Transcripts For CSPAN3 Hearing On FAA Modernization And Reforms 20150519

Hillary clinton continues hir visit today in cedar fall. Shes taking part in a roundtable discussion on Small Businesses and lending. And live coverage this morning on capitol hill the Senate Transportation committee holding a hearing on reauthorizing faa programs, focusing on modernizing the air Traffic Control system. The administrator of the faa is michael werta. Well be hearing from him as national air Traffic Controller associations president and others. The chair arrived. South Dakota Republican john thune. Youre watching live coverage on cspan3. This hearing will come to order. Good morning. The Commerce Committee concludes the series of planned hearings on reauthorization of the federal Aviation Administration with an examination of the nations air Traffic Control system. Let me begin by thanking aviation subcommittee chair and Ranking Member for taking us through several valuable hearings on the way to this full committee hearing. Its been a busy work period and a great deal of progress has been made thanks to their efforts. Usair Traffic Control oshgs atc system involves thousands of dedicated air Traffic Controllers guiding flights across the country on daily basis. We can proud of the safety record. At the same time increasing demand, the need to improve efficiency and changes in technology all underscore the need to modernize a system that is still radar based and operated using concepts and procedures developed decades ago. Efforts to modernize hardware and software made progress recently with the long view indicates modernization programs often taken too much time and cost too much. We have stacks of reports from the dots office of Inspector General and the Government Accountability office detailing the implementation delays and cost overruns that have plagued the efforts for decades and stimied leadership for multiple administrations. The initiative in this area is the next Generation Air Transportation System. Before nexgen was given a name it was free flight. It was expected to result in the genuine trance formation of the system away from air Traffic Control to air traffic manage management taking advantage of gps for navigation was at the heart of this idea. Faa would save money eliminating most radars and airspace operators would save time money and fuel by choosing their own direct routes. But more than 15 years after the faa began talking about free flight, we still seem to be more than a decade away from anything resembling it. A recent study by the National Research council concluded that the nexgen is more about incremental programs and improvements rather than a transformational change r change. Airlines and other operators in the system feel burdened with the expense and effort of implementing change thats wont yield direct benefits for them for many years to come. This situation is led several stake holders and policy makers to question whether the current atc structure is best suited for the task at hand. Long standing difficulties with modernization of just one reason to consider reform. The systems reliance on annual transportation appropriations and the vague riz of the political process make long term planning for system capitalization management of the footprint difficult and more costly. And the faa will always face challenges attracting and retaining the talent needed to drive major change when it must compete with cutting edge businesses in the private sector. To address the challenges we must consider if there is a better way to deliver atc services for the traveling public and airspace users. And im open to considering all ideas. Faa has a great record as a safety regulator, something that would certainly continue a fair traffic considering Services Removed out of the faa or government. Many countries arent world have undergone such transitions with success. I look forward to hearing from our Witnesses Today about what reform of our system might look like and how reform could serve the needs of all airspace users. To be sure, the matters we discuss today are part of a larger effort on faa reauthorization where well address a host of other important issues. Im looking forward to working with Ranking Member nelson as other members of the committee to advance such legislation. Lastly, i want sto stress our interest about atc modernization are not focused only on the Current Leadership Team at faa. As i mentioned before it seems clear there are limitation thats impede success over the years. I suppose the key question is whether if we were to build an air Traffic Control system from scratch today, would we necessarily conform to the old structures or strike a better path . I look forward to this discussion. And now i want to turn to my colleague senator nelson Ranking Member, for his opening remarks. Thank you, mr. Chairman and senator thune. He joins me to acknowledge those lost and the flight 3407. Your presence here is a reminder of how much is at stake with the safe operation of our Aviation System. We have the most kblechl airspace in the world. The faa employees, we have an agency that is providing the safest, most efficient airspace in the world. Yet the negative impacts of the uncertainty of the funding and the sequestration have led to widespread concerns about the funding of federal programs and the federal operations. If you take a meat cleaver approach instead of the scalpel approach the sequester forces irresponsible budget decisions and our domestic and defense programs. Now some of you are going to suggest that the answer is to privatise how the faa and air Traffic Control. This senator feels like we out to get budget certainty and repeal sequestration. If we do not, the situation will worsen when additional budget cuts return in 2016. The faa has faced unpredictability for too long. The last faa bill took four years and involved 23 extensions and a partial faa shutdown. Now the good news is that senator thune and i working together, were going to do Everything Possible to get this faa reauthorization gone. The faa has had to furlough employees implement a hiring freeze temporarily close their academy and halt a lot of the work that ive had the privilege of seeing with the administrator on the nexgen programs. This is set the faa back in its progress to advance air Traffic Control modernization. So the conversation about moving air Traffic Control into private, not for profit entities has impact far beyond you witnesses here today. They control airspace with the faa and they have for more than 65 years. Today the department of defense controls about 20 of our airspace. For civilians as well as the military. Faa and dod coordinate activities to ensure our military can train war fighters test new concepts, equipment, and defend the nation. Air defense right here in the continental u. S. No other country in the world has the defense assets of the u. S. And we must ensure that our defense interests are not harmed by removing the government from air Traffic Control. I can tell you the department of defense has visited me and they dont want any of this privatization. Well, look at the airlines. Even the airlines are not in agreement. Let me quote from a letter from delta. Rather than wasting months of collective energy only to find ourselves with a less sufficient less responsive, more bureaucratic like costlier, new Monopoly Service provider, we should instead focus our efforts on achieving real reform in the next authorization that brings about tangible benefits for operators and more importantly for the traveling public. Thats delta. So since aviation is the backbone of our u. S. Economy we must prioritize air Traffic Control investments for the good of this country. Thank you, mr. Chairman. Thank you. We have a great panel today led off by the honorable michael huerta. Hell be followed by the honorable john engler, president and Business Roundtable and former governor. The honorable byron dorgan, former colleague of ours from the other dakota. And also a former member of this committee. And mr. Jeff smisek, paul renaldi, and mr. Ed bolen. So a great panel. We look forward to hearing from all of you. Well start on my left and your right with the administrator, mr. Huerta. Please proceed. Thank you. Members of the committee, thank you for inviting me to speak today about the reauthorization of the faa. The upcoming faa reauthorization provides us with the opportunity to propel our system to the next level of safety and to foster the kind of innovative climate that is long been the hallmark of our proud aviation heritage. This reauthorization is provided a forum for many an industry and government to openly discuss possible changes in the governing structure of the faa to help us create the Aviation System that will sustain our nations Economic Growth well into the future. Were open to having this discussion. But we must all agree on the most important problems reauthorization should fix. In our view those are budget instability and the lack of flexibility to execute on our priorities. These challenges exist for the entire agency, not just for the air Traffic Control system and the nexgen organizations. In addition to finding the agreement on the problem were trying to solve we should agree on finding ways to avoid unin unintended consequences. That hinges on relationships within the agency. Nexgen is more than installing technology in our air traffic facilities. It involves participation of our Safety Organization to ebb sure that the technology is safe and the controllers and pilots know how to use it safely. We believe that any discussion about governance must take into account the issues so that we may best serve our nation and the flying public. Some of argue for change saying it is not delivered on air traffic modernization. I argue that the faa already made major progress in modernizing our airspace system through nexgen. We completed the installation of a more powerful Technology Platform with the new High Altitude control system. The system will accommodate the applications of nexgen and allow controllers to handle the expected increase in air traffic efficiently. And last year we finished the coast to coast installation of the network that will enable satellitebased air Traffic Control. On a parallel track, through our collaboration with industry, we identified key priorities and implementing the procedures. We now have more satellitebased procedures in our skies than traditional radarbased procedures. We have created new nexgen routes above our busiest areas saving millions of dollars in fuel decreasing Carbon Emissions and cutting down on delays in each city. In addition to these improvements, we set clear priorities on delivering more benefits in the next three years. These range from improved separations standards for heavy aircraft, better coordination of traffic on the airplane surface, and streamline departure clearances using data communications. Nexgen yielded 1. 6 billion in benefits to airlines in the traveling public. In the next 15 years, the changes we have already made will produce 11. A 11. 5 million in benefits. Thats why we go back and study the benefits that certain improvements provided to users. For example, in atlanta, we safely reduced wake separation standards to improve efficiency at the airport. Because of this change, atlantas Heartsfield Jackson International airport increased number of planes it can land by 5 or about five planes more per hour. Delta is saving two minutes of taxi time per flight. The improvements are saving them between 13 million to 18 million in operating costs annually. Were aware of the implementation of nexgen. There are different theories about how to Deploy Technology if a complex operating environment. Some take the position that you should start from a wideranging vision and work back from there on developing a range of scenarios. Others suggest mapping out the entire picture and only proceeding when youre sure of the end game. Others say take a more pragmatic approach and this is the path that faa has chosen based on close consultation with industry. This approach used by the office of management and budget manages them to airlines and passengers. We acknowledge it requires up front investment but careful not to strand framz in theprograms. When dealing with widespread change and die namic airspace system, there is no margin for error. The system must transport 7 auto million passengers every year with the highest levels of safety. Any technology we implement must be reliable and safe from the outset. To achieve this high standard, we must remain nimble and we must have flexibility. Our Aviation System is a valuable asset for the american public. We should use the upcoming reauthorization to provide the faa with the tools necessary to meet the demands of the future and to minimize disruption to the progress weve already made with nexgen and to intergrate new use nears the airspace system. I thank you for the opportunity to appear today. Im happy to take your questions. Thank you. Here we go. Every one of the members relies on air transportation as a customers cargo and passenger airlines. Thert largest they are the largest system. Sadly are we lost our position and our future leadership is in doubt. The usair traffic system remains the largest worlds safest and it is not the most technologically advanced. The system relies on the same technology, ground based radar. The technology is still analyzed. They have the pace of modernization and represented by the faas nexgen situation. This month clearly stated the problems. The original vision for nexgen is not implemented today. Its offered for nexgen. A modern innovative air Traffic Control system would offer tremendous benefits to the usersst airspace. They lower emissions. It is Small Community airports. So what are the obstacles . Last year my seat mate here, faa administrator huerta offered an explanation at the Aerospace Club of washington. There is no wait faa can implement nexgen, recapitalize our aging infrastructure. That is something that the senator referred to in the opening comments. I would agree i believe on this critical point that current funding system clearly does not provide the needed resources. But a deeper problem is with the budget airy process itself. Stepbystep Technological Improvement that standard. Four generations of Cellular Technology from basic flip phone to 4g streaming videos and todays modern iphone are adopted. The faa is trying to fund a 20 billion capital modernization effort on an annual and unpredictable cash flow. Most sectors issue Revenue Bonds to finance Large Capital modernization. But bonding is something the faa cannot do. States do it. Private sector does it. The forecast government does not. I convened at the roundtable an expert group to help study this issue including the faa Department Officials and knowledgeable aviation policy advisors. Their conclusion, the status quo is simply too costly, too inefficient. They identified the necessary elements of the alternative system. Separation of the air Traffic Control operator from the regulators to improve transparency and accountability and to further increase safety. An organizational structure that accounts for multiple objectives so that safety and access are valued along with cost efficiency. Governance of the air Traffic Control by a board of 25 stake holders. A revenue structure that enables air Traffic Control to be selfsupporting without government Financial Support and completely free of the federal budget airy process. They accelerate modernization. Wage and benefit structures to protect employees, prevent disruption of employee reasonable career expectations and preserve a collaborative culture. Over the last two decades, most other western countries have restructured the way air Traffic Control is funded and governed. Determining that its a hightech service business, part of Critical Infrastructure that can be funded directly by the aviation users and customers separating air Traffic Control into an independent from the rest of the faa is of manageable process. Tools exist to address the problems that come with innovation and this is necessary. In the end, i hope you use the reauthorization process to put america on a trajectory to a modern air Traffic Control system that is again the Gold Standard. Now is time to restore the Global Leadership. Thank you for the opportunity. Thank you. Maybe turn about is fair play. Well see. For the past two years, i am former transportation secretary jim burnly have cochaired a project at the Transportation Institute looking at the subject of air Traffic Control and the structure of air Traffic Control. I was the chairman of the Aviation Panel the last time that we worked on reauthorizing the faa. And i pulled up a headline from that moment where we finally succeeded. And it said after five years of debate, 23 short term extensions and a partial shutdown, Congress Approved the final version of the faa bill. My hope this time around is that your headline will be shorter and your conclusions bolder for this reason. Aviation is one of the major arteries of the american economy. And the fact is the issue of effective air Traffic Control is essential to that industry. And i think weve now come to an intersection where we have to decide can we retain our leadership and developing the new technology and the next Generation Air Traffic Control system . Can we retain leadership with the current structure . In my judgement, we cannot. My conclusion was after two years of work with stake holders from around the system, if we want to retain americas leadership with the most advanced Technology Moving from ground based radar to satellite guidance which will be safer, faster and more efficient if we want to retain that we have to restructure the air Traffic Control function. Let me mention a couple of facts. Theres no question we have impressive record in aviation particularly commercial aviation even though there is still more to do. I know the families of the Crash Victims are in this room. I hope all of you get to know them. Because over the years they have played a very Important Role in continuing those Safety Improvement issues with the faa. Number two the air Traffic Controllers do a terrific job every day, steering 30,000 flights and two Million People as they fly across this country. Number three, the people of the faa work hard on these issues including air Traffic Control and nexgen. But they necessarily work in the thick glue of the bureaucracy. And, frankly, that is hard to do with these kinds of challenges. In a tichl spending restraint they cant even count on Stable Funding, in fact, they cant count on level funding. Take a look at the buget just passed and the facilities and equipment account. Its going to be 355 million below that which was requested and the lowest in 15 years. Thats the fne account faa and the current budget. As much as we wish it would, the budgets picture isnt going to change. Were going to see more and more spending restraint. Were going to see the impact of sequestration, the impact of more layoffs, the on again, off again stutter stop start funding from continuing resolutions. Thats what the faa is confronted with. No one would or could build a major new Technology Project with those kinds of challenges. Now heres the headline from last week and the post. I know that it causes heartache in the agency. It says, faa isnt delivering what was promised in aed 40dz ed 40 billion project. Thats why a change is needed n our work at the Eno Institute the consensus of the stake holders was we need to restructure to a Government Corporation or a Nonprofit Organization that has bonding capability, Stable Funding and the ability to plan and control and finance the march to modernization. We reached a Tipping Point that requires in our judgment the action by congress. Im not the typical spokesperson that would come to this table and suggest that be the case. Im someone who normally would weigh in on this side of having an agency do it. In this case, there is not going to be Stable Funding to move this country towards the leadership necessary in the next gen opportunity for air Traffic Control. Now i understand this isnt easy. I understand its a big lift. Its been discussed before. It needs to be done now. A number of other countries did this successfully and so can we. Finally, mr. Chairman, we know the history. December 17th 1903. They made the first flight. We learned to fly. We flew to ground based radar and for 50 to 60 years we havent changed. Now we need to change. We need to do it quickly and effectively and in my judgment the only way thats going to happen is if we create some different structure. I suggest a Government Corporation or Nonprofit Organization to accomplish what all of us want to accomplish for this country. One final point. I know the word privatization has been used. I didnt use it. There are others structural approaches including as i say Government Corporations and Nonprofit Organizations that i think will solve the problem for this country and allow and certainly insist the government retain and be a stake holder in a new organization. Thank you for the invite. Thanks to you have back. Now turn to mr. Smisek. Thank you chairman thune and Ranking Member nelson and the committee for the opportunity to be here. The reform of our nations air Traffic Control system is a critical issue for the users of the National Airspace, for our passengers and employees and for the many stake holders across the country that benefit from the healthy commercial Aviation System. Airlines for america which i serve as chairman dedicated a tremendous amount of resources, time, and attention developing a rigorous, factbased study of air Traffic Control reform including a Global Survey of best practices for operation of air navigation providers. Today all users of the atc system are beholden to a world war ii era radar based system that while world class in safety is inefficient and delay ridden. A long string of reports from aviation commissions, department of transportation and Inspector General and the Government Accountability office and independent private sector. They have not met expectations. It is existing funding and governance structure. The problem is not the leadership or workforce of the faa much its the funding and governance structure who we must face. There are many countries around the world that have already successfully transformed their own air Traffic Control systems. They have done extensive benchmarking of the success of the models. Our analysis suggests the following six basic principles for success of a transformed air Navigation Service provider. One, separation of the atc operations and the atc safety regulation functions. Two, a Nonprofit Corporation operating the atc system with independent, multistake holder board of governance, free from political influence over decision making. A self funneleding user fee model based on the cost of atc services. Allowing for access to Capital Markets and a steady predictable, reliable stream of funding that isnt subject to governmental budget airy con trants. Five, the ability to manage assets and Capital Investments in a way that allows far greater speed to market of technological modernization and six transparency in user fees so that users and their customers alike know what their paying allowing users to recover costs. Under a transformed atc system the total of new user fees for airlines plus in a new airlines are the passengers to help funneled the remaining faa should not exceed the total tax burden on the airlines and passengers today. With independent governance, operation and funding of a transformed atc system the faa could then turn full attention to what they do best, safety regulation and oversight. They create efficiencies, delay reductions and environmental benefits from reduced fuel burn. The inefficiencies, delays and costs of the current atc system will only grow over time. So theres no better time to transform the atc system than now. We are capable of rising to this challenge. As have many other countries before us. If we conduct this trance formation methodically and thoughtfully while giving proper consideration to transition issues, the result of this transformation will be a modernized Service Provider that will better deliver the benefits that the users of the system our employees, our passengers and this great nation expect and deserve. Thank you. Thank you. Mr. Chairman and senators of the committee, thank you for the opportunity to testify in front of you to day at this important hearing to discuss the future of our Aviation System. We all have a stake in the National Airspace system. Its an economic engine for this country, contributes 1. 5 trillion to the Gross Domestic Product and provides over 12 million american jobs. We invented aviation in this country. Its an american tradition. We have dreamed, innovated, implemented the unbelievable in aviation. Currently, we run the largest safest, most efficient, most complex, most diverse system in the world. Our system is incomparable unequal and unrivalled by any other country. For example the next largest airspace system in the United States is canada. They run roughly 12 million operations a year. The United States airspace system runs over 132 million operations a year. The United States airspace system and the faa considered the Gold Standard in the World Aviation community. In order to keep that honor, a change is needed. We face challenges to respond to the given problems of an unstabable funding stream, including but not limited the to the ability to finance the long term projects. The inability to grow at the National Airspace system and the infrastructure. And over 50 years old. Woor struggling to maintain our proper resources and staffing our busiest air Traffic Control system. The upcoming faa reauthorization bill must address the lack of a predictable Stable Funding stream for our continuous hyper critical safety aviation operation. We understand that addressing the stop and go funding problems will lead to an examination of a potential structure change for the faa. We believe its time for strictural change. The Current System is not dynamic enough to address the needs of air Traffic Control operations in the future. But any such change or reform must be carefully examined to prevent the consequences of negatively affecting the safety and efficiency of our National Airspace system. Every stake holder in the National Airspace system should Work Together to make sure the United States continues to be the Global Leader in aviation. Any reform must address the safety and efficiency of the National Airspace system. It must be mission driven. It must have a process to provide a stable, predictable funding system to adequately support air Traffic Control Services Staffing hiring training, long term projects such as nexgen. Any change must allow for continued growth in our Aviation System. Any change must be dynamic. The Aviation System must continue to provide all services to all segments of the aviation community. Any change we make needs to be precision like so that we dont interrupt the day to day operation of the National Airspace system. Our National Airspace system is an american treasure. Aviation is uniquely an american tradition. We cannot continue to short change it. Were still currently recovering from the sequestration cuts of 2013. Another round of cuts that are set to take place this year will shrink our countrys aviation footprint forever. We need to make appropriate changes to secure a Stable Funding stream for aviation. We need to establish a proper governance structure for our National Airspace system. A structure that is not laiden with bureaucratic business. A structure not burdened and marred with bureaucratic process. We need a dynamic structure that is is nimble. We need to grow aviation in this country and not shrink it. We need to modernize facilities, equipment, procedures, technology in a realistic time frame. We need a structure that will give us the Competitive Edge to ensure our future leadership and the global aviation community. Mr. Chairman, i thank you for the opportunity to testify in front of you today. I look forward to answering any of your questions or any of the questions the senators may have. Thank you. Thank you. Thank you, mr. Chairman members of the committee. General aviation is an important american industry. It represents over 200 billion to our economy. Business aviation and the United States Fosters Economic Development and small towns and in rural communities. It helps with our humanitarian efforts whether its responding to forest fires flooding, or getting transplant organs to treatment. Were honored to be here today. We represent over 10000 Member Companies, companies of all sizes. Companies in all types of industry. We also represent hospitals, universities, and nonprofits. 85 of mbaas members are small and mid sized companies. They generally are operating under small towns and secondary markets. Theyre generally flying from either from or two an airport with no commercial service. Business aviation is fundamental to the economy small towns and mid size. Typical of our membership is engineering. It is located in a kmubtcommunity with very little commercial service. It iscompete effectively because it has access to Business Aviation. Mr. Chairman, every member of this committee has a company like this in a Community Like polman. Just as a matter of perspective there are fewer than 500 communities in the United States with airline service. There are 5,000 communities in the United States that rely on Business Aviation for economic support. The reauthorization bill has a lot to do with communities like pollman and Companies Like schwitzer. Why do i say that . Because the airspace above our heads belongs to the american public. It doesnt belong in any one stake holder or any industry segment. The air Transportation System serves and must continue to serve all americans across this vast country of ours. The question on the table, the funneled. Al question of reauthorization is whos going to ensure that our public airspace serves the publics benefit. Will it be the duly elected officials . They wash their hands of the air Traffic Control system. Give over to other parties, taxing authority and the authority to determined who can access airports and airspace. This has been something that is pushed since long before nexgen was a concept and long before sequestration. These interests have been wanting the Sweeping Authority to determine who gets taxed what and who can fly where and when. Mr. Chairman the power to tax has been called the power to destroy. Today, that authority resides with elected officials. So, too, does the power to ensure nondiscriminatory access to airports and airspace. Congress should not relegate or delegate its authority over taxes and access. The Congressional Research Service Recently said to do so may well be unconstitutional. The largest measure the safest the most efficient the most complex and the most diverse air Transportation System in the world. But the Business Aviation community is not content with the status quo. No american should be. Being the best today does not mean we will be the best tomorrow. In fact complaisancy is our enemy. Thats why the Business Aviation community has been active and outspoken in the support for nexgen. In fact, no industry segment has done more. Our members have invested in technology and we urge congress to do the same. Serious problems do exist with the nexgen program. To date, programs have been delayed, implementation of operational benefits have been slow. And we still have a lot of work to do in terms of certifying technology. Its time for us to focus like a laser on those problems. Its time for us to not be distracted by what we need to do. We need to use this faa reauthorization bill to make sure that we are making nexgen a reality, make sure were improving the certification and approval process, to make sure that we are protecting our nations system of airports, to make sure that we are certifying and implemention, intergrating in a safe way uavs. Theres a lot of work to be done. The Member Companies look forward to working closely with you to do it. Lets just never forget that public airspace should serve the publics benefit. Thank you. You were a very efficient panel. Everybody came close to the fiveminute rule. Even our former colleague managed to get close to that. So i have a couple quick questions for mr. Huerta. A little off topic. I need to ask them. Over the weekend there were reports that indicated a security researcher claimed to have temporarily taken control of an engine on a passenger aircraft by hacking into the Inflight Entertainment system. If true this would be a very disturbing incident. Whats been the faas response to this mter and do you feel the faa is well equipped to analyze the types of threats against the Flight Control systems on passenger aircraft . First with, respect to the specific incident, were cooperating with the fbi and their investigation of what actually their finding is theyre working in that. As it relates to the larger question, cyber, this is something that is an ever evolving threat and something were looking very carefully at and were taking very seriously not only in the operation of our system but also in the manufacturer of aircraft. That means that were working closely with the manufacturers to understand how the threat how the threat morphs, how it evolves, changes and how do we stay ahead of it by having, as weve always had many layers of security and control over access to Critical Systems within the aircraft. I will say that i think cyber is and will continue to be a challenge. It is something that they have to work cooperatively against industry. Thats still being investigated . Yes, sir. There is nothing to report . Thats correct. There say report about it National Academy thats noted it would require a significant effort for the faa to attract, develop and retain the workforce talent to deal with cybersecurity challenges Going Forward. So when you talk about that that issue and the agencys efforts, how do you deal with the limitations, the Government Faces in competing against private sector employers in some of these fields . We always need to consider the factor do we offer a competitive job and do we offer a competitive compensation for that . That is a combination of ensuring were casting the broadest possible net. I think it is also important to point out that while we do operate within the government environment, there is a significant portion of our applicant pool and of our workforce generally who is interested in coming to work for the faa because of their belief in the mission and their belief in public service. Yes, its a very competitive environment out there. Were never going to pay the top salaries that Top Technology companies pay. And so our focus is on how can we ensure that we have an orderly process for promoting these people and how do we sell the job itself . This committee, of course, is very interested in concerned with the cybersecurity as it relateses to atc and nexgen. So well continue to, im sure, be in touch with you on that subject. I want to turn back to for the subject at hand today and ask you, mr. Renaldi, you spoke about how the status quo with regard to funding is not an acceptable situation. Can you assess among the options that have been put forward how some of those reform options provide for more Stable Funding for the atc system and the current government model . Thank you, mr. Chairman. We look to we have been studying probably for the last 18 months the other countries and when they broke off the air Traffic Control services from the Government Entity and some have done very well and some are still struggling. Were looking at if we have a good funding stream and if were going to change the structure. We dont want a system that is for profit. And its if canada. Its a model for comparison. And understanding as there is reluctance to copy the model reform. Im curious to see what aspects your members find most appealing. I think that i just i was up there last week visiting in ottawa. And looking at their technical center. The unique thing they do is they have a true clobcollaboration out. They have the air Traffic Controller and the engineer and a manufacturer working together from conceptual stage all the way through to training implementation and deployment within their facilities. And what that does is save time and money and they actually are developing probably the best equipment out there. Theyre selling it around the world. And theyre doing it in a 30 to 30month to threeyear time frame when we have to look much lower down the road because of our procurement process in this country. This will be for governor engeler and senator dorgan. In the context of an independent atc services provided, some of you have referenced a preference one way or the other or at least suggested several different models. Can you speak to the differences between a federal corporation a federally chartered chartered Nonprofit Corporation, and what might be the pros and cons of each approach . Ill start. We convened this group of kind of experts to look at this and their kind of consensus was probably a Nonprofit Corporation that was outside the government allowed for maximizing your shareholder precipitation with some of the benefits he just spoke of, speeding it up. One of the things that also would happen is the ability to get that bonding authority. If a governor were doing this, you know, or senator peters when hes back in michigan we bonded the project, you would have done it in a fairly short period of time. And then you could be count continuously improving. So the nimbleness of the corporation and the entity, we havent endorsed a specific approach, but i would say that the people we consulted with tend to rely on that, you know, that Nonprofit Corporation with the the shareholder management, if you will. We think that gets you the most bang for your buck and it also i think over time gets us back on the innovation leading edge, where we are simply not today. Mr. Chairman we are submitted to you a very substantial Research Document that the Eno Institute, jim burr burley, myself and the other folks involved have produced. It describes a series of different approaches with strengths in each. It also describes what other countries have done. But i think this is the most important point. That is the stability of funding for a project of this type is essential. And i served in congress 30 years, and theres a lot i dont know. In a time of spending restraint, in a time of sequestration, in a time of multiple spending resolutions and all the things coming at us there will not be Stable Funding for this type of project in the future, unless it comes through bonding capability and another type of organization. It is important to note that i dont support something that doesnt have the government as a stake stakeholder. I support and believe that this project will not get done for the country the way we want to see it getting done to retain our leadership, unless we decide to do it in a different stricture. To do that allows us funding and so on, with the input of all the key stakeholders, including the government. Thank you mr. Chairman. Airlines for america supports a Nonprofit Corporation for a number of reasons. First of all, the user Fee Structure, as senator dorgen mentioned would provide a stable stream of funding that would be bonded so rational Infrastructure Investments could be made and insurance of funding and stability. Secondly, this would be governed by a board of directors comprised of stake holders. Representatives from, for example, the department of defense, the u. S. Government aviation carriers, air cargo carriers, and union representatives. So that the stake holders would be present and would govern. But they would have fiduciary duties. They would not be employees of the government or employees of the airlines, but rather would have fiduciary duties dedicated to mission of the air Traffic Safety control system. And also the efficiencies that would be driven from a Nonprofit Corporation, we have very good evidence from canada to the north. That would provide funding as well for excellent and stable and professional management. You mentioned the ability, as administrative huerta mentioned, the ability to retract and retain excellent workforce includeingeing Cyber Security experts, quite important in any enterprise. And that enterprise would also be free of the political influence. The faa and the ability to modernize today. Thank you. Senator nelson followed by senator wicker. Thank you, mr. Chairman. I want to follow up your introduction of the question of cyber attack. Part of what were looking to do in this next generation is were going to do air Traffic Control off of satellites. You can have aware rns right from the cockpit of your other airlines around. And theres also the transition from the ground base radar. There is the question of the backup of the ground base radar. So what happens if there were a cyber attack on the gps that shut it down with mr. Srkmisek, the arrangement that youre talking about, who could bear the cost of that backup of the ground base radar since thats the less efficient operation . Senator um im certainly not an expert on Cyber Security. And not necessary any enterprise, the enterprise were talking about or an enterprise to have very expert investments in Cyber Security. It is a risk and it is no doubt a growing risk as we become the internet of all things. Certainly an attack on the gps system would not simply affect the air Traffic Control system. It would affect the department of defense. It would affect everything. Right. In the the private corporation in terms of if who would bear that cost . Concerns that were sufficiently material concerns of the ability of someone to bring down the gps system of which i have certainly have no knowledge at all. And then that would also be the responsibility of the Nonprofit Corporation. And as would you know everyone else. Im not actually familiar whether canada that has retained a backup radar system. Perhaps mr. Ranaldo would know that. So youre saying the private corporation would, in fact, retain the ground base radar as a backup system. Im not saying that, sir, i dont know whether that would be necessary. Based on the robustness of the technology itself. Well, thats one of the costs that were having to look to the future for. Mr. Administrator, why is d. O. D. Weighing in on this so heavily that they are concerned about this privatization . Can you speculate how privatization would impact the relationship with d. O. D. And would you be able to interact with a private entity or Nonprofit Corporation in the same way that you have existing opportunities to interact with d. O. D. . Senator nelson, we have i can certainly speak about the relationship and the working proceed ydures we have with the department of defense as they exist today. They are an important partner with air Traffic Control services, and they control certain air space in the country. We control certain air space in the country. And we have a shared responsibility for an efficient and effective management of the safety air Traffic Control system. We often take advantage of the air space that they use exclusively during peak travel periods to accommodate traditional traffic loads. And we work clabollaboratively with them to make sure they have access they need for their training. I understand you work clab collaboratively with them. Why do you think they are weighing in so vigorously . I cant speak to why they are weighing in. But i think what it ultimately depends on is what would be the the structure in an alternative model under which they would interact with their partners in the air traffic system . It would strike me that there would be a way to build protocols, but it is entirely dependent on what structure would be selected. Mr. Bolen why are the general aviation manufacturers so concerned about this . You represent folks like embrie air well go through all of them. Gulf stream on the g5. Cesna, et cetera. Why are they so concerned about this . Well, the Business Aviation community, as i mentioned earlier, 85 of our members are are small and mid sized companies. Theyre flying into and out of airports with little or no commercial airline service. And so theyre concerned about their access to airports and air space. And theyre concerneded about ensuring that their access is safe, its predictable, and its affordable. I think one of the questions that came up earlier was financing the system and what we heard is that one of the plans for the future is to have bonding authority. Which is a euphemism for borrowing. The reality is, what we have today is our system generates through taxes a largely, but not entirely selfsufficient system. We have a combination of user funded taxes plus a general Fund Contribution that currently funds the faa. The question on the table is if we pull it out, then we have a situation where all the industry charges dont equal the amount we have today. So we can either raise the taxes to get to that amount, we can cut the system to get to that amount, or as you heard we can borrow the money. Now borrowing money comes at a cost. Thats got to be serviced. And prolonged borrowing ends up creating an interest nightmare. So there are issues here that need to be addressed. What we want to do is make sure that all of the small towns, the rural communities, the secondary markets around the United States are able to have Business Aviation located in their communities and being able to access the airports and air space in the major markets where those Companies Need to go as well. Well. Thank you, senator nelson. Senator, let me just begin. Is every witness here a part of this working group . No. Okay. Well, i tell you what. I had to think about that for a second. I think this is an excellent report. T kudos to the authors. Would you do this for me because in reading through, i think at some point there needs to be a page where the owners take owner ship of this. And i dont see that. We check the website and found a number of people. So would you spread that on the record for us . And a question for the record. Would you do that, sir . I would be happy to do that. Now mr. Bowlen there are three are you part of this working group . We were part of the working group, but we didnt feel our concerns were being reflected so we are no longer part of that. I think thats probably accurate to say. There are three options that involve a major structural change. 100 government owned federal corporation. The second being an independent Nonprofit Organization and the third option being private forProfit Corporation. And the fourth option sort of basically tells congress that we ought to do our job. Get the funding straight and make sure that its reliable and steady. The fourth option included within the section, reform the system funning stream while maintaining the current structure. It goes onto say that this option could alleviate transition issues that are concerned with completely new government structure. Would it be fair to say that your organization is more in tune with that fourth option . Well, we have studied various market variety structures around the world. We looked at australia, new england, canada. In none of these markets do we see a robust Business Aviation community that is providing Economic Development in small towns and rural communities. Weve seen serious access issues. In australia, for example, Business Aviation is not allowed access to air space in melbourne or sidney on a prioritized basis at all. So we end up waiting sometimes three, four, hours on the tarmac waiting to get access. I was on a panel with the head of the irish air Traffic Control system. And he said you just have to understand youre not going to get priority. Thats just part of a Natural Selection process. As weve looked at nats in the united kingdom, we saw that privatized group needed a bailout from the taxpayers. When we looked at canada, weve seen they have instituted user charges, which are very problematic, while continuing fuel taxes. So what we have seen as weve looked around is a lot of fundament problems with some of the different havestructures. And we want to make sure were identifying problems and finding targeted solutions to them. To simply say were going to pull this out and give it Borrowing Authority leaves a lot of concerns about our ability to safely predictably and afford affordably get access for airports. So what youre saying the United States is unique in we have the 5,000 communities that rely on aviation in your prepared remarks, and that access will not be the same if we go to one of these three structural changes. Is that basically part of your concern . Yeah, our studies of system around that world that have taken this action have raised serious access and affordability concerns. Now senator, it sounds like hes got a good point there. Well, it depends on who is listening. Look, as ed knows, i spoke on the floor of the senate a nrm of times about general aviation and its importance this country. I think its very important. The question before this committee is are we in fact going to have the latest technology, next Generation System built and completed in this country to allow us to fly more safely, more efficiently . The answer in my judgment is without a change in in structure, we are not going to get there. I understand there are lots of interests that are opposed to this. And im going to give you a list of everyone who participated the best stake holders from around the country. But you cant reach everyone because everyone has their own set of interests they bring to these issues. As i mentioned to you, this is a heavy lift, which i understand. We didnt put forward a pattern with all the statistics for very important reasons. We wouldnt have gotten agreement on a specific pattern with all the specifics in it. But you know, mark twain was once asked if the he would engage in a debate. He said oh yes, if i can take the negative side. He said weve not told you the subject. Oh, the negative side takes no preparation. Look, i understand that this is big and its controversial. And i want to make one more point, if i might. Then i want to make one more. Mr. Huerta came to our organization as well. He wasnt a participant, but i invited him. I have Great Respect for him. And thats why we invited him to hear his vision as well. All of us should want the same thing. The question is what is the route to get to the end point . And there will not be Stable Funding in times of spending restraint for the next ten years, which will probably include sequester, probably include furloughs, and probably include a budget as we saw this year that cuts 365 million out of the facilities and equipment account of this Organization Even as theyre trying to climb this hill of modernization. That does not work and will not work. A stunning indictment, which very well may be correct. One quick point, mr. Chairman. Mr. Huerta several weeks ago i guess it was april 14th goodness time flies. April 14th you appeared before the full committee on a similar topic, faa reauthorization, a number of us asked questions for the record. Particularly with regard to the contract Tower Program. Were still awaiting those details and i look forward to receiving answers to those qfrs. Sooner rather than later. Absolutely sir. I think were actually trying to schedule a staff briefing to go over the methodology that we discussed at that hearing. Okay, if we could have squeezed those questions in in time, you could have answered them right on the spot but do your best and see if you can get those answers to us. Thank you. Thank you, senator wicker. Senator peters followed by senator manchin. Thank you to the panel for your testimony today. And governor its good to see you, governor and i served together in state, was the governor. I was the staurt senator. I recall you coming before me when i was on the finance committee in testimony. So here we are again in a different capacity. But its great to see you again. I would like to really pick up on just briefly on senator wickers comments. Is its interesting as i heard the tem from the panelists here and concerns about budgeting and sequester. It seems it ultimately falls backing on congress, that were not doing our job here in providing the resources necessary to implement nextgen and other types of reforms. So the proposals put before us to privatize us because were not going our jobs here. Thats what the focus need to be, to make sure the faa has the resources necessary to go forward. Having said that i have a question for you, i understand that the second largest air carrier in the United States, the el that airlines which has a major presence in my state of michigan. Thest a major hub for them as well as a very Large Employer in the state of michigan. They have declined to enforce the position today. They can deliver substantial benefits through improved collaboration efforts between the faa and aviation stake holders. Delta fears separating the system from the atc would lead to certain operational risks and pitfalls that they outlined, such as organizational discorruption bureaucratic silos between the atc system and faa safety experts. Unforeseen costs to accompany a transition to the new organization and a loss of expert personnel sochlt a long list of concerns that the Delta Airlines has expressed. Could you please leave a comment on the concerns and do you agree the risks are ones we need to consider here as a panel . I would be happy to, senator. As you can imagine, the airlines for america, Like Congress we dont always get unanimity, however, in airlines for america on this issue, we do have unanimity, except for one member, and that member has expressed its concerns. I will say that i think that our colleagues at delta have no evidence that the faa can become more efficient or can deliver Effective Services compared to a nonprofit enterprise. And i think its a perfect example of that. Which today has the best technology probably in the world. I think he would agree with me. Theyve brought down the cost of the system to the users by 30 . They are a model of safety and they are selling their technology to third parties because they are so adept at working clabtively with the unions, working clabtively with experts and attracting retaining experts. So i would say that lacks evidence. In terms of risks of transition, of course there are risks of transition. There are risks in anything large. As the senator said, this is a heavy lift but this is something that needs to be done. What we know is what we have today does not work and we have candidly little to no confidence that that will be a stream of Stable Funding for modernization of the air Traffic Control system or the anlt of the faa to attract and retain qualified people to implement it or a change in how the faa operations. So i think we have i think this nation should reach for greatness, and i think this is an opportunity to do so. What we know is it doesnt work, and if we just keep doing the same thing weve been doing for all these years and expect a different result, question will get what we deserve. Administrator huerta, it has spun you have potentially into a new entity outside of government. However, enro center also says the government must maintain a role in governess of the system, since the faa is the guarantor of the public interest. Mr. Huerta, it is the role of the faa to put safety of the traveling public first. Are you concerned this priority might be diminished if the faa would only play a small part in the multistake holder model of governance . I would envision there would be a couple of different roles. First and foremost, there is the question of who oversees the safety of the air traffic administration. Under the current structure today, we have an independent Safety Organization within our aviation structure that provides safety oversight of the air Traffic Control system. With respect to the other questions that have been raised by the panel, relating to access to the system or ensuring the public interest, i think those are all questions that would need to be carefully considered by this committee. And would need to be reflected in should there be a change in the governance model to ensure all those perspectives are reflected. Governor england . I think its very clear certainly in the expanded testimony that ive submitted its very clear that the faa remains the safety. Theyre the regulator. And i think you get Better Regulation by separating. Right now we have an inherent conflict. Theyre both the rule maker and the regulator. Theyre judge and jury. They make the rules and they assess their efficacy. And i think the separation actually allows them to do their job very very effectively, as they do in a lot of areas. So i think theres a benefit in this republicans to that and i dont think theres ever been a suggestion that smouch safety were talking about the air Traffic Control system. The operation of it. The vision for it, the leadership, all of it has to come back. The other thing the faa can contribute, which much better comment than i. But we need a more effective way for the the faa to modernize its own procedures. Now they would be able to focus on that and get up to date where it does help improve the way we fly, the way airlines can manage operations. And i think there are examples of literally rules being months if not years behind. And so the ability to have a separation of labor is one of what i believe to be the benefits of this idea and i would suggest also that, as i think you pointed out in your question, the structures, it really isnt a its moving to somebody somebody said Government Corporation. We suggested a Nonprofit Corporation. But its far different than a private enterprise being set up in a big stock company, for example. Thank you. First of all, i want to thank you all for your attendance today and everything. I think we need to look at the size of what were dealing with here. Enive heard all of you and your thoughts and statements and beliefs and basically we have the safest system in the world. And next i hear that it doesnt work. So conflicting statements coming from you all. When you start looking at the size. Lets look at canada. Canada has 42 towers and seven centers. Germany, 16 towers, 4 centers. Mexico, 58 towers, 4 centers. United kingdom, 16 towers and 2 centers. United states of america, 512 towers, 21 centers. They dont even come close. You can put everybody in the world, and they dont come close to us. So how are we saying the system doesnt work and were not able to maintain a system thats the safest in the world. And its the most used in the world. So let me go in and give you my little state of West Virginia. They told us if you deregulate, it is going to improve air service in rural West Virginia. We were told that. I remember that back in the 70s and 80s. Randolph was a pioneer at the time. We have 122 airports in West Virginia. 86 of them are little private strips here and there. 36 are public. Only 7 of them have customer shl flights and only seven of them have towers. Our ability to move people in West Virginia has tremendously diminished because of whats going on, and im just looking at the situation to where were supposed to be improving a system by privatizing it. And in some cases ive been all for privatization. We have contract towers but still come under the purview i believe. Of the faa. But theyre in a private stream if you will. That seems to have worked in West Virginia its worked or we would have been our towers would have been e bim nated. We only had two towers. Five would have been gone. So im looking at how im going to go home and explain were really going to make this h system better. And then we start scharjing. If it wasnt for the Business Aviation going on today, we would be out of communication completely. Some of our little towns would not have any industry whatsoever. Because they couldnt go back and forth. Sot with that, i would just say, senator, if we take congress out of the equation and spend all the air Traffic Control system to some nongovernment that will organization thousand willhow will that speak for Rural America . Senator, no one is suggesting the government not be a stake holder in whatever is proposed. I dont support privatization. Ive told you what i do support and why. Blue but i spend a lot of time on the committee holding up signs about how you could fly twice as far for half the price or half as far for twice the price under deregulation. So youre talking about a different subject. That subject has nothing to do you and i agree on that subject. That has nothing to do with the question of how you move airplanes from one part of the world to another. How they fly from one airport to another. And whether were going to continue to use a world war ii ground based radar system, or whether were going to move to a different type of system using modern technology. This is not a question of what is, its a question of what will be. There is no conflict at all by saying this is the safest this is an unbelievably safe system. But theres no conflict in saying that and also observing that we are not moving as rapidly as some others are and as rapidly as we need to move in order to embrace new technology and retain the leadership. I met with europeans and others on this subject because the world is moving in this direction. The yes is how fast will we move and will we retain the leadership. There will not be funding to do it in the public sector. I believe therefore we have to find a new sector. No one in which the government is not a stake holder. I believe sooner or later we have to get a budget that works for the country and based on our priorities and based on our values. And we havent been able to because of the toxicity of the place we call washington. It cant be picking and choosing what side of the fence youre on. Con gregs Fall Research and tugal concerns is what were talking about. One of my biggest concerns in the arena is delegation of taxing authority. To an unelected, unaccountable board of directors to adjust user fees and taxes. One of the strongest argumenting being made is corporating the air Traffic Control systems is it would allow it to be financially self sustaining, free from the Political Forces that often drive federal appropriations. I would just ask maybe many of you all here in the business arena, do you think its legal for them to releninquish our Constitutional Authority to levy taxes . If i could jump in sir. I dont report to be an expert but i believe its very difficult to judge the constitutionality of a structure that doesnt exist and legislation has not been drafted. The user Fee Structure that we had been talking about is designed to cover the cost of the system. And only the cost of the system. And to have an appropriate rep serve fund for example, if there were reductions in travel caused by an economic and in terms of the you know the issues of general aviation, for example, in canada, and it could be done here, you know, general piston aviation is charged an annual fee, sort of like the sticker you put on your car. Its a very simple process. Theres no intent to use the user Fee Structure to change the proportion funding, as amongst and general aviation for example. The airlines today disproportionately pay and they are certainly not proposing to change that, because even though philosophically the appropriate thing to do, we see enormous efficiencies that could be driven from a Nonprofit Corporation with clear stake holders of interest involved, particularly the government, department of defense, of course we would have to that. Okay. The amount of money being generated today from industry is less than what the faa cost. So it seems to me as we go forward, were going to have to make decisions on whether were going to raise industry taxes. And you can call them user fees. You can call them rates, charges, taxes it doesnt matter. Forced payments for the industry to fund the system have to go up, or the size of the the system has to come down, or as has been discussed, we can borrow the money. I think if were going to do that we would need to know pretty clearly what are we going to borrow what are we going to get for it . When is it going to be ready . How are we going to pay that back, and who is going to pay that back . As i said before, this authority to tax was set by the first chief justice of the Supreme Court to be the power to destroy. And were very concerned about that. Weve heard the press announcements and Cost Shifting has been part of that. Gentlemans time has expired. Thank you very much, senator blunt, thank you. Welcome back. Its good to see you. I was just at the canadian industry with the premier of ontario and talking about their funding and senator blunt and i have been in canada talking about how they handled transportation projects. The focus has been more on highways and bridges and how theyve been able to have the private sector finance those projects over the long haul. But theyre still publicly owned in the end. Could you tell me those of you who are experts on how this works on a model with air Traffic Control if its the same model and how they do this in canada with the faa. Obviously theres concerned that some of my colleagues have expressed about the affect this would have on smaller airports, on Public Safety and other things. I wonder how it compares to what they have done with the roads and bridges and pretty interesting model to look at. Thank you senator. I wont call myself an expert on this. But i have been researching with nav canada along with the uk and the australia system. As far as from what i know about the system, they havent really reduced services. A that would be one of the things i would be deeply concerned about. They moved out of air transport. The government structure in the early 90 rz. They started the transition about 1994, and it took about five years to go through a full transition. It was a big transition that they actually went through. And then stood up their corporation of nav canada. They do have as ed bowlen would say, they did still keep their tax, and that is actually to fund the safety and regulatory function, as still remained in government, and they established a user fee of ul the users in the system. And then looking at someone else that brought up this delta letter since theyve been out front on this. They talked about cost increase in the provision of service. Cost increases. Airports look to make up for lost airport and air way trust fund money. This is again a different model. But in canada. Any comments on that . Anyone . Well, i could speak to the u. S. The amount of money raised from the tax structure day not only pays for the control system, but contributes additional moneys to the operation of the faa and we would not propose that would change. I think the 15year average is around 3 billion. So that with user fees to run the system initially there would be certainly with the current level of taxation a portion of river place by user fees. A portion retained by congress. There would be money that would continue to be contributed to this the fa, whether that would go to the aip or the general fund of i mean, the general fa would be up to congress. So in this reform system, would users be rlg to pay more then . Well, we would certainly from the u. S. Airline industry. As you know, senator, were one of the most heavily taxed industry. Today were taxed more heavily than alcohol and tobacco, which are sins, and we are not a sin. M we would suggest that perhaps the level of taxation would not increase. I believe over time, personally, based on the nav canada model that the user fees would go down because of the efficiencies that would be driven in the operational system in canada. Theyve gone done by 30 . Senator, i think from a Business Aviation perspective the Business Aviation Community Looks dramatically different in canada than it the uz in the United States. While they have large companies, they dont have a lot of small and mid sized Companies Operating out of the maul and mid sized communities that we do in the United States. As paul mentioned, they do have both user fees and a fuel tax up in, so it was a double tax situation. Its also fundamentally different, because in addition to privatizing air Traffic Control, they also have privatized airports. Which have their own costs associated with. So for a lot of reasons, we dont think its an apples to apples comparison. And how would smaller airports compare to this . Well, were very concerned about that access. Today i received a letter which obviously has a lot of operations from there, very concerned that we copy that model. What we hear from our members is a lot of concern about the way it works with regard to paying the user fees as opposed to the the fuel taxes. It creates a costly administrate i have burden. Governor engler. One of the arguments i would make is perhaps it goes the opposite direction. Today we have technology to allow for more Remote Access service to the airports we cant get fully deployed. That would be a benefit. Theres the decision do we like what we have got, and are we confident we can make it a lot better if we stay the the course . And were getting into a lot of debate. But the questions being asked are able to be responded to, both in some of the work that the senator has done and the other reports looked at. Okay. Senator dorgen. Well, i think he is concerned oobt the uncertainty. And i understand that. You know my interest is not in creating a system, and we have offered an approach that doesnt have a lot of specifics. One of the principle issues is every major airport in the country has bonding authoritiment and every one of your communities. Theyre bonding for investment and so on. I think to give a bonding capability to be able to build the system in a robust way. And we have explicitly not described a user fee or structure system beyond that. And i fully understand his point. I dont have any interest in seeing a system that will injure access to small airports. Okay, thank you. Senator markey. Thank you mr. Chairman very much. Last month, and its good to see you back in congress. Last month along with Ranking Member nelson senators cantwell, booker and frank, and i sent a letter to the department of transportation asking about airlines ability to engage in personalized pricing. Personalized pricing is a practice that would allow an airline to charge different prices to consumers that are trying to buy the same seat on the same flight at the same time. The difference in airfare would be based upon personal information that the airline has collected about the passenger. I am and the other members are deeply concerned if airlines are allowed to engage in personalized pricing, they could discriminate amongst consumers charging customers different priced based on zip codes income levels, marital status or other characteristics. What if Airlines Using consumer zip code information offered special fares to consumers who live in more aflant zip codes to entice them to travel more frequently, while failing the same discounts in lower income areas. The faa refused to determine whether price discrimination based on income level, marital status would constitute unreasonable discrimination. I believe that practice is discrimination. What can you tell the committee today . First of all senator, to clarify, the economic regulation and oversight is an authority they would at d. O. T. , not in the faa. We can certainly get you a response for the record, though. I think thats important for the committee. Your airline would would you discriminate based upon income status, or marital status. Or trip purpose. Sir, if what youre describing is the new description capability, which is a technological advance for the ability of airlines to offer through third parties Additional Services that the customers cannot get today not only do i not view it as discriminatory, i view it as proconsumer. But im asking are you going to use marital status we have no desire to do anything like that. What the new distribution allows us to do if, if youre a premier member through the thirdparty site, today youre able, if you bought directly from us directly on united. Com, you would be able to get an economy plus seat for free. If youre buying through third party, we dont know your loyalty status, because of the technology that exists that i. Not able to offer you that ability to upgrade for free. So all im really trying to clarify is you will not be using income status on marital status. Zip code information to in any way make any of these. Senator, yibted airlines has no desire to discriminate against anyone. Thats very helpful. Thank you. We have heard recent reports about Cyber Security threats that air travel has faced. One security researcher claimed to hack into the the airlines control system changing the direction of the plane. Im concerned about recent claims that the wifi on planes lacks basic security that make it easy for hackers to spy on Customers Using the network. So let me first ask about hacking into airplane controls. I know the the chairman earlier asked administrator huerta about the faas efforts. What is American Airlines doing to prevent hacking into the vital controls of your airplanes. Sir, i will tell you that United Airlines is obviously any form of Cyber Security issue is of great concern to us sir. I will say that, we are cooperating with the fbi because an allegation with respect to one of our aircraft was involved. We are unaware of whether or not this is possible, the original equipment manufacturers, from at least what i understand have stated this is not possible today. Ch however, i think what we need is an industry to take any threat seriously. There are clear firewalls between a wifi system and any kind of control. Has united taken efforts to secure your Wireless Network . Absolutely we have. So are your customers protected against data breaches while theyre using the united system . We provide the most robust protections that we can, sir. Based upon worldwide, i dont think anyone can ensure anyone. Skbl im only talking about 30,000 feet. Using your wifi system, are those consumers on that plane protected against data hacking . We have protected them to the best of our abilities, sir, and we have robust protections particularly with respect to the aircraft. And the Data Protection of customers on board. Yes, sir, as best we can. As best you can. Okay. Thank you, senator. Senator mccaskill. Thank you. Its not clear to me how much of this is money and how much of this is management. Does anybody want to put a percentage on which is which . Is 90 of this the lack of Stable Funding and 10 management . Is what do you think governor engler . Ill take a shot at it because i dont think thest knowable. Go to the academys report, which is objective and smart people that Congress Mandated look at this. They raise a lot of management questions. And their management in the kind of strategic thought leadership. Where are we going . What is the architecture . So its that kind of management of process and of design, and then money, theres no question. I would say its 50 50. You know, its interesting though, i dont know how we ensure we get better management by changing the structure. Look at the u. S. Postal service. Look at amtrak. These are all examples of things we have done that are structures of where we have tried to do something other than traditional this is inherently government function and the government is going to do it. I would say look at fedex. Those are privatized forprofit. Are we advocating going forprofit, because if thats the case my rural airports are totally hosed . No, were not saying that. But i think a private Nonprofit Corporation is a in my mind when i look at some of the decisions made in other countries and how they approach it, they really to me offer the flexibility. Remember, the faa is still a rule center here. Theyre still the boss. But now its basically in the hands of the private company to move fast. And one of the things on the funding side. Tried to say well its a euphemism for borrowing. Of course it is. You bond now, the markets today, i mean you borrow capital at almost no cost. Anybody would do this and just go build it. And you get tremendous savings by making your investment now. I dont know, three years. Would it be all done . Should we do this . Im listening to you and hearing highways. Were all thinking highways right now. We dont have a bill and the highway funding runs out in about ten minutes. We still dont have a hearing or bill on highway funding. Should we do this for the the highway system . Should we go to a not for Profit Organization . What about the waterways . Should we go to a private, a not for Profit Corporation for that . Some of the port authorities are good analysis for that. Indiana did it on highways. Ohio has done something similar. We certainly have done it on bridges in some cases. The mackinaw bridge is run by an authority. It seems to me we could do better on the funding part if we would all acknowledge that in fact bonding is dead. But we need to do it for infrastructure or we need to do something for infrastructure. We are shortchanging the country in a dramatic fashion. But that is the mjajority of the problem. I am skeptical. I know the senator shares my skepticism because he was on a front row seat, as i have tried to be about turning over an inherently government function to private corporations because he did Ground Breaking hearings on the abuses in iraq with the contracting we did for inherently government functions that went badly airywry and wasted billions of dollars i dont think a new structure is a silver bullet. Im open to this. I dont mean to sound like its a terrible idea. Were trying to put a bandaid on a cancer that is the inability of congress to step up to the plate and do the mandated hard job of finding the resources to fund infrastructure. Ill tell you i got into this issue by looking at how it is that we can persuade the federal government theres a better way to do capital budgeting. Inl strongly in our budget at the capital level. Absent that are there ways to think about how to solve big Critical Infrastructure questions. This is a discreet one. It would have been all done. We would have been using it. We talked to the administration about this one when tarp was being talked about. Lets get this done. You can have this done by the time youre running for reelection. But secretary of transportation, both parties in the past have supported this. Theres a lot of history here. I would like to stee the committee sersly consider it a and then validate a concept. Are there other applications . You bet. I think theres a ton of them. Maybe well become irrelevant. If i might just respond briefly. You may be already. You ask a question thats really important about the issue of management versus funding. And i will admit there are Management Issues and have been for some long time. Ive been watching as chair of the Aviation Sub Committee and other venues watching whats happening in nextgen for a long, long time. But i think were it not for the funding issue, i probably wouldnt be at this table with this message. I mean, i honestly think it is a triumph of hope over experience to believe the funding issue is going to change and somehow the congress, who this year, by the way, is going to cut 355 its 365 billion from the facilities and equipment account of mr. Huer the huerta. I mean, its unbelievable to me. That will probably be magnified by sequestration and a furlough. Who knows . But you cannot build what we want to build for this country and retain leadership opportunities in this critical area of technology of air Traffic Control with this approach. And thats why i have come to the conclusion that we need restructuring of the type that ive described. Thank you, senator mccaskill. Senator blumenthal has returned. So hes up next,. Thanks, mr. Chairman. And thanks for having this series of excellent hearings and to all of you who are before us today. The chairman mentioned earlier you were a very efficient panel and you were also a very distinguished and informative one. I want to thank you for being here. I was interested in as rider of amtrak as well as a flyer in some of the reports last week in the wakeover the philadelphia tragedy about potential price gougeing among airlines and the derailment was a horrific event. And i know you join me in expressing our sympathies to all the loved ones and all who were affected. But i wonder whether as an executive for United Airlines can you confirm whether these reports are valid, whether theyve been exaggerated, if the ftc were to look at these fares, what would they conclude . I just want to mention that the 2,309 flight from d. C. To laguardia would be an example of potential price gouging. And i want to emphasize i am not asking you because i am pointed to United Airlines in in way or form as potentially one responsible or accountable. Im just asking for you as an informed airline executive. Sure. I would be happy to respond. First, let me express my condolences to the families and loved ones of those killed in the terrible tragedy in amtrak. Absolutely not, sir. Speaking for united air, we would never take advantage of an opportunity like that. If you viewed it as an opportunity. No one would do that. It is true that as people book closer into a flight that ticket prices tend to go up because the inventory, which is of course, as you know, evaporates every time the flight takes off without someone in the seat, that inventory disappears and priced more towards lastminute business travelers who tend to have a willingness to pay more because theyre traveling on business. When you have a tragedy such as amtrak you have a sudden rush of dplandemand for the very few remaining seats, but we would never raise prices in connection to that. You would attribute any any increase in prices to just demand. Those are lastminute fares in ep inventory reserve for business travelers for people booking in the last minute. And we saw certainly in a surge in demand for tickets and the only available inventory was the lastminute business inventory. Mr. Ranaldi did you have a comment . On the ticketing, no. Well, i would join you in the strong feeling that that kind of price gouging would be utterly reprehensible. And if there is any indication, certainly i will call on the ftc to investigate promptly as perhaps this committee would have a role as well. Sir, i would join you in that call. Thank you. And speaking of that derailment and the aftermath when rail transportation was stopped, i think we saw in the reaction among passengers in rushing to the airlines that the lack of adequate rail transportation has an impact on airlines. These systems are all interconnected and the present air Transportation System can become so congested that it simply cant serve all of the riders who are diverted from rail, and so i would ask the panel whether you have any observations on the importance of rail in assuring adequate and Efficient Airline transportation simply in providing a necessary link that relieves some of the congestion in the airline. Senator, certainly from our standpoint, as an agency at the with our colleagues across all of the modal agencies to ensure we have connections and linkages and that the system is being appropriately managed as a total system. One of the things that weve been very focused on, how do we link modes of transportation together and a lot of that as you well now is rail access to airports to ensure there is a seamless Transportation Network that spans many modes of transportation. But clearly there is a relationship. And finally i have one last question for maybe governor and the senator. You know, the need for investment in these systems seems to apparent, even obvious to us and we have a virtually full room here but the public still doesnt seem to be mobilized. And this Congress Seems to be divided. Do you have any advice based on your political wisdom and your experience on how we do better to raise awareness and generate support . Because obviously both have longstanding experience in doing so. You know, prioritization is tough, it takes a little sense to try to build railroads in the desert and california when we have a northeast corridor to Passenger Rail from freight rail on the corridor. Maybe reigning in while we fix the corridor that matters the most would be my thought on that. I would also suggest that the sub sidization cost of different modes one of the things youve heard from the i think everyone in the panel today air has been pretty good about paying its own way and heavily taxed. Thats not necessarily the case certainly with rail and with transportation while states have been willing to raise fuel taxes, we know that form of tax is probably you know its coming to an end at some point. And there is a need for a solution. Im hoping that we can get to the broader question of tax reform and buy ourselves a few years while we sort out how were going to fund highways and bridges. Thats a big unmet need. You know, i dont any i can offer you much advice except to say that weve painted ourselves into a fiscal policy corner. We have so much i chaired the Appropriations Panel in energy and water, we have 60 billion of authorized water projects and 2 billion in appropriations. You know, this stuff doesnt add up. Its true in transportation and wide range of variouses of infrastructure. I think we have to do better on fiscal policy and make investments in the country if were going to have the kind of country we want in the future. Thank you. I want to thank all of you again and mr. Rinnealdi, the air controllers across the country most especially in connecticut i dealt with a number of them earlier and they are often the unappreciated and unacclaimed heroes of our air and Transportation System. Thank you for being here today. Highly trained and highly skilled professionals who love their job. Thank you. Thank you senator blumenthal. As questions relate to Rural America, the chairman represents south dakota. I have the privilege to represent montana. And states like ours, connectivity allowing us to build world class Technology Companies close to fly fishing streams and mountain ranges, its a way to attracts and retain best talent in the world but the other part is air service. Its a requirement to build World Class Companies with accessibility to good air services. So for administrator huerta, i will strongly encourage you to first focus on Community Interest when considering any changes. We looked at our states not only do we have the ability to throw great Technology Companies down because of quality of life but our energy deposits and fut future sources will be in places along ways from urban area. Senator dorgan sees that. The contact Tower Program and Airport Improvement Program are critical to states like montana. Were concerned that the proposed changes will harm the program specifically. I encourage you to undertake consultation with all stake holders. What specific remedies, can the faa provide to rural airports as it considers reforming the air Traffic Control program . Youve asked a very important question and it is something that as we have this longer term discussion of investment and structure that we do drn that everyone understands that the program, Aviation System and the Grant Program and aviation structure in the United States has always been about achieving twin objectives. First is to have an efficient system that serves the largest number of passengers and second is too provide a level of access to communities throughout the country. And in previous reauthorizations that has always been matter of great debate as you well know between members of congress about how to achieve that balance. That challenge and issue does not go away under any structure, nor does any structure alone deal with what those issues are. What youre raising is a important Public Policy request, where are we going with respect to ensuring a modernization of that system while at the same time ensuring some level of access. And that debate i think is foundational to what we need to be looking at reauthorization and we need to answer that question before we can really answer the question of what is the best structure that enables us to get there. There are other questions as well, in terms of how we capitalize and pay forth what were looking for and longer term how we ensure that were keeping those twin objectives in balance. Let me give i was part of building a Great Technology company in montana and had a great airport, the boseman airport. I was in tokyo and bouncing across the water a lot thanks to connectivity with airlines. I want to step back and ask, as you look at global systems, a Great Airline like United Airlines, in the air Traffic Control systems used by other countries, what do you see from some of these countries . Something we can learn to apply best practices and improvements in our system Going Forward that will make the u. S. System better. I realize theres scalize questions but can you share questions how we can make our system better based on what other countries are doing . Yeah sure i would be happy to, senator thank you. What were looking for in this opportunity is to provide logical improvements which improve throughput or reduce time travelers sit on a runway waiting to take off, reduce the instances of circling airports waiting to land, reduce congestion reduce fuel burn and we believe that technology is absolutely scaleable. It is true lets youve nav canada, among the best jobs in the world and they have the most advanced techology and happiest air Traffic Controllers all true things. Even happier than yours and they are pretty happy. Someone mentioned these were the unsung heroes, we sing their praises daily because they are very professional. And thanks for it. Although it is indeed smaller, air transport has handled sectorally and you know from your own History Technology scales magnificent. And i think there are tremendous opportunities. We certainly as we fly around the world there are some systems better than others and some Foreign Countries that handle it well and others that dont. But were very focused on not only maintaining where we are and where we are in safety for sure, but in improving the efficiency of this system because this system so even though were a global carrier, this system disproportionately affects our operational Customer Satisfaction of fuel burn. If we get it right and have an opportunity to get it right, we can have a huge step forward in the efficiency of this system in the value of this system to the United States and the economy to consumers, this is a tremendous opportunity for us. This is the system we focus on the most because this is where we actually have not only a vast majority of our assets and our flights, but also this is an opportunity for the United States of america where we are citizens and in the United Airlines is a citizen of the United States to provide the best air Traffic Control system in the world. Im out of time and will say the nighting public you can see all of the traffic in the air at any given time is humbling. And grateful for what we have here with 130 million number used