'' memorandum to Regional Airports Division Managers, 610 Branch
    Managers, 620 Branch Managers, and ADO Managers, September 27, 2012.
    ---------------------------------------------------------------------------
    Types of Airport-Related Infrastructure
        Airport infrastructure is typically distinguished by the categories
    of airside and landside. Airside infrastructure includes runways,
    taxiways, aprons, aircraft gates, barriers, lighting, and other
    facilities necessary for aircraft operation. Landside infrastructure
    includes airport terminals, parking lots and garages, transportation
    access roads and rails, rental car facilities, baggage facilities, and
    other facilities for processing passengers, cargo, and ground
    transportation. Airports reported spending $12.8 billion on capital
    projects for these sorts of infrastructure in 2017 alone. Although not
    a focus of our study, air traffic control (ATC) infrastructure includes
    towers and other vital facilities, which are not owned and operated by
    airports, and not all of which are located on airport property.\7\
    ---------------------------------------------------------------------------
        \7\ Congressional staff made clear to RAND that the Section 122
    study was not intended to address the infrastructure needs of the more
    than 300 ATC facilities operated by the FAA and for that reason was not
    included within the scope of the study.
    ---------------------------------------------------------------------------
    Areas Where Infrastructure Investment Is Needed
        Airport runways are generally in good repair. This reflects the
    priority given to airside infrastructure in Federal grants provided
    under the AIP and the effectiveness of funding from all sources to meet
    airside needs. However, terminals and control towers are widely viewed
    as needing modernization, repair, or replacement. The growth in the
    number of enplanements led to crowded terminals at some airports prior
    to the pandemic, and many aging control towers and other ATC facilities
    require rehabilitation and upgrading. Smaller airports, which are
    reliant on Federal grants, struggle to generate sufficient revenues for
    spending on landside infrastructure for ground transportation vehicles,
    the processing of passengers, and other purposes.
        These infrastructure limitations are one of several factors
    contributing to delays in the National Airspace System that were
    evident before the pandemic. These infrastructure-related delays are
    not spread evenly across the system. Rather, a small number of
    capacity-constrained airports appeared to be responsible for the
    majority of delays that could be partially (but not fully) addressed by
    sound infrastructure investment. Twenty airports (19 large hubs and one
    reliever) accounted for 96 percent of delays measured by the FAA's
    Operations Network in 2018.
    Funding Sources Vary with Airport Sizes
        Although airports across the Nation face many of the same
    challenges, the financial capabilities and local context of each
    airport can vary widely. Airports of all sizes face a broadly similar
    distribution of operating expenses, nonoperating expenses, and capital
    expenses. However, the funding sources used to finance these expenses
    differ depending on the airport's size, as shown in Figure 1. Further,
    how financial risks are distributed between airports and airlines
    depends on the particulars of use-and-lease agreements between
    individual airports and their tenant airlines. Airports also entered
    the pandemic with widely varying amounts of cash reserves, airline
    competition, and infrastructure-related delays.
        The difference in the proportion of AIP grants and PFC funds by
    airport size is particularly noteworthy, as these are the two funding
    sources most directly affected by Federal policy. Larger airports
    generally choose to forgo a large portion of their AIP entitlements in
    order to collect additional PFC funds. This is because their larger
    passenger volumes cause the revenue collected from PFCs to easily
    exceed the forgone AIP entitlements. In contrast, smaller airports
    often perceive the potential revenue from PFCs to be too small to
    justify the administrative costs of applying.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        SOURCE: ``Certification Activity Tracking System (CATS),'' webpage,
    undated (https://cats.airports.faa.gov).

        362 airports were collecting PFCs as of August 2019, including 98
    of the Nation's largest 100 airports. As shown in Table 1, the vast
    majority of these airports collect the maximum allowable fee of $4.50
    per flight segment.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        SOURCE: FAA, ``Key Passenger Facility Charge Statistics,'' May 31,
    2019.
        NOTE: Data are as of August 31, 2019; the number of airports in
    each hub-size category is from FAA, ``Voluntary Airport Low Emissions
    Program (VALE),'' webpage, updated November 13, 2018 (https://
    www.faa.gov/airports/environmental/vale/).

        Smaller airports by definition have a smaller user base that offers
    fewer opportunities for raising revenue and are therefore more reliant
    on Federal (and to a much lesser extent, state) grants than larger
    airports for paying the high fixed costs related to runways, taxiways,
    aprons, safety, and security. GA airports are not eligible to collect
    PFCs, a mechanism that Congress authorized exclusively for use by
    commercial service airports, nor do GA airports have sufficient
    passenger volume to support such a user fee. Instead, GA and nonprimary
    commercial service airports rely on AIP funding, which is
    redistributive by design; smaller airports receive a larger share of
    AIP dollars than they generate in excise tax revenues to the Airport
    and Airway Trust Fund (AATF), which funds the AIP and many other FAA
    programs.
    The Pandemic and Its Impact on Demand for Air Travel
        Prior to the coronavirus pandemic, the demand for air travel was
    steadily increasing, leading to questions about whether the flow of
    funds supporting airport infrastructure was sufficient to keep pace
    with the growing demands placed on airport infrastructure. The severity
    and duration of the reduction in demand for commercial passenger air
    travel caused by the coronavirus pandemic was unprecedented, even in
    comparison to past disruptions, such as the September 11 attacks, which
    were previously considered by the industry to represent a worst-case
    scenario. The Airports Council International-North America forecasts
    that U.S. airports will lose $23.3 billion in revenues as a result of
    the COVID-19 pandemic.\8\ At least four regional airlines collapsed,\9\
    and airports in dozens of small cities lost almost all commercial
    passenger air service because the remaining demand for passenger air
    travel was no longer sufficient to support regularly scheduled
    service.\10\
    ---------------------------------------------------------------------------
        \8\ Airports Council International-North America, ``Economic Impact
    of Coronavirus on U.S. Commercial Airports,'' fact sheet, April 29,
    2020 (https://airportscouncil.org/resource/economic-impact-of-
    coronavirus-on-u-s-commercial-airports/).
        \9\ Justin Bachman, ``Another Regional Airline Falls to the Covid-
    19 Recession,'' Bloomberg, August 4, 2020 (https://www.bloomberg.com/
    news/articles/2020-08-04/another-regional-u-s-airline-falls-to-the-
    covid-19-recession).
        \10\ Ian Duncan, ``American Airlines to Cut Service to 15 Cities
    Once Terms on Billions in Pandemic Aid Expire,'' Washington Post,
    August 20, 2020; Peter Buffo and Sandra Jones, ``Grounded: Some Cities
    Lost More Than Half Their Flights amid COVID-19,'' WAGM, March 29,
    2021.
    ---------------------------------------------------------------------------
    Passenger Service
        Passenger volumes have been recovering very slowly after bottoming
    out, with approximately 95 percent fewer passengers in April 2020 than
    in April 2019, as shown in Figure 2. This decline in passenger traffic
    was experienced by airports of all sizes. As of mid-June 2021, demand
    reached approximately 70 percent of 2019 levels. Recent trends appear
    to point to domestic passenger counts returning to 2019 levels within
    the next year, although international travel may take longer. As
    passenger travel resumes its previously forecasted growth, the question
    of sufficiency of funding will reemerge.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        SOURCE: Transportation Security Administration, ``TSA Checkpoint
    Travel Numbers (Current Year(S) Versus Prior Year/Same Weekday),''
    webpage, last updated June 17, 2021 (https://www.tsa.gov/coronavirus/
    passenger-throughput).
        NOTE: Both lines show seven-day rolling averages. The orange line
    shows the average number of passengers on the corresponding date in
    2019.
    Cargo
        The quantity of cargo being flown across the country reached record
    highs during the pandemic.\11\ Demand for air transportation of cargo
    spiked in May 2020, as shown in Figure 3.
    ---------------------------------------------------------------------------
        \11\ Our report in response to Section 122 of the FAA
    Reauthorization Act of 2018, focused on commercial passenger service
    rather than cargo. However, understanding the pandemic's impact on
    cargo is important for understanding how the pandemic's impact varies
    across different types of airports.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        SOURCE: Bureau of Transportation Statistics, ``Air Cargo Summary
    Data (All): October 2002-March 2021,'' webpage, undated (https://
    www.transtats.bts.gov/freight.asp).
    The Impacts of the Pandemic Have Varied Across Airports
        The pandemic has been devastating for airports of all sizes, just
    as it has been for airlines and all industries involved in air travel.
    The increase in cargo is not a substitute for the revenue lost from the
    decline in passengers. Because different types of airports may focus on
    serving different customers, the rate at which the number of flights is
    returning to prepandemic levels varies across airports of different
    types. Figure 4 shows that smaller airports, where a larger fraction of
    flights are cargo, have returned to their prepandemic number of flights
    more quickly than larger airports, which typically focus on commercial
    passengers. However, even if an airport were to replace lost passenger
    flights with cargo flights, that might not fully replace lost revenue
    from such sources as parking garages and terminal leases.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Source: FAA, ``The Operations Network (OPSNET),'' database, undated
    (https://aspm.faa.gov/opsnet/sys/main.asp)
    Recommendations
        Since our report was published in January 2020, the pandemic has
    severely disrupted air travel. Demand for air travel will--eventually--
    return to previous levels and previous rates of growth. When that
    happens, the same infrastructure funding issues will reappear. For this
    testimony, the study team reviewed our recommendations in light of the
    pandemic's impacts and considered whether changes were warranted. We
    concluded that, despite the coronavirus pandemic, our recommendations
    remain sound and require little modification.
    Changes to the PFC Program
        The PFC is a federally authorized user fee paid by passengers at
    the time of ticket purchase and remitted to the airport at which the
    passenger boards a plane. With the approval of the FAA, an airport can
    choose to collect up to $4.50 from each passenger boarding a plane,
    similar to drivers paying a toll to use a highway. Congress determines
    the maximum allowable fee per passenger boarding; an airport may apply
    to collect that amount or a lower fee. The vast majority of these
    airports collect the maximum allowable fee of $4.50 per flight segment.
    There is an ongoing debate over whether the maximum allowable PFC
    should be increased above $4.50, the amount it has been since April
    2001, when the cap increase included in the 2000 FAA reauthorization
    took effect.
        The PFC does not currently adjust with inflation, so the value per
    passenger has declined over time. The total amount of PFC funds
    collected has increased over time due to three factors: (1) an increase
    in the number of airports that impose a PFC, (2) an increase in the
    average PFC charged by these airports, and (3) an increase in
    enplanements. At the same time, increases in enplanements and
    operations also increase demands on infrastructure.
        Airport sponsors cannot unilaterally impose a PFC. Rather, they
    must apply to the FAA to request approval to collect a PFC.\12\ The
    application must identify specific PFC-eligible projects that the
    collected funds will support, as well as provide other documentation.
    During the application process, airport sponsors must consult with air
    carriers and submit formal responses to any formal comments made by air
    carriers or other members of the public.
    ---------------------------------------------------------------------------
        \12\ The application process is detailed in FAA Order 5500.1, and
    the instructions for preparing a PFC application are available on the
    FAA's website. See FAA Order 5500.1, Passenger Facility Charge,
    Washington, D.C.: Federal Aviation Administration, August 9, 2001; FAA,
    ``Instructions for Preparing Attachments for PFC Application Form:
    Section 6 of FAA Form 5500-1,'' undated.
    ---------------------------------------------------------------------------
        PFC revenues are attractive to airports because they can be used
    for a wider range of projects than can AIP grants, and they can also be
    used to pay for debt service and financing costs.
    Congress Should Increase--but Not Remove--the PFC Cap and Index It to
            Inflation
        This option will improve airports' ability to make timely and
    efficient capital investments to meet growing future demand while
    leaving in place FAA oversight of project justification and costs on
    passengers.
        Specifically, we recommend that Congress

       raise the current PFC cap of $4.50 to approximately $7.50
            for origin passengers only

       index the new PFC cap to inflation

       eliminate 100 percent of AIP primary entitlements for
            medium-and large-hub airports that choose to raise their PFC
            above $4.50.

        We are not aware of compelling evidence or data justifying a
    particular level for a new cap. Any number could be chosen, but we note
    that if the $4.50 cap had been indexed to inflation in 2000 using the
    Producer Price Index for construction materials, it would now be set at
    $7.44. For this reason, we suggest that the cap in this option be
    around this value, perhaps rounded up to $7.50, although other levels
    could be chosen. Although an increase in the PFC cap would likely
    result in higher ticket prices for passengers traveling through
    airports that raised their PFC collections, there remains in place a
    set of guardrails to weigh the public benefits of PFC-funded projects
    relative to the costs imposed on passengers. Airports will continue to
    be required to justify the net benefits of projects proposed for PFC
    funding to the FAA, and the FAA retains its discretion to approve or
    disapprove applications for these projects. Further, airports will
    still need to be responsive to comments from airlines and other
    stakeholders when requesting a PFC increase.
        To ensure that airports have sufficient and stable sources of
    revenue commensurate with present and future capital needs, the PFC cap
    should be indexed to inflation, regardless of whether the PFC cap is
    otherwise changed. Indexing the PFC to a construction index, such as
    the Producer Price Index for construction materials, would stabilize
    the parity of purchasing power at the current cap or a new cap set by
    Congress for airports making infrastructure investments. In contrast,
    indexing to the Consumer Price Index would hold constant the impact of
    PFC increases on passenger ticket prices.
        Not all airports may choose to seek an immediate or longer-term PFC
    increase. To increase transparency regarding the intentions of airports
    in maintaining cash reserves beyond those required by bond-rating
    agencies, we suggest that the FAA consider an airport's cash reserves
    and broader financial status when determining whether to approve an
    airport's request for an increase in its PFC. Prior to the coronavirus
    pandemic, there was significant variation in airports' levels of cash
    reserves.
        We further recommend that large-and medium-hub airports that raise
    their PFC above $4.50, indexed to inflation, should forgo their AIP
    primary entitlements, dollar for dollar, for each dollar of PFCs they
    collect up to 100 percent of these entitlements. Instead, that money
    could more efficiently achieve the redistributive purpose of the AIP
    program by either being focused on needs of national significance among
    smaller airports or directed to other priorities affecting the safety
    and sustainability of the National Airspace System. Airports that raise
    their PFC above $4.50 would remain eligible for other categories of AIP
    funding, including discretionary grants and cargo entitlements.
        We recommend that any increase in the PFC cap apply only to
    passengers who originate at that airport and that the PFC for layover
    passengers remain capped at $4.50, indexed to inflation. The rationale
    for restricting future PFC increases to origin passengers only is to
    ensure that airports that increase their PFCs do so at their own
    expense, rather than at the expense of other airports. Under current
    law, passengers with one or more layovers must pay two PFCs, one to the
    origin airport and one to the first layover airport. If an airport's
    PFC increase applies to layover passengers, demand for flights that
    have layovers at that airport would decrease. This would be
    particularly problematic for small airports, where almost all routes go
    through one or two larger ``feeder'' airports to connect the community
    to the national and international system. Because origin passengers
    represent the majority of passengers at most airports, and because
    layover passengers can still be charged PFCs at currently approved
    rates, all commercial service airports would still receive a meaningful
    increase in their ability to raise revenue through PFCs.
    Implications of the Pandemic
        The need to increase the PFC and index to inflation remains--
    indeed, the need is greater, if anything. Airports have $16.6 billion
    in debt service payments to make over the next two years,\13\ much of
    which was to be paid with PFC funds collected over that time. With
    passenger volumes down, those PFC funds will be far less than
    anticipated. Because revenue from other funding sources, such as retail
    and parking, is also down, many airports will need to draw on PFC
    revenues from future years to pay off debts. However, many airports
    have already borrowed against PFCs that will be collected decades into
    the future and hence may have limited ability to obtain additional PFC
    funds. This will delay airports' ability to finance future
    infrastructure projects.
    ---------------------------------------------------------------------------
        \13\ Airports Council International-North America, 2020.
    ---------------------------------------------------------------------------
        That said, it is unclear whether airports would make immediate use
    of a PFC increase in today's environment. Keeping costs down has been a
    focus of both industry and policy responses to COVID-19, with the hope
    of luring back travelers. As explained above, raising the PFC cap does
    not directly raise PFCs--it simply provides airports the option to
    apply for permission to raise their PFC at the appropriate time.
    Changes to the AIP
        AIP grants represent the largest, most direct involvement of the
    Federal government in funding airport infrastructure. AIP grants are
    funded by the AATF, a Federal trust fund that receives excise tax
    revenues from passenger and cargo travel and fuel purchases and that is
    used exclusively to fund aviation-related activities. The annual AIP
    funding appropriation limitation is set by Congress. AIP grants are
    distributed to public-use airports listed in the NPIAS via a complex
    set of apportionment formulas and percentage set-asides.
        There are two general types of AIP grants: entitlements and
    discretionary. The FAA uses discretionary grants to target specific
    projects at individual airports according to need and benefit to the
    system as a whole. The FAA awards entitlement grants to most airports
    in the NPIAS, although airports that receive approval for PFC-funded
    projects forgo a portion of their entitlement. Under current
    congressionally mandated funding formulas, GA and nonprimary commercial
    service airports are each eligible to receive entitlement grants of up
    to $150,000 per year, an amount too small to support airport
    construction of any consequence. Airports, however, are permitted to
    defer their annual entitlements over several years to accumulate
    sufficient funds to undertake a project.
        Importantly, large-and medium-hub airports forgo a portion of their
    primary entitlements if they impose a PFC. Virtually all of them choose
    to do so because their passenger volumes ensure that revenue collected
    from PFCs dwarfs forgone AIP entitlements. Large and medium hubs that
    charge a PFC of $3 or less forgo AIP apportionments equal to 50 percent
    of their projected PFC revenues for the year, up to 50 percent of their
    primary apportionment, while those that charge a PFC of more than $3
    forgo an amount equal to 75 percent of projected PFC revenues, up to 75
    percent of their primary apportionment.\14\ By statute, 87.5 percent of
    these forgone AIP entitlements go to the Small Airport Fund,\15\ while
    the remaining 12.5 percent are available as discretionary funds.\16\
    ---------------------------------------------------------------------------
        \14\ 49 U.S.C. Sec. 47114.
        \15\ Funds in the Small Airport Fund are awarded competitively to
    specific categories of small airports.
        \16\ 49 U.S.C. Sec. 47116.
    ---------------------------------------------------------------------------
    Congress Should Remove the Automatic Doubling of AIP Primary
            Entitlements
        Under current law, whenever Congress appropriates at least $3.2
    billion to the AIP, primary entitlements per passenger double (subject
    to a cap), with those increases resulting in less money available for
    other AIP funds, including discretionary grants. As a consequence of
    this policy, annual AIP funding is spread across all primary airports
    according to their enplanements, and the FAA has less discretion to
    effectively direct funds to current high-priority projects at specific
    airports.
        In our report, we recommend that Congress remove the triggered
    primary entitlement increase that occurs when Congress appropriates at
    least at $3.2 billion to the AIP. Those airports not voluntarily
    forgoing AIP entitlements in return for the ability to collect PFCs
    could still receive comparable levels of AIP funding over time, but the
    timing and magnitude of annual grants would be better aligned with the
    timing and magnitude of needs. Airports could compete to receive more
    funds in the form of larger grants from the pool of discretionary
    funding, when needed, but would receive fewer guaranteed funds in the
    form of annual entitlements.
    Congress Should Consider Removing Nonprimary Entitlements
        As with primary entitlements, under current law, whenever Congress
    appropriates at least $3.2 billion to the AIP, each nonprimary airport
    in the NPIAS receives an entitlement of up to $150,000 instead of those
    funds going to more-flexible state apportionments for nonprimary
    airports. This amount is insufficient for major construction projects,
    and the existing state apportionment mechanism is better suited to meet
    nonprimary airports' needs and has sufficient oversight mechanisms in
    place. We recommend that Congress eliminate nonprimary entitlements
    that occur under current law when the AIP appropriation is at least
    $3.2 billion. As with the previous recommendation, airports could still
    compete to receive comparable levels of funding over time, but the
    timing and magnitude of individual distributions would be better
    aligned with the timing and magnitude of needs.
        It is important to emphasize that the purpose of removing
    nonprimary entitlements is to reconfigure how nonprimary airports are
    supported and not to reduce overall support for nonprimary airports.
    These changes--combined with the PFC reforms that would increase the
    amount of forgone AIP primary entitlements going to the Small Airport
    Fund--would ensure that nonprimary airports have access to more
    resources when they are needed.
    Changes to the AATF
    Congress Should Establish a Rainy Day Reserve Fund to Serve as a
            Backstop for the AATF
        Prior to the pandemic, we had suggested that Congress use what had
    been a large uncommitted balance in the AATF to establish a rainy day
    fund to support the air travel industry in the event of unusually low
    air travel. A few months after we published our report, the pandemic
    caused an unprecedented decline in demand, and Congress reacted to the
    decline by temporarily waiving the taxes associated with air travel.
    This change eliminated the flow of revenues to the AATF, thereby
    draining the funding source for many FAA programs.
        Now that the flow of funds to the AATF has resumed, the AATF will
    likely replenish, albeit slowly. Establishing a rainy day fund remains
    a sound idea to ensure that funding levels for FAA programs and
    activities can remain stable over time as the fund replenishes. Our
    report had estimated that a rainy day fund containing $4 billion to $6
    billion would be sufficient to ensure that AATF outflows would remain
    stable even in the face of two to three years of severe revenue
    shortfalls. Although such a rainy day fund would not be sufficient to
    provide stability during disruptions of the magnitude of the current
    pandemic, we continue to believe that it would be sufficient to provide
    stability in the face of two to three years of severe revenue
    shortfalls, as might occur in a severe recession. Once the AATF is
    fully funded and a rainy day fund is in place, any additional AATF
    revenues should be appropriated to meet clearly identified needs, as
    determined by the FAA.
    Congress Should Include Ancillary Fees in the Domestic Passenger Ticket
            Tax
        Ancillary fees are charges for airline-provided services or
    products that some airlines sell separately from tickets, such as
    checked baggage, advance seat assignments, and priority boarding. These
    fees are excluded from the 7.5 percent Domestic Passenger Ticket Tax
    that helps fund the AATF. This policy favors airlines that separate
    ancillary fees from their base ticket price over those that do not.
    Airlines should be free to separate ancillary fees if they wish, but
    the Domestic Passenger Ticket Tax should not incentivize one business
    model over another by taxing ancillary services differently from
    bundled ticket prices.
    Conclusions
        In our analysis, we concluded that sufficient guardrails are in
    place within the PFC program and the marketplace to prevent airports
    from making inappropriate use of PFC revenues. The PFC program
    represents a near-ideal example of the user-pays principle of
    infrastructure funding and has proved to be a valuable source of
    revenues for medium and large airports. Paired with a healthy market
    for airport bond issues, PFCs help provide airports with access to the
    capital they need to keep up with changing and growing demands. Smaller
    airports could also gain from changes that improve the flexibility and
    timeliness of AIP grants. Such changes could enable small airports to
    access funds at the time they are needed to serve their communities.
    Finally, Congress has an opportunity to make some changes in the AATF
    to make it even more resilient to future shocks and provide assurances
    of sustainability to the airport sector for years to come.
        Before the pandemic, the airport sector was generally healthy and
    poised for continued growth. In the coming months and years, airports
    will regain their passenger volumes. In the meantime, changes in policy
    could help airports make the investments needed to better position
    themselves for the future.

        Senator Sinema. Thank you so much. And our fifth witness, I
    would like to invite Senator Cruz to introduce Sean Donohue.
    Senator Cruz, are you still with us? Oh, you are. Great. I turn
    over to you to introduce our final witness.
        Senator Cruz. Thank you, Madam Chair. I would like to
    introduce Sean Donohue. Sean currently serves as Chief
    Executive Officer of Dallas Fort Worth International Airport, a
    role that he has held since October 2013. Prior to this, he
    served as the Chief Operating Officer for Virgin Australia
    Airlines, where he led the day to day operations for
    Australia's second largest air carrier, and in a variety of
    executive roles at United Airlines that included operations,
    sales, and commercial startups.
        In his role as CEO of DFW, the fourth busiest airport in
    the world, Mr. Donohue is responsible for the management,
    operation, and future strategy and development of the airport.
    He manages an organization with 1,800 employees and an annual
    operating budget of $800 million, as well as a $3 billion
    capital improvement program, which produces more than $37
    billion in annual economic impact for the Dallas Fort Worth
    region, hosting pre-COVID around 64 million customers each
    year.
        Mr. Donohue graduated from Boston College with a Bachelor
    of Science degree in Marketing and Economics, and he is married
    with five children. And although he is a native of
    Massachusetts, he has certainly made Texas his home.

    STATEMENT OF SEAN DONOHUE, CEO, DALLAS FORT WORTH INTERNATIONAL
                                AIRPORT

        Mr. Donohue. Good afternoon and thank you, Chair Sinema, a
    special thanks to Ranking Member Cruz for your kind comments,
    and also greetings to the members of the Subcommittee. Thank
    you for the invitation to discuss our perspective on aviation
    infrastructure. Senator Sinema, I just wanted to comment, I
    hope you have had a chance to meet the new Director of Aviation
    in Phoenix Airport, Chad McClosky. Chad spent the last 4 years
    at DFW, and along with Danette, the state has two excellent
    aviation leaders at your largest airports in Arizona.
        Before I begin my remarks on infrastructure, I want to
    express my gratitude to Congress for the tremendous support of
    the aviation sector during the pandemic crisis. In my 35 plus
    years in the industry, this is by far the most consequential
    financial support airports, airlines, and importantly airport
    business partners such as small, women, and minority owned
    concessionaires have ever witnessed. My sincere thanks. At DFW,
    we realized we have been fortunate compared to some of our
    other airport colleagues in weathering the impact of COVID-19.
        While we saw our revenues drop by over $200 million just in
    the last 6 months of last year, we have recently seen a faster
    recovery and forecast our 2021 summer traffic to be 85 to 90
    percent [technical problem.]--2019. We also made the deliberate
    decision to proceed with a handful of key infrastructure
    projects during the pandemic. One of them was the
    reconstruction of one of our main arrival runways, which was
    funded in part by AIP funding. This effort, along with a few
    other key projects, created over 4,000 new jobs during the
    pandemic. I note these projects to highlight, while DFW Airport
    plays a critical role in the U.S. aviation system, we also had
    the responsibility, as Senator Cruz highlighted, of being a $37
    billion annual economic engine for North Texas that supports
    over a quarter of a million jobs.
        As it relates to airports and our dual aviation and
    economic driver roles, infrastructure remains our biggest
    challenge and we are pleased that airports are included as part
    of the national infrastructure discussions. As has been
    highlighted, U.S. airports have over $100 billion in
    infrastructure needs over the next several years. Why is that
    number so large? First and stating the obvious, we have very
    old airports in the United States. Take DFW, we are nearly 50
    years old, and we are the second youngest large airport in the
    country.
        And we need to be realistic. There are very few
    opportunities for Greenfield airport projects in the U.S. Like
    Denver Airport, the last one, which, by the way, is now 25
    years old. Coupled with growing traffic, which I believe all of
    us on this call, in this discussion would agree is going to
    return, our aging airports will primarily require projects that
    reconstruct older facilities. Those type of projects are more
    expensive, and they take considerably more time than Greenfield
    projects.
        Having spent the majority of my career working for
    airlines, I am very sensitive to the needs of the airlines as
    they recover from the greatest financial shock in modern
    aviation history. Despite the significant support of Congress,
    the airline balance sheets have been severely impacted. Since
    airlines ultimately pay for the majority of airport
    infrastructure projects through fees and charges,
    understandably, I would suggest we are looking at a lost decade
    of airport infrastructure support from many of our airline
    partners, hence the criticality of airports being considered in
    the current infrastructure discussions.
        I commend the Senators working on various infrastructure
    proposals related to airports. All U.S. airports, regardless of
    size, are critical to the ecosystem of aviation. I am confident
    every Member of Congress, whether they begin their travels from
    a small, midsized, or large airports, understand the importance
    of airports--understand the importance airports bring to the
    economies of their state.
        Thank you very much for the opportunity to join the
    discussion today and I will be glad to take any questions.
        [The prepared statement of Mr. Donohue follows:]

         Prepared Statement of Sean Donohue, Chief Executive Officer,
                    Dallas Fort Worth International Airport
        Chair Sinema, Ranking Member Cruz, and members of the subcommittee,
        Thank you for the invitation to join today to discuss our
    perspective on aviation infrastructure at Dallas Fort Worth
    International Airport (DFW).
        I've served as Chief Executive Officer of DFW since late 2013 where
    I am responsible for the management, operation and future strategy and
    development of the Airport. I am a member of the U.S. Travel Gateway
    Airports Committee and sit on the Executive Committees of the World
    Travel & Tourism Council and the Dallas Regional Chamber. I previously
    spent over 25 years working for U.S. and global airlines.
    About Dallas Fort Worth International Airport
        DFW covers more than 26.9 square miles of North Texas. We have
    2,000 direct airport employees and over 60,000 total on-airport
    employees through airlines, concessionaires, vendors, and other
    partners. The aviation ecosystem in north Texas is one of the largest
    and most robust in the nation, home to American Airlines, Southwest
    Airlines, Bell Helicopter, Boeing Aviall, Sabre, and more.
        DFW operates 7 runways and 164 gates throughout 5 terminals. In
    calendar year 2020, DFW ranked 4th in the world for passengers and 2nd
    in North America. DFW produces over $37 billion in economic impact each
    year. DFW is the second largest economic engine in the Texas behind the
    Port of Houston.
        DFW's role as a leading international cargo operations and
    logistics hub is critical to the North Texas economy. DFW's total cargo
    throughput is nearly 1 million U.S. tons per year.
        COVID-19's impact on travel significantly reduced revenues from
    airlines and passengers for the last two Fiscal Years from which we
    expect a full recovery not to occur until 2023. DFW and the airport
    industry are grateful for the three COVID relief packages Congress
    passed. DFW has used and will use the funds primarily to stabilize our
    balance sheet and provide relief for our concessionaire and airline
    partners. The Federal relief funds allowed us to balance our finances
    so that we did not have to pass on incremental costs to our airline
    partners, who were also deeply impacted by the pandemic. DFW also
    reduced its budget by over $90 million after the pandemic hit. But,
    even before the COVID-19 tragedy struck the world, DFW and other
    airports across the United States were already playing catch up in the
    race to modernize our aging infrastructure.
    Modernizing aging infrastructure to manage existing capabilities
        DFW is nearly 50-years old. Much of our existing infrastructure has
    reached the end of its useful life and requires rehabilitation and
    replacement. DFW faces the challenge of balancing the priorities of
    modernizing existing infrastructure capabilities while making the
    necessary investments for future travel demands. We must plan for
    expansion as we are operating in one of the fastest growing urban areas
    in the United States.
        We placed approximately $100 million in capital projects on hold
    for an estimated 18 months. Further adjusting to COVID's effect on the
    economy and travel, DFW extended our 10-year Capital Improvement
    Program (CIP) to 15 years to reduce the capital expenditure in the near
    term while aviation activity recovers. This program focuses
    specifically on aging infrastructure rehabilitation and replacement.
    Previously DFW had renovated three of its four original terminals that
    were built in the early 1970s.
        DFW is currently planning the renovation of the fourth original
    Terminal C plus the addition of 9 additional gates for growth in the
    Central Terminal Area (CTA). In addition, our access roads, bridges,
    and utility systems are 50 years old and in need of replacement. DFW's
    total capital investment needs over the next decade is in excess of $6
    billion, with nearly 90 percent of those dollars being slated for
    infrastructure repairs and replacement alone.
        On a positive note, we were able to accelerate some projects due to
    the period of lower airport utilization, such as the recently completed
    reconstruction of Runway 18R/36L as this is a critical piece of
    infrastructure for the entire National Airspace System. DFW was able to
    create and preserve jobs at the height of the pandemic by following
    through on the project. It was made possible in part through an AIP
    letter of intent from the FAA. In the past 14 months of the pandemic,
    DFW was able to complete 42 Capital Projects amounting to over $500
    million in capital expenditures. We're proud to share that this work
    created 4,348 new jobs during a difficult economic environment.
    Investing for growth and future travel demands of the 21st century
        The travel industry is beginning to see the initial signs of
    recovery and we must be ready to welcome travelers. COVID forced DFW to
    suspend construction of a new 24-gate Terminal F and associated
    infrastructure due to uncertainty around future passenger growth and
    the financial impact to the airlines. The pandemic's impact on the
    construction of Terminal F puts DFW behind the growth curve as travel
    demand rapidly returns. Delaying construction of a new terminal
    challenged us to adjust planning and reorganize activity to be prepared
    for when travel demand returns to pre-COVID levels. However, the 9-gate
    expansion of the Central Terminal Area will not be enough to meet the
    demands of future travel.
        Our post-COVID adjusted 15-year Capital Improvement Program
    includes--45 percent airfield, 30 percent roads and bridges, and 25
    percent facilities projects. All of the Capital Improvement Projects
    are critical infrastructure projects as the DFW Capital Improvement
    Program is based on condition assessments conducted by professional
    firms and just in time delivery of assets rehabilitation. The team at
    DFW is focused on developing shovel-ready projects to create
    opportunities should additional funds become available. We accelerated
    the design and required environmental documentation for key airfields,
    roadways, and facilities infrastructure projects. This planning will
    facilitate project opportunities that can stimulate job creation in the
    North Texas regional economy as we serve travelers.
        Another facet of our project development at DFW is to look for ways
    to achieve our Net Zero Carbon by 2030 goal. DFW is the largest carbon
    airport in the world. DFW integrates sustainability principles into all
    aspects of operations, planning, and development. A key component of
    our Net Zero Carbon by 2030 goal is a $170M electric central utility
    plan that would replace our aging utility plan and transition DFW's
    primary heating fuel source from natural gas to renewable electricity.
    The project will further reduce our carbon and ozone emissions and
    decrease water use annually as well as provide operating cost savings.
        Our DFW team is creative and leans forward with planning and
    development. However, the current AIP program is not sufficient to put
    a dent in our Capital Improvement Program and there are limitations on
    eligible projects for AIP funds. The only option we have is to issue
    bonds to finance these projects which are repaid through higher airline
    charges.
    Bringing Airport Infrastructure into the 21st Century
        The industry appreciates the committee, as well as your colleagues
    in the House, working with us to find solutions to meet the needs of
    providing world-class domestic and international business and leisure
    travel.
        I would like to thank the Chair and Ranking Member along with
    Senator Young for introducing the Expedited Delivery of Airport
    Infrastructure Act last week. We have been supportive of the companion
    bill in the House and encourage passage in the Senate. I commend the
    Senators working on the various infrastructure proposals being
    discussed for recognizing the ongoing need of airports. As we in the
    aviation industry work to address our infrastructure challenges ahead,
    money directed toward airports would be put to good use at DFW and at
    other airports across the country on meaningful and necessary
    infrastructure projects.
        Airports of all sizes and locations are a critical ecosystem of
    travel moving passengers and cargo throughout America and beyond our
    borders. Every Member of Congress, whether they begin their travels at
    a small, mid-sized, or larger airport in their state, understands the
    importance airports bring to the economy of their state.
        Thank you for the opportunity today and I look forward to your
    questions.

        Senator Sinema. Thank you so much. I will first start by
    recognizing myself for 5 minutes of questions. Ms. Bewley,
    thank you for being here and for your work at the Tucson
    Airport Authority. In your testimony, you discussed the
    airfield safety enhancement project underway at the Tucson
    International Airport, the largest infrastructure project ever
    at your airport.
        The project has many benefits. It will improve safety,
    increase efficiency, support the Arizona Air National Guard
    mission, and also create jobs. How can Congress best support
    important safety projects like the ASE project in Tucson?
        Ms. Bewley. Thank you for the question, Senator Sinema. The
    help that we need at Tucson International Airport and other
    airports across the Nation really is with a reliable funding
    source and funding stream that isn't disconnected between
    Federal Fiscal Years. As Sean Donohue mentioned, that if you
    have a large project, it would be wonderful and effective if
    the funding source matched the size of that project, and that
    the funding operated at the speed of the project, so the
    project doesn't have to slow down because of Federal funding
    streams. We can be very efficient.
        Airports operate as business enterprises, and we are very
    good at what we do. And the last thing we want to do is slow a
    project down. So anything that we can do to improve the Federal
    funding source, the Federal funding stream, would allow us to
    be more efficient and effective. And as you mentioned, the
    Tucson ASE project has wonderful benefits for air carriers, our
    general aviation users, and the military, all important assets
    to our regional economy and to our Nation's economy.
        Senator Sinema. Thank you so much. My next question is for
    Mr. Rinaldi. The Phoenix Mesa Gateway Airport is in the process
    of replacing its 50 year old tower. It is too short and has a
    cab that is too small to keep up with the growth of the
    airport. The new tower will be 65 feet taller, will have twice
    the space, and will provide unobstructed views for air traffic
    controllers. In your testimony, you discussed the age of our
    air traffic control physical infrastructure. Can you explain
    how outdated towers make it harder for your members to do their
    jobs?
        Mr. Rinaldi. Thank you, Chair Sinema. Absolutely. Listen, I
    think that when you have to walk up 20 flights of stairs to
    report to duty in a tower cab, and hopefully you didn't forget
    anything because then you have to go back down and get your
    headset or your lunch, you are winded and you are already
    sweating, and hopefully the HVAC system works. And we are
    having problems with air conditioning throughout our
    facilities. But I think air traffic control is a very high,
    intense-focused occupation.
        We don't like distractions in our operation and our aging
    infrastructure is a distraction in our operation which can
    impede safety. So we really have to focus on getting our
    facilities up to speed, getting them healthy, making them the
    type of facilities that people want to come to work and not
    worry about ripping their clothes or cutting their hands
    because the countertops have sharp edges on them and, you know,
    they are ripping their hands up as they are moving across,
    moving paper strips from one position to the other.
        Senator Sinema. Thanks. My next question is for Mr. Cullen.
    Mr. Cullen, most air travelers think about their experience in
    the terminal when they think about aviation infrastructure. So
    how do air carriers such as Southwest partner with airports to
    help improve terminals? And what recommendations do you offer
    for how Congress can best support those terminal projects?
        Mr. Cullen. So yes, we generally work with airports'
    various committees, and in addition to talking about capacity
    growth, we talk about what the customer experience looks like.
    Just talking on the--talking about Southwest looks at the
    customer experience, we really go in and look at net promoter
    score to the entire customer experience, be it at the airport,
    online, or in the air. And that really allows us to clue into
    where we have got areas of opportunity.
        I think looking forward to what post pandemic experience
    looks like at the airport, I think we have a proven record, at
    least we point back to 9/11 and the improvements that were
    required for TSA checkpoints and then security, the investments
    that were made over the years following 9/11 in essentially
    every airport. So I think we are standing by, ready to see what
    those future investments may look like.
        Senator Sinema. Thank you so much. Now, my time has
    expired. So I now recognize the Subcommittee's Ranking Member,
    Senator Cruz, for his 5 minutes.
        Senator Cruz. Thank you, Madam Chair. Mr. Cullen, I want to
    start with you. As you are aware, for the entirety of my tenure
    in the Senate, I have been blunt about my position on passenger
    facility charges, PFCs. That they are a tax on consumers, and
    if raised, they will inhibit increased air travel.
        I notice that in your written testimony, you stated that
    Southwest strongly believes that, ``increased taxes and fees on
    passengers does the most harm to price sensitive customers and
    to smaller markets, such as many of the 18 new airports we have
    added or announced since the pandemic began.'' Can you please
    go into more detail on why, in your judgment, an increase in
    the PFC would be bad for consumers and would inhibit air
    travel?
        Mr. Cullen. Absolutely. So the PFC, as we look at it, has
    to be included in the price that we advertised, and we put on
    our website to sell. So any increase of that is a direct
    increase to the fare that a customer has to pay. Now that is
    point one. Point two, if you look at many of the new airports
    that we serve, many of them are smaller and just by their
    nature don't have the same amount of destinations offered.
        So therefore, it is a requirement that many of them have to
    connect--customers have to connect over markets. So they
    actually have to double dip in the PFC pool just to pay the
    original--the market where they originate and also where they
    connect. So that really is a form of double taxation.
        Senator Cruz. OK, and knowing your position of PFC
    increases, I am also interested to know what the alternative
    for funding would be if the cap on PFCs is not increased, and
    if additional funding doesn't come from PFC,s where would
    additional revenue come from?
        Mr. Cullen. Absolutely. So the cap on PFCs has been in
    place from the early aughts and at $4.50. However, since that
    time, over the 20 years, we have actually seen PSC collections
    increase 137 percent. So from $1.6 billion to well over $3
    billion. The--however, if you look at AIP funding, that was
    really held constant. It was $3.3 billion 20 years ago, it is
    still there today. So I would argue that is one place where we
    have not kept up with demand and with inflationary increases.
        Senator Cruz. And what should the role of private capital
    and private activity bonds be in terms of airport and other
    aviation infrastructure?
        Mr. Cullen. Well, at Southwest, we have had some nice
    success in terms of taking the private approach and us at
    Southwest Airlines leading on projects. We have seen that going
    back years ago in Dallas Love Field and in Houston Hobby. We
    are currently underway in LAX. And I think we have got a great
    model there where we have proven we can deliver projects on
    time and well below budget.
        Senator Cruz. OK, and now this question is for Ms. Bewley,
    Mr. Donohue, and Dr. Miller. I understand that that airport
    funding was thrown into chaos by the lack of air traffic due to
    the pandemic. But right now, airports seem to be fairly flush
    with COVID relief money. I continue to believe that increasing
    the cap on PFCs will only drive demand away from airports and
    inhibit air travel.
        In fact, Dr. Miller, in your testimony, you acknowledge
    that, ``an increase in the PFC cap would likely result in
    higher ticket prices for passengers.'' In your judgment, should
    we be concerned about raising prices on consumers and reducing
    demand for air travel, number one? And number two, if Congress
    does not raise PFCs, what alternative revenue sources are there
    for the infrastructure improvements we need in airports?
        Dr. Miller. This is Dr. Miller. I can go ahead and dive in
    on the first part of that question. We agree in our report that
    an increase in the PFC is likely to raise [technical
    problems.]--at the airports that [technical problems.]--
    increased PFC collections. Now, our view is that at the present
    moment, demand is around 70 to 80 percent of where it was in
    2019.
        And this increase in demand is at this point driven more by
    pandemic related concerns [technical problems.]--concerns.
    There is a fairly large literature on how increases in prices
    will affect consumer demand, and that certainly is an impact of
    that. However, we view the net benefits of increased
    collections to exceed the cost of it.
        Senator Cruz. Ms. Bewley, Mr. Donohue?
        Ms. Bewley. Senator Cruz, thank you for the opportunity to
    speak with you today. You mentioned the Federal relief funds
    that airports have received. And thank you so much for that. It
    has been a godsend. And where the funds are being primarily
    used at my airport system and possibly throughout the Nation is
    to support payroll. And right now we have got almost several
    million dollars of employee costs that we are supporting. Both
    the CARES Act, the CRRSAA, and now ARPA are going to take us a
    little bit further into the future, which we greatly
    appreciate.
        But when we are looking at aging infrastructure to the tune
    of tens of billions of dollars, up to over $100 billion
    dollars, it is very difficult to then use that money for the
    projects when we still have the operation to manage and
    maintain. The PFC has been discussed for almost 20 years, as
    long as I can remember, and having it indexed to inflation
    shouldn't be a shock to the system. I think it is interesting
    that a PFC can create havoc on an airfare, but baggage fees
    don't.
        So I think that we should find a happy medium where the
    airlines can get what they need, the airports can get what they
    need, and certainly be sensitive to what the passengers needs
    are.
        Senator Cruz. Mr. Donohue.
        Mr. Donohue. Senator, a couple of answers to your
    questions. Number one, when it comes to airport funding, the
    CARES Act funding was a tremendous support mechanism for DFW
    because our revenues dropped so dramatically. Early on in the
    pandemic, I made the decision, told our employees no one would
    be furloughed, no one would see a reduction in compensation or
    benefits. And we also were able to support our concessionaires
    to the tune of tens of millions of dollars by waiving their
    rent. So not only it helped the airport, it helped our
    employees and helped our business partners.
        And as it relates to future funding, in my humble opinion,
    there is no single solution. We would love to be part of the
    infrastructure bill discussions moving forward. As it relates
    to PFCs, because they have not been indexed, we have lost 40
    percent of the value of the PFCs. AIP will continue to be an
    important funding mechanism.
        And we do need to recognize as airports, we do know
    airlines will continue even during these difficult times in
    some airports to invest. And airports need to invest as well.
    And at DFW over the last five years, we have invested our own
    capital into projects. So in my opinion, we have to look at
    this holistically. Everyone needs to come to the table, to your
    point, with ideas. And we have to look at a macro solution.
        Senator Cruz. Thank you very much.
        Senator Sinema. Thank you, Senator Cruz. I now recognize
    Senator Rosen for 5 minutes of questions.

                    STATEMENT OF HON. JACKY ROSEN,
                        U.S. SENATOR FROM NEVADA

        Senator Rosen. Thank you, Chair Sinema. Of course, Ranking
    Member Cruz. That is a really important hearing you are having
    today. Appreciate all the witnesses, of course, for being here.
    And but we sure have to revive our travel and tourism economy
    because in Nevada, travel and tourism are essential to our
    economy. And our airports serve as a gateway to the Silver
    State, my state, for millions of domestic and international
    travelers. In 2019, Las Vegas McCarran International Airport
    saw over 50 million passengers.
        We generated nearly $35 billion dollars in economic output
    and supported approximately a quarter of a million jobs. The
    Reno Tahoe International Airport saw a passenger increase of
    almost 6 percent in 2019, which was the fifth consecutive
    increase in year over year passenger growth. In short, our
    airports are growing. But the pandemic created steep declines
    in passenger traffic-related revenues, which exacerbated
    existing airport infrastructure needs and funding challenges.
        So as the pandemic winds down in the United States and
    Congress takes up infrastructure legislation, funding for
    airports needs to be a few things, needs to be long term, needs
    to be dependable, and in order to promote certainty and allow
    for large capital projects and investments.
        So Ms. Bewley and Mr. Donohue, how can Congress ensure that
    the investments we make in aviation infrastructure help revive
    the travel and tourism industry that was devastated by the
    pandemic, particularly excuse me, the projects that enhance the
    traveler experience? Excuse me, I will take a drink. Ms.
    Bewley, you can go first, please.
        Ms. Bewley. Thank you. Senator Rosen. The Federal funding
    stream for projects can be used for improvements to outdated
    terminal facilities, upgrading HVAC filtration. At our airport
    alone, we could only upgrade to a certain level because the age
    of the system and we are very limited. So in order for us to
    even have a higher grade HVAC filter like hospitals, we would
    have to rip out our systems and start over. We have an aging
    facility that maybe only has 20 years of life left in it if we
    are lucky and we are probably going to need to expand our gates
    and our hold room.
        So upgrading those systems are really important. This also
    supports the airlines because we can improve the gates, we can
    add space, we can build space for concessions, which then
    brings us the opportunity to enhance our revenue stream and
    outreach even further into the community to bring businesses
    into the airport so they, too, can take advantage of the
    opportunity of being around travelers. So those are just a few
    things that we can do.
        On the airfield, the infrastructure out there--most
    airports are very old. Our airport is probably 50, 60 years old
    as far as our terminal, excuse me, our airfield. So the
    upgrades that we are talking about in our airfield safety
    enhancement program are going to take us far, far, far into the
    future. And those are good investments. And as far as making
    sure that the money is being used appropriately, well, if it is
    being funded through an FAA source, you know, they are the
    guardians of the AIP funds.
        They are our connection to all of you who help supply the
    funds. So we would certainly follow the same processes that we
    always do to make sure the project is eligible under safety,
    security, customer service, you name it. And following all the
    grant assurances that we always do.
        Senator Rosen. So, and Mr. Donohue, how can we revive
    travel and tourism and make sure that the customer experience--
    how do we enhance that traveler experience while reviving our
    tourism and travel industry?
        Mr. Donohue. Thank you, Senator Rosen. And probably one of
    the examples that goes to your point is during the pandemic, we
    continued with a project at DFW were added gates to our
    international terminal. We just opened those gates in the last
    60 days and that has significantly helped us as the travel has
    recovered.
        It has provided the necessary relief for the airlines, and
    at the same time has increased the customer experience because
    we were able to incorporate new technology to improve the
    customer's experience through the terminal. I would also say
    that, you know, when you think of airports and you look at
    infrastructure investment, we typically go to terminals and
    terminals are critical. And they are critical to handle the
    volumes. They are critical to have that customer experience
    that you mentioned. But infrastructure at our airports is
    starting to get old.
        And at DFW as I said, we are coming on 50 years. We have
    130 bridges at DFW airport. We have 1,200 lane miles of road
    landside on our airport. And then when you look at all the
    airfield projects we do, many of those go to the heart of
    everything we are concerned about on this call, which is safe
    and secure operations.
        So believe me when it comes to how we spend money at
    airports, yes, the customer experience is critical, but the
    infrastructure also goes to the heart of a safe and secure
    aviation system in this country.
        Senator Rosen. Well, I sure would agree with you there. And
    I am going to submit a couple questions for the record on how
    we--what Congress can do to support our airport personnel, our
    airline employees, air traffic controllers as we recover from
    COVID thinking about their safety and security as well. Thank
    you, Madam Chair.
        Senator Sinema. Thank you so much, Senator Rosen. Senator
    Rosen, we actually don't have another Senator in the queue. If
    you would like, I can extend a few minutes for you to continue
    asking questions.
        Senator Rosen. Oh, well, that would be--that would be
    really great, because, you know, I just want to finish. You
    know, I am grateful to be the Chairwoman of the Tourism, Trade
    and Export Promotion Subcommittee, part of Commerce. And so
    this really goes hand in hand with the Aviation Subcommittee.
    And as we think about coming out of COVID and the investments
    that we have an opportunity to make that will pay off in the
    long run, we know that the airports in 2019, I am sure you
    spoke about this, faced more than $128 billion in new
    infrastructure needs, having a burden of nearly $100 billion.
    And so our airport operators are just struggling and really not
    able to keep up pace with growing demand. And so there is a
    long way to go.
        So, Ms. Bewley, we provided our Nation with a lot of
    support during COVID. And how are the airports using this--and
    we are talking a little bit--as you have been talking about
    critical infrastructure, I would say that being able to get
    there on the roads, being able to cross the bridges, the
    parking garages, all of that infrastructure that goes around,
    having the proper air traffic control towers, things we might
    not see but do benefit us all.
        What do we also--what also do we need to do so we don't
    fall behind since we were right behind before COVID?
        Ms. Bewley. Senator Rosen, ACI North America released a
    report last summer that outlined about $115 billion in
    infrastructure needs over the next 5 years across the national
    airport system. And, you know, I think there is a lot to be
    gained from that study. And I think we all agree safety is
    always a top priority. And when you come to an airport, you
    want to be safe, you want to be secure, you want to have a
    customer experience, you want the infrastructure to be healthy
    and support the activity, and provide a great atmosphere for
    everyone, including the airlines. So all of that is very
    important.
        And with the aging infrastructure in these outdated
    terminals, there is a lot of behind the scenes that probably
    isn't so pretty. I think Mr. Rinaldi mentioned that some of the
    towers are aging and crumbling. That is true. We have an aging
    tower at our small little airport at Ryan Airfield. It is a
    contract tower. It is not high priority, but it is just as
    important as another tower.
        So I think infrastructure really needs to be looked at
    across many levels, crossing all sorts of avenues that we can
    find the best way to use the limited resources and support the
    national aviation system for the benefit of everyone.
        Senator Rosen. I think we make these investments are going
    to create jobs. There is going to be a big economic benefit to
    all of that. And as well as not just the people we move, but we
    move a lot of cargo at many of these airports. And I do have
    one last question, if I may, Madam Chair, to Mr. Miller.
        Based on Rand's report, we are talking about, of course,
    DFW, Tucson, they are bigger cities, but we have, of course,
    Nevada, we have a lot of rural airports all across this
    country. There is the smaller airports, the rural airports. And
    what do we have to do to make sure that they don't get left
    behind as some of the bigger, more populated terminals and of
    course, in the larger cities with more volume, take up a lot of
    that funding.
        Dr. Miller. Thank you, Senator Rosen. The smaller airports
    in some ways have a vastly different experience than the larger
    airports, and in some ways they are facing some of the same
    struggles around dealing with the pandemic. The most important
    thing that we want to emphasize in this study regarding the
    differences between the airports is their sources of funding.
        The larger airports because they have such a larger number
    of travelers flowing through them, are able to make much more
    use of funding sources like the passenger facility charge. The
    smaller airports, particularly noncommercial service airports
    that just don't focus on conserving a large number of
    commercial passengers, something like the passenger facility
    charge is unavailable to them or doesn't make sense for their
    number of passengers. So smaller airports are much more reliant
    on Federal grants, such as the AIP program.
        Senator Rosen. Thank you, I appreciate that, because our
    smaller airports, our rural airports are really important to
    those communities. Particularly we have a lot of places in
    Nevada that are great to go, but during wildfire season, they
    also host helicopters or other kinds of planes that need to
    land there, firefighters, supplies. So it is really important
    that we don't leave rural America behind. Thank you, Madam
    Chair. I really appreciate the extra time.
        Senator Sinema. Absolutely. Thank you so much, Senator
    Rosen. We don't have any additional Senators in the queue to
    speak. But I will follow up with a question for both Ms. Bewley
    and Mr. Donohue. I just reintroduced, along with Senator Young
    and Senator Cruz, the Expedited Delivery of Airport
    Infrastructure Act.
        Our bipartisan legislation would allow airports to use
    airport improvement program funds to incentivize contractors to
    finish airport construction projects ahead of schedule. Do you
    believe that this flexibility with AIP funding can help build
    infrastructure projects more efficiently at your airports?
        Mr. Donohue. Yes, Senator. I will give you an example. The
    main arrival runway that we reconstructed during the pandemic,
    we did that for two reasons. Number one, we knew we had reduced
    operations, and if you are going to shut a runway, that is the
    time to do it. But we also did it because we were able to
    expedite the project and we saved over $10 million doing the
    project.
        And if we had had the ability to incentivize the
    contractors in this case, we probably would have been able to
    complete the project faster, and we probably would have been
    able to save even more. So we completely support this bill. We
    appreciate, Senator Sinema, your support and Senator Cruz's
    support because they will make a difference, and not only be
    more efficient, but also saving dollars.
        Senator Sinema. Thank you. Ms. Bewley?
        Ms. Bewley. Senator Sinema, I absolutely support Sean's
    comments. We think the bill is a wonderful opportunity for us
    to be more efficient. As I mentioned before, we operate as
    business enterprises, and having the flexibility to do things
    more efficiently is wonderful for us, because then we can
    finish and move on to another project or open up a runway or
    open up a terminal that much quicker.
        Senator Sinema. Thank you so much. And with that, it looks
    like we do not have any additional Senators in the queue, so we
    have reached the end of today's hearing. I want to say thank
    you to all of the witnesses for your time and for your
    testimony and for your flexibility today.
        The hearing's record will remain open for two weeks until
    July 7th of 2021. Any Senators that would like to submit
    questions for the record for the hearing witnesses should do so
    by July 7. And we ask that our witness responses be returned to
    the committee by July 14, 2021. Thank you again so much. We are
    adjourned.
        [Whereupon, at 4:22 p.m., the hearing was adjourned.]

                                A P P E N D I X

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                                     ______

       Response to Written Question Submitted by Hon. Tammy Duckworth to
                                 Danette Bewley
        In Airports Council International--North America's (ACI-NA) most
    recent infrastructure needs study, Building the Runway to Economic
    Growth, America's airports have identified $115 billion in necessary
    infrastructure projects at their facilities over the next five years.
    With limited Federal funds available and an outdated Federal cap on
    local user fees, airports often turn to financial marketplaces to help
    finance their infrastructure projects. While not a substitute for new,
    direct investment in airports, increasing the number of financing
    options and tools available to airports helps them improve their
    infrastructure more quickly and in a more cost-effective manner.
        The current Transportation Infrastructure Finance and Innovation
    Act (TIFIA) program at DOT is limited to surface transportation, but
    several airports have been exploring the feasibility of financing
    transit-connected projects at their facilities. That has sparked an
    interest among industry and government in finding ways to incorporate
    more airport development projects into the TIFIA program. With
    significant infrastructure needs in airport terminals nationwide, the
    airport industry strongly supports the bipartisan and bicameral TIFIA
    for Airports legislation you have introduced with Sen. Cornyn, Rep.
    Garamendi, and Rep. Babin that would expand the TIFIA program to
    include all Passenger Facility Charge (PFC)-eligible projects at
    airports. Making additional airport development projects explicitly
    eligible for TIFIA would allow airports to access financing at lower
    borrowing costs and with more flexible repayment terms than through
    traditional markets. In this time of economic uncertainty, with the
    current TIFIA fund running a surplus, your legislation would help
    airports across the country--including small hubs like Tucson
    International Airport--participate in this important alternative
    financing program.
                                     ______

       Response to Written Question Submitted by Hon. Tammy Duckworth to
                                  Paul Cullen
    Transportation Infrastructure Finance and Innovation Act (TIFIA)
            financing.
        Question. On September 27, 2019, the Kansas City Star published an
    article about the Kansas City International Airport's interest in the
    TIFIA program, in which a Southwest Airlines representative said the
    airlines was supportive of the TIFIA effort. Mr. Cullen, do you
    supporting extending TIFIA to airport-related projects?
        Answer. Yes, Senator Duckworth, Southwest Airlines supports
    extending eligibility for Transportation and Infrastructure Finance and
    Innovation Act (TIFIA) credit assistance to airport projects. Today,
    most airports have access to significant capital resources, but TIFIA
    would be another good tool in the broader tool box. We appreciate your
    bipartisan efforts to ensure airports have the same access to TIFIA
    funds that other projects--such as highways and transit--already enjoy
    today. Taxpayers will be well-protected because airports have ample
    access to multiple sources of revenue today. In other words, airports
    are well-positioned to pay-back TIFIA loans in addition to the non-
    TIFIA bonds that they can access today. Existing sources of revenue for
    commercial airports include airline-paid rents/landing fees (the
    largest source of revenue), existing PFC collections, AIP grants,
    supplemental Federal funding, and fees collected from non-airline
    users, parking, concessions, rental cars, taxi/ride share services,
    advertising, etc. As a result, we think lenders are well-protected and
    it makes sense to provide equitable access to the TIFIA program for our
    airport partners. Thank you.
                                     ______

       Response to Written Question Submitted by Hon. Tammy Duckworth to
                                  Sean Donohue
        Question. Mr. Donohue, Senator Cornyn and I recently reintroduced
    the TIFIA for Airports Act (S.1715), which would expand TIFIA credit
    assistance to state and local airport projects and was successfully
    included in the Surface Transportation Reauthorization Act of 2021. Do
    you support extending TIFIA to airport-related projects? How would
    expanding TIFIA benefit airports such as Dallas Fort Worth
    International Airport?
        Answer. DFW Airport supports extending TIFIA for airport related
    projects. TIFIA provides airports with financing options at attractive
    interest rates. This is an important option given the large capital
    expenses associated with renovation and expansion of airport
    facilities. DFW encourages the Senate to reduce the significant
    administrative burdens of the TIFIA program to make it a more
    attractive option for airports.

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