Federal Aviation Administration: Issues Concerning the Reauthorization of
Aviation Programs (Testimony, 01/20/99, GAO/T-RCED-99-68).

Pursuant to a congressional request, GAO provided information on the
issues being considered in the proposed legislation to reauthorize the
Federal Aviation Administration's (FAA) aviation programs, focusing on:
(1) air traffic control modernization program; (2) efforts to make its
computer systems ready for the year 2000; (3) Airport Improvement
Program (AIP) funding; (4) aviation safety and security measures; and
(5) efforts to enhance aviation competition.

GAO noted that: (1) provisions in the draft legislation to enhance the
competitiveness of the aviation industry address concerns GAO has raised
about operating barriers at airports and airline marketing practices
that have limited the full potential benefits of deregulation; (2)
airline deregulation has led to lower airfares and better service for
most air travelers, largely because of increased competition spurred by
the entry of new airlines into the industry and established carriers
into new markets; (3) some communities have not shared these benefits
and have experienced higher air fares or less convenient service since
deregulation; (4) by establishing programs to promote air service in
various communities, the draft legislation would assist communities in
developing and improving their air service; (5) the reporting
requirements that the proposed legislation would place on FAA's air
traffic control modernization program would aid in continued
congressional oversight of this problem-ridden program; (6) over the
past 17 years, FAA's multibillion-dollar program to modernize aging air
traffic control systems has experienced cost overruns, schedule
slippages, and performance problems of large proportions; (7) the
proposed legislation calls for FAA to report every 3 months on the
problems associated with making its computer systems ready for the year
2000; (8) the implications of FAA's not meeting the year 2000 deadline
are enormous and could affect hundreds of thousands of people through
customers' inconvenience, increased airline costs, grounded or delayed
flights, or degraded levels of safety; (9) provisions to reauthorize AIP
would help to address critical funding shortfalls for airport
development by expanding FAA's innovative pilot projects and providing
small airports with more flexibility in funding AIP projects; (10) the
proposed legislation would help to improve FAA's information on airfield
pavement quality, which should improve decisions about funding these
costly improvements; and (11) the legislation's proposals to enhance
aviation safety and security encompass areas in which GAO has identified
a continuing need for improvements.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-RCED-99-68
     TITLE:  Federal Aviation Administration: Issues Concerning the 
             Reauthorization of Aviation Programs
      DATE:  01/20/99
   SUBJECT:  Authorization
             Air traffic control systems
             Airports
             Airline regulation
             Safety standards
             Competition
             Transportation safety
             Proposed legislation
             Commercial aviation
             Systems conversions
IDENTIFIER:  FAA Airport Improvement Program
             FAA Air Traffic Control Modernization Program
             Y2K
             FAA Wide Area Augmentation System
             NAVSTAR Global Positioning System
             FAA Flight Operational Quality Assurance Program
             FAA Oceanic Automation System
             GPS
             Airport and Airway Trust Fund
             FAA Airport Safety Data Program
             FAA Air Transportation Oversight System
             FAA Standard Terminal Automation Replacement System
             
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Cover
================================================================ COVER


Before the Committee on Commerce, Science, and Transportation, U.S. 
Senate

For Release
on Delivery
Expected at
9:30 a.m.  EST
Wednesday
January 20, 1999

FEDERAL AVIATION ADMINISTRAITON -
ISSUES CONCERNING THE
REAUTHORIZATION OF AVIATION
PROGRAMS

Statement of John H.  Anderson, Jr., Director, and
Gerald L.  Dillingham, Associate Director,
Transportation Issues,
Resources, Community, and Economic
Development Division

GAO/T-RCED-99-68

GAO/RCED-99-68T


(348150)


Abbreviations
=============================================================== ABBREV

  AIP - Airport Improvement Program
  ATOS - Air Transport Oversight System
  DOT - Department of Transportation
  FAA - Federal Aviation Administration
  FOQA - Flight Operational Quality Assurance
  GPS - Global Positioning System
  NAS - National Airspace System
  STARS - Standard Terminal Automation Replacement System
  WAAS - Wide Area Augmentation System

============================================================ Chapter 0

Mr.  Chairman and Members of the Committee: 

We are pleased to be here to provide information for your
deliberations on reauthorizing programs for the Federal Aviation
Administration (FAA), including the Airport Improvement Program
(AIP).  Last year, the Senate passed legislation to reauthorize FAA's
programs for a 2-year period.  The Senate legislation included
various provisions to enhance competition and service in the aviation
industry and to improve aviation safety, security, and system
capacity.  However, the House did not pass similar legislation, and
instead, the Congress passed a 6-month reauthorization that expires
on March 31, 1999.  You asked us to comment on issues considered in
the proposed legislation that you introduced yesterday. 

Over the years, we have performed a significant body of work in
several areas covered in the proposed legislation--aviation
competition, FAA's air traffic control modernization program, FAA's
efforts to make its computer systems ready for the year 2000, AIP
funding, and aviation safety and security.  Today, we will provide
you with our views on these issues, which you may wish to consider in
drafting new reauthorization legislation.  In summary: 

  -- Provisions in the draft legislation to enhance the
     competitiveness of the aviation industry address concerns we
     have raised about operating barriers at airports and airline
     marketing practices that have limited the full potential
     benefits of deregulation.  Airline deregulation has led to lower
     airfares and better service for most air travelers, largely
     because of increased competition spurred by the entry of new
     airlines into the industry and established carriers into new
     markets.  However, some communities have not shared these
     benefits and have experienced higher air fares and/or less
     convenient service since deregulation.  By establishing programs
     to promote air service in various communities, the draft
     legislation would assist communities in developing and improving
     their air service.  The draft legislation would also address
     various barriers--including certain marketing practices,
     restrictive gate leases, and limits on the number of take-offs
     and landings at four congested airports--that have contributed
     to limiting the full potential benefits of deregulation. 

  -- The reporting requirements that the proposed legislation would
     place on FAA's air traffic control modernization program would
     aid in continued congressional oversight of this problem-ridden
     program.  Over the past 17 years, FAA's multibillion-dollar
     program to modernize aging air traffic control systems has
     experienced cost overruns, schedule slippages, and performance
     problems of large proportions.  Because of the program's size,
     complexity, cost, and problems, we have designated it as a
     high-risk information technology initiative since 1995.  Our
     recent review of the program indicated continuing problems.  For
     example, the Wide Area Augmentation System has incurred
     significant cost growth and schedule delays, and questions
     remain about whether the system can perform as originally
     intended. 

  -- The proposed legislation calls for FAA to report every 3 months
     on the problems associated with making its computer systems
     ready for the year 2000.  The implications of FAA's not meeting
     the Year 2000 deadline are enormous and could affect hundreds of
     thousands of people through customers' inconvenience, increased
     airline costs, grounded or delayed flights, or degraded levels
     of safety.  Over the last year, we have reported that FAA
     continues to face serious challenges in meeting the deadline. 
     Our recent review of FAA's efforts indicated a need for
     continued attention to the agency's progress, as called for in
     the proposed legislation.  Focusing solely on FAA, however,
     provides an incomplete picture of the nationwide network of
     aviation operations.  Airports and domestic airlines also depend
     on computer technologies and are likely to be affected by the
     Year 2000 problem.  We found that many airports did not believe
     they would meet FAA's recommended deadline for completing
     preparations for the Year 2000.  It would be appropriate to
     expand the reauthorization language to require FAA to also
     report on the Year 2000 status of airports and airlines. 

  -- Provisions to reauthorize AIP would help to address critical
     funding shortfalls for airport development by expanding FAA's
     innovative pilot projects and providing small airports with more
     flexibility in funding AIP projects, among other things.  In
     addition, the proposed legislation would help to improve FAA's
     information on airfield pavement quality, which should improve
     decisions about funding these costly improvements. 

  -- The legislation's proposals to enhance aviation safety and
     security encompass areas in which we have identified a
     continuing need for improvements.  Requiring FAA to promptly
     address issues that could prevent future accidents and better
     deal with human error are positive steps.  Similarly, requiring
     FAA to report on the status of its new airline inspection and
     certification program and providing additional oversight of
     aircraft repair stations should result in additional safety
     improvements. 


   ENHANCING AVIATION COMPETITION
---------------------------------------------------------- Chapter 0:1

Airline deregulation has led to lower airfares and better service for
most air travelers, largely because of increased competition spurred
by the entry of new airlines into the industry and established
carriers into new markets.  However, some communities have not
experienced the benefits of deregulation and thus have found
themselves facing higher air fares and/or less convenient service. 
In numerous reports and testimonies issued since the late 1980s, we
have found that competition could be improved in many communities
around the country.  Various operating barriers--including
restrictive gate leases and limits on the number of take-offs and
landings at four congested airports--and airline marketing practices
have contributed to limiting the full potential benefits of
deregulation.  The proposed legislation addresses a number of
important issues intended to enhance the overall competitiveness of
the aviation industry. 


      COMMUNITY AVIATION PROGRAMS
-------------------------------------------------------- Chapter 0:1.1

Among other things, the proposed bill would establish two programs to
promote air service in various communities and establish ways to
overcome some of the operating barriers that we identified.  The
proposal would authorize the expenditure of up to $30 million for a
4-year program to develop air service in up to 40 small communities,
or groups of communities.  A second pilot program would assist
communities and states with inadequate access to the national
transportation system in improving their access to the system. 

The programs would provide a vehicle for trying and evaluating
different approaches to improving air service.  We found that a
variety of factors have contributed to the higher fares and poorer
service that some communities have experienced since deregulation.\1
Similarly, we suggested that a coordinated effort involving federal,
regional, state, local, and private-sector initiatives may be needed
to address those factors.  Such initiatives, coupled with other
initiatives included in this legislation--particularly provisions
relating to the use of regional jets by commuter carriers--have the
potential for increasing competition and improving the quality of
service for some communities.  We believe the programs may provide
the vehicle by which such efforts can be systematically tested and
evaluated. 


--------------------
\1 See, for example, Domestic Aviation:  Barriers Continue to Limit
Competition (GAO/T-RCED-98-32, Oct.  28, 1997). 


      AIRLINE PRACTICES
-------------------------------------------------------- Chapter 0:1.2

The proposed legislation would require the Department of
Transportation (DOT) to review the practices of airlines that may
inhibit the availability of quality, affordable air transportation
services to small and medium-sized communities and to take
appropriate regulatory actions to address problems.  These practices
include marketing, code-sharing partnerships, and gate leases at
airports.\2

We have long recognized that the marketing practices of major
airlines--such as frequent flyer programs and travel agent commission
overrides--may make competitive entry more difficult for other
airlines.\3 These practices encourage travelers to choose one airline
over another on the basis of factors other than obtaining the best
fare.  Such practices may be especially important if an airline is
already dominant in a given market or markets.  Ultimately, these
practices may lead to higher fares than would exist in their absence. 
Other marketing arrangements, such as code-sharing partnerships
between airlines, may have both positive and negative effects on
consumers.\4 For example, the partnerships may improve the
convenience of connections for travelers but could reduce competition
and lead to higher fares if alliance partners do not compete with
each other. 

Restrictive gate leases may also be barriers to establishing new or
expanded service at some airports.  We reported that gate leases at
six key airports permitted one or a few airlines to hold exclusive
rights to use most of an airport's gates over a long period of time,
commonly 20 years.  Such leases have prevented nonincumbents from
securing necessary airport facilities on equal terms with incumbent
airlines and have contributed to higher airfares at these airports.\5
We are analyzing information on recent changes in airfares and gate
arrangements and plan on reporting that information to you in
February 1999. 


--------------------
\2 Code-sharing occurs when an airline, by agreement, uses its
designator code to market flights operated by another carrier as its
own. 

\3 Under frequent flier programs, passengers qualify for awards by
flying a certain number of miles with the sponsoring airline.  A
travel agent commission override is a special bonus commission paid
by airlines to travel agents or agencies as a reward for booking a
targeted proportion of passengers on their airline.  Among our
reports, see Aviation Competition:  International Aviation Alliances
and the Influence of Airline Marketing Practices (GAO/T-RCED-98-131,
Mar.  19, 1998). 

\4 Aviation Competition:  Proposed Domestic Airline Alliances Raise
Serious Issues (GAO/T-RCED-98-215, June 4, 1998). 

\5 This issue is discussed, for example, in Airline Competition: 
Effects of Airline Market Concentration and Barriers to Entry on
Airfares (GAO/RCED-91-101, Apr.  15, 1991). 


      SLOT EXEMPTIONS AND
      PERIMETER RULE
-------------------------------------------------------- Chapter 0:1.3

The legislation also requires DOT to quickly grant or deny exemptions
for nonstop regional jet service from small communities into three
high-density airports--O'Hare, LaGuardia, and Kennedy.  To reduce
congestion, FAA has limited since 1969 the number of takeoffs and
landings (referred to as slots) that can occur at these airports and
at Ronald Reagan Washington National Airport.  However, efforts by
DOT to allocate these slots equitably among airlines have not been
effective in preventing established airlines from strengthening their
control of slots.  In response to our October 1996 report, DOT began
to use the authority that the Congress gave it in 1994 to allow
additional slots at O'Hare, LaGuardia, and Kennedy.\6 These
exemptions could help to enhance service from some small and
medium-sized communities. 

The draft legislation would also provide limited exemptions to the
federal perimeter rule at Reagan National that prohibits incoming and
outgoing flights exceeding 1,250 miles.  Among other things, the
draft legislation would require DOT to assess the impact of the
exemptions on safety, noise levels, and the environment.  The
perimeter rule, which has been amended in the past to extend the
distance, has been used to promote Dulles Airport as the long-haul
airport for the metropolitan area.  However, the rule restricts the
ability of airlines based in the West to serve Reagan National
because they are not allowed to fly directly from the markets where
they are strongest.  By contrast, because of their proximity to
Reagan National, each of the seven largest established carriers is
able to serve the airport from its principal hub.\7

In 1996, we suggested that the Congress consider granting DOT the
authority to allow exemptions to the perimeter rule at Reagan
National when the proposed service will substantially increase
competition.\8 We did not recommend that the rule be abolished
because doing so could have unintended negative consequences, such as
reducing the amount of service to smaller communities in the
Northeast and Southeast.  This could happen if the airlines serving
Reagan National were to shift their service from those communities to
take advantage of more profitable, longer-distance routes. 

The proposed legislation would also delineate special rules for
O'Hare by granting 30 slot exemptions over a 3-year period--18 for
underserved markets and 12 for air carrier slot exemptions.  DOT
would be required to report to the Congress 3 years after the first
exemption is granted on the impact of the additional slots on safety,
environment, noise, access to underserved markets, and competition. 
In the year 2000, DOT would be required to complete another study
encompassing all four high-density airports.\9

We recognize that the communities where the airports are located will
be concerned with any proposals to grant additional slots because of
potential congestion, noise, and safety problems.  These are
sensitive issues, and ultimately, any final decisions about slots can
best be resolved through congressional deliberations.  However, the
proposed legislation provides for a relatively modest number of
additional slots and could enhance competition at and improve access
to these airports.  Similarly, the proposed requirements that would
spread the additional flights at Reagan National throughout the day
and limit those flights to quieter, stage 3 aircraft, may mitigate
the concerns of the community.  And finally, by requiring DOT to
report to the Congress on the impacts of the additional slots at
Reagan National, the draft bill would provide an opportunity to
reexamine concerns about noise, safety, and the environment. 


--------------------
\6 The FAA Authorization Act of 1994 (P.L.  103-305, section 206)
created an exemption provision to allow additional slots at O'Hare,
LaGuardia, and Kennedy when DOT "finds it to be in the public
interest and the circumstances to be exceptional." The number of
flights at Reagan National is further limited by federal law to
address local concerns about noise.  DOT's exemption authority does
not presently include Reagan National.  Airline Deregulation: 
Barriers to Entry Continue to Limit Competition in Several Key
Domestic Markets (GAO/RCED-97-4, Oct.  18, 1996). 

\7 A similar rule is in place at New York's LaGuardia airport,
restricting flights to within 1,500 miles.  It was established by the
Port Authority of New York & New Jersey and was intended to promote
Kennedy as the long-haul airport for the metropolitan area. 

\8 Airline Deregulation:  Barriers to Entry Continue to Limit
Competition in Several Key Domestic Markets (GAO/RCED-97-4, Oct.  18,
1996). 

\9 The report due in 2000, when the airports are using only stage 3
aircraft, would compare current community noise levels with the 1991
levels. 


   OVERSEEING AIR TRAFFIC CONTROL
   MODERNIZATION
---------------------------------------------------------- Chapter 0:2

Over the past 17 years, FAA's multibillion-dollar program to
modernize aging air traffic control systems has experienced cost
overruns, schedule slippages, and performance problems of large
proportions.  Because of the program's size, complexity, cost, and
problems, we have designated it as a high-risk information technology
initiative since 1995.  The proposed legislation contains reporting
requirements for several of the program's major modernization
projects.  We recently reported on the status of major projects and
would like to provide you with an update on the progress and
challenges faced by two of the projects targeted in the draft
legislation--the Wide Area Augmentation System (WAAS) and Oceanic
Automation System.\10


--------------------
\10 Air Traffic Control:  Status of FAA's Modernization Program
(GAO/RCED-99-25, Dec.  3, 1998). 


      WIDE AREA AUGMENTATION
      SYSTEM
-------------------------------------------------------- Chapter 0:2.1

The proposed legislation would call for FAA to report to the Senate
and House authorizing committees on the implementation plans and the
timetable for the WAAS system--a network of ground stations and
geostationary communications satellites.  FAA would also be required
to determine whether WAAS will ultimately be the primary or sole
means of navigation.  FAA is developing the system to augment the
Global Positioning System (GPS)\11 to enable it to replace its
present ground-based navigation system with a satellite-based system. 
WAAS has incurred significant cost growth--from approximately $500
million in 1994 to just over $1 billion in 1998 to develop the system
and from about $1.5 billion in 1997 to slightly over $2.0 billion in
1998 to operate and maintain it.  FAA recently reported that the
operation of the initial system--originally planned for June
1997--was likely to be delayed until September 2000.  FAA attributed
the delay to problems with the development of a critical software
component that helps ensure that WAAS signals are precise and valid. 
We have reported over the years that the lack of a disciplined
software acquisition process has contributed to FAA's past problems
to deliver systems capabilities on time and within budget.\12

Furthermore, many questions remain about whether WAAS can perform as
originally intended--that is, provide the sole means of navigation,
so that it allows aircraft to meet all performance requirements for
the navigation system for a given operation or phase of flight.  With
WAAS fully operational, FAA would be able to phase out its costly
network of ground-based navigation aids.  Key issues that relate to
the system's ultimate capability include (1) its cost/benefit, (2)
the vulnerability of GPS signals to radio frequency interference, (3)
the availability of a second civil broadcast frequency, and (4) the
acquisition of additional satellites.  FAA is currently addressing
these issues, and their resolution will allow the agency to develop a
roadmap for the future navigation system.  The reporting requirements
outlined in the draft legislation regarding the certification of
WAAS' capabilities and the necessity of a back-up system until FAA
determines that WAAS should be the sole means of navigation would aid
in continued congressional oversight to help ensure that FAA does not
repeat past problems with major modernization systems. 


--------------------
\11 The Department of Defense's GPS satellites transmit radio signals
that allow properly equipped air, land, and sea users to calculate
the time and their position and speed anywhere above the earth's
surface and under any condition. 

\12 Air Traffic Control:  Immature Software Acquisition Processes
Increase FAA System Acquisition Risks (GAO/AIMD-97-47, Mar.  21,
1997). 


      OCEANIC AIR TRAFFIC CONTROL
      SYSTEM
-------------------------------------------------------- Chapter 0:2.2

The proposed legislation also calls for FAA to report to the Congress
on plans to modernize the oceanic air traffic control system and, if
necessary, submit a proposal to fund the project.  FAA's oceanic
automation project is designed to improve air traffic control over
the ocean by allowing controllers and aircraft operators to take
advantage of new technology and procedures--such as automatic
dependent surveillance position reporting, advanced conflict probe,
and data link--that would improve safety and traffic flow.\13

The oceanic project has encountered problems in development.  For
example, the project's scope has been reduced from five segments,
which would have allowed incremental functional improvements, to one
segment.  That one segment, in turn, has been reduced from three to
two components--data link and controller tools.  FAA eliminated the
third component--a requirement for automatic dependent
surveillance--from this segment, partially in response to contractor
performance problems and the potential for a $45 million cost
increase to this segment.  FAA reported that it was on schedule to
deliver the data link and controller tools by October 1999. 

FAA officials believe that further improvements in oceanic air
traffic control automation are needed and are examining alternative
means to satisfy those needs.  Oceanic users expect FAA to improve
oceanic air traffic control to allow them to achieve maximum fuel
efficiency, minimum travel time, and access to preferred takeoff
times and flight paths.  The draft legislation's reporting
requirement, including a budget for the program, is important to help
ensure that FAA meets these expectations. 


--------------------
\13 Automatic dependent surveillance is a technology that will
provide more accurate position reports for use by controllers and
pilots to safely reduce distances between aircraft and make more
efficient use of airspace.  Conflict probe tools allow air traffic
controllers to identify conflicts up to 20 minutes in advance of
their occurrence.  Advanced tools would provide controllers with
suggested resolution for these conflicts.  Data link provides digital
communication between ground and airborne automation systems.  All of
these capabilities will ultimately allow FAA to move to a more
collaborative system of air traffic management known as ï¿½free
flight.ï¿½


   MANAGING THE YEAR 2000 PROBLEM
---------------------------------------------------------- Chapter 0:3

The proposed legislation calls for FAA to report to the House and
Senate authorizing committees every 3 months on problems associated
with making its computer systems ready for the year 2000.  To safely
guide and direct aircraft, FAA depends on an extensive array of
information-processing and communications technologies.  The
implications of FAA's not meeting the Year 2000 deadline are enormous
and could affect hundreds of thousands of people through customers'
inconvenience, increased airline costs, grounded or delayed flights,
or degraded levels of safety.  Over the last year, we have reported
that FAA continues to face serious challenges in meeting the
deadline.  In August 1998, we reported that FAA was unlikely to
complete critical testing activities in time because, among other
reasons, its projections were based on very optimistic schedules and
because the agency's testing process is complex.  We also reported
that unresolved risks--including those associated with data
exchanges, international coordination, reliance on the
telecommunications infrastructure, and business continuity and
contingency planning--threatened aviation operations. 

More recently, our reviews of DOT's Year 2000 progress reports
demonstrate the need for continued attention to FAA's progress.  DOT
recently reported that FAA expected to complete implementing\14
repairs on 33 of its 155 mission-critical systems by December 31,
1998.  However, it later reported that only 14 of these systems were
completed by that date.  While there could be a reasonable
explanation for FAA's not reaching its goals, this type of
information would be valuable to congressional committees to allow
further questioning and to aid in congressional decision-making. 
This type of information is called for in the draft legislation. 

Focusing solely on FAA, however, provides an incomplete picture of
the nationwide network of aviation operations, commonly called the
National Airspace System (NAS).  In addition to FAA's air traffic
control system, major NAS components include airports and domestic
airlines, which both depend on computer technologies and are likely
to be affected by the Year 2000 problem.  FAA has some insight into
the Year 2000 status of these industries because it regulates certain
airline and airport systems.  The agency has also hosted a number of
outreach meetings aimed at sharing Year 2000 information with members
of the aviation community. 

At the request of this Committee and its Subcommittee on Aviation, we
are reviewing the status of airports' preparations for the Year 2000
and will issue a report soon.  We have found that nearly a third of
the more than 330 airports that responded to our survey did not
report that they would meet the June 1999 date recommended by FAA to
complete preparations for the Year 2000 and did not have contingency
plans for Year 2000 induced failures.  Therefore, it would be
appropriate to expand the reauthorization language to require FAA to
report on the Year 2000 status of all critical NAS
components--including airports and airlines. 


--------------------
\14 Implementation is the final phase in the government's approach to
resolving Year 2000 problems.  It occurs after systems have been
fixed and tested and involves putting systems into operation. 


   FUNDING AIRPORT IMPROVEMENT
   PROGRAMS
---------------------------------------------------------- Chapter 0:4

AIP provides grants to fund the capital needs of the nation's
commercial and general aviation airports.  Funding for most of FAA
and all of AIP is provided through the Airport and Airway Trust Fund. 
The proposed legislation would remove caps on the amount of
discretionary grants, increase the apportionment for noise grants,
and make other technical adjustments to the AIP funding formula. 

We have previously reported on the need for adequate and predictable
funding for airport improvements.  Last year, we reported that
airports face a potential funding gap of as much as $3 billion
annually over the 5-year period, 1997-2001.\15 The $3 billion is the
difference between $10 billion in planned development and $7 billion
in funding at historical levels.  The difference between current
funding and planned development is especially acute for smaller
airports.  Their 1996 funding covered only about half of their total
planned development. 


--------------------
\15 Airport Financing:  Comparing Funding Sources With Planned
Development (GAO/T-RCED-98-129, Mar.  19, 1998). 


      INNOVATIVE FINANCING
-------------------------------------------------------- Chapter 0:4.1

To help address airports' funding needs, the proposed legislation
would codify FAA's innovative finance pilot project and expand it
from 10 to 20 projects.\16

The pilot project allows FAA to provide AIP grants to projects that
demonstrate innovative financing, specifically through the payment of
interest, credit enhancement, and a flexible nonfederal matching
share.  The draft bill would also provide small airports with more
flexibility in funding AIP projects by allowing them to contribute
more than 10 percent in local matching funds. 

In March 1998, we reported that FAA's innovative financing pilot
program had attracted only limited interest among airports.\17 Of the
airports that applied, the greatest interest was for flexible local
matching, which allows local airport sponsors to increase their local
matching contribution above 10 percent.  Flexible matching allows
projects, which otherwise may be delayed, to be started sooner and
may ultimately increase the funds available for the airports'
infrastructure needs.  We also recommended that the Secretary of
Transportation be given the authority to use AIP grants to capitalize
state revolving funds for those states with the capability of
managing such a fund.  We believe that state revolving funds are an
innovative financing concept that could help smaller airports obtain
additional financing. 


--------------------
\16 FAA selected 10 projects before the pilot expired at the end of
fiscal year 1998. 

\17 Airport Financing:  Funding Sources for Airport Development
(GAO/RCED-98-71, Mar.  12, 1998). 


      AIRFIELD PAVEMENT
-------------------------------------------------------- Chapter 0:4.2

The proposed legislation would also require FAA to evaluate options
for improving the quality of information on runway pavement
condition.  Runways, like highways, are prone to deterioration from
weather and usage.  Left unchecked, such deterioration can eventually
pose safety risks to planes.  While the rehabilitation of runway
pavement is a high priority for FAA in awarding AIP grants, the
agency does not have accurate, consistent, nationwide information on
the runways' condition.  To improve the existing information
contained in the Airport Safety Data Program, we recommended that FAA
require airports to submit these data on a regular basis in order to
create a pavement condition database.  \18 The draft bill
incorporates our recommendations. 

We also reported in July 1998 that while most runway pavement is
currently in good condition, over the next 10 years, many airports
will face substantial costs to keep them in that condition.  We
estimated that future costs to maintain airport runways will be $1.38
billion if rehabilitation occurs when needed.  However, this could
mean as much as $774 million in the first year alone.  If, however,
runaway rehabilitation is funded at the historical level of about
$162 annually, the overall cost of maintaining runways will increase
and will result in an unmet need of $2.37 billion after 10 years. 
This situation will occur because many projects would be deferred,
pavement would deteriorate more rapidly, and pavement would
ultimately become more expensive to rehabilitate. 


--------------------
\18 The pavement condition index rates pavements on a scale of 100
(excellent) to 0 (failed).  See Airfield Pavement:  Keeping Nation's
Runways in Good Condition Could Require Substantially Higher Spending
(GAO/RCED-98-226, July 31, 1998). 


   IMPROVING AVIATION SAFETY AND
   SECURITY
---------------------------------------------------------- Chapter 0:5

The proposed legislation contains a number of provisions to enhance
the safety and security of the nation's aviation system.  We have
done work that is relevant to provisions concerning Flight
Operational Quality Assurance (FOQA) programs, human factors issues,
the Air Transport Oversight System (ATOS), and the oversight of
aircraft repair stations. 


      FLIGHT OPERATIONAL QUALITY
      ASSURANCE PROGRAMS
-------------------------------------------------------- Chapter 0:5.1

The proposed legislation would require FAA to promptly issue a Notice
of Proposed Rulemaking to protect air carriers and their employees
from civil enforcement penalties for incidents discovered under FOQA
programs.  These programs analyze data recorded during uneventful
flights to detect technical flaws and unsafe practices or conditions
early enough to prevent future accidents or incidents.  In December
1997, we reported on the important safety benefits that could result
from such programs.\19 In that report, we identified as a serious
impediment to implementing FOQA programs the concerns held by
airlines and pilots that the information gathered would be used
against them in civil enforcement actions by FAA.  We believe that it
is time for this concern to be laid to rest and that formal
rulemaking is the appropriate way to do so.  Last month, FAA issued a
policy statement promising conditional protection from civil
enforcement actions for airlines participating in FOQA programs.  The
agency has also indicated that a Notice of Proposed Rulemaking will
soon be forthcoming.  The statement reiterated a policy statement
issued in February 1995, but no rule has been issued. 


--------------------
\19 See Aviation Safety:  Efforts to Implement Flight Operational
Quality Assurance Programs, (GAO/RCED-98-10, Dec.  2, 1997). 


      HUMAN FACTORS
-------------------------------------------------------- Chapter 0:5.2

In addition, the proposed legislation would emphasize the importance
of ensuring that human factors concerns are addressed throughout FAA. 
Human factors is a science that examines how humans interact with
machines and other people and determines whether procedures and
regulations take into account human abilities and limitations. 
Identifying chances for human error can reduce the need for later
replacing or modifying equipment and procedures.  Among other things,
the draft legislation would require FAA to address problems and
concerns that have been raised about its human factors program and to
develop human factors training for pilots and flight crews. 

In 1997, we recommended that FAA better integrate human factors
considerations into the projects it was developing.\20 In addition,
we and others have pointed out several cases in which increased and
early attention by FAA to human factors issues could enhance the
agency's efficiency and effectiveness.  The National Air Traffic
Controllers Association and the Professional Airways Systems
Specialists are working with FAA to resolve numerous human factors
problems with the Standard Terminal Automation Replacement System
(STARS)--a major component of the air traffic control modernization
program, which will replace aging controller workstations and
supporting equipment.  The fact that many of the human factors issues
were not identified and resolved early in the project has contributed
to added project cost and schedule delays.  FAA estimated that the
total cost for incorporating all human factor issues into the final
design of STARS would be $192 million and entail a delay of more than
2 years. 


--------------------
\20 See Human Factors:  Status of Efforts to Integrate Research on
Human Factors Into FAA's Activities (GAO/RCED-96-151, June 27, 1996). 


      AIR TRANSPORT OVERSIGHT
      SYSTEM
-------------------------------------------------------- Chapter 0:5.3

The draft legislation would also establish reporting requirements for
FAA on ATOS--a reengineered approach to the way FAA fulfills its
safety inspection and certification responsibilities, which are
essential to the safe operation of the nation's aviation system. 
Over the past several years, we and others have reported on a number
of deficiencies in FAA's inspection program.\21 ATOS was developed in
part to respond to the criticisms and recommendations made by us and
others.  ATOS promises to provide a structured approach to
inspections by using data on past accidents, incidents, and problems
detected during inspections to target the surveillance of airlines. 
FAA began implementing the system in October 1998, applying it to the
nation's 10 largest airlines.  We are monitoring the system's
implementation and plan to report our findings later this year. 


--------------------
\21 See, for example, Aviation Safety:  Weaknesses in Inspection and
Enforcement Limit FAA in Identifying and Responding to Risks
(RCED-98-6, Feb.  27, 1998); Aviation Safety:  New Airlines
Illustrate Long-Standing Problems in FAA's Inspection Program
(GAO/RCED-97-2, Oct.  17, 1996). 


      AIRCRAFT REPAIR STATIONS
-------------------------------------------------------- Chapter 0:5.4

The draft legislation would create an advisory panel to review issues
related to the use and oversight of aircraft repair stations.  During
this decade, the airlines and air cargo industries have increasingly
come to rely on independent repair stations to perform their
maintenance.  FAA is responsible for certifying these repair stations
and inspecting them regularly to ensure that they continue to meet
the agency's certification requirements.  In October 1997, we found
that FAA was meeting its goal of inspecting every repair station at
least once a year.\22

The overwhelming majority of the inspectors we surveyed stated that
they believed the overall compliance of repair stations was good or
excellent.  However, more than half of the inspectors believed there
were areas of compliance that repair stations could improve.  We made
a number of recommendations to improve the quality of inspections and
record keeping, and DOT is now implementing our recommendations.  The
proposed legislation would provide continued oversight of repair
stations. 

In summary, we have conducted a large body of work that addresses
many of the issues now being considered by this Committee.  We
support the passage of legislation to reauthorize FAA.  It provides
an opportunity to address critical issues facing FAA and the aviation
community while ensuring appropriate Congressional oversight.  We
would be glad to work with you and your staff through this
legislative process. 


--------------------
\22 See Aviation Safety:  FAA Oversight of Repair Stations Needs
Improvement (GAO/RCED-98-21, Oct.  24, 1997). 


-------------------------------------------------------- Chapter 0:5.5

Mr.  Chairman and Members of the Committee, this concludes our
prepared statement.  We would be glad to respond to questions. 


*** End of document. ***