[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
THE STATE OF AMERICAN AVIATION
=======================================================================
(113-46)
HEARING
BEFORE THE
SUBCOMMITTEE ON
AVIATION
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
DECEMBER 12, 2013
__________
Printed for the use of the
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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska NICK J. RAHALL, II, West Virginia
THOMAS E. PETRI, Wisconsin PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina ELEANOR HOLMES NORTON, District of
JOHN J. DUNCAN, Jr., Tennessee, Columbia
Vice Chair JERROLD NADLER, New York
JOHN L. MICA, Florida CORRINE BROWN, Florida
FRANK A. LoBIONDO, New Jersey EDDIE BERNICE JOHNSON, Texas
GARY G. MILLER, California ELIJAH E. CUMMINGS, Maryland
SAM GRAVES, Missouri RICK LARSEN, Washington
SHELLEY MOORE CAPITO, West Virginia MICHAEL E. CAPUANO, Massachusetts
CANDICE S. MILLER, Michigan TIMOTHY H. BISHOP, New York
DUNCAN HUNTER, California MICHAEL H. MICHAUD, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana STEVE COHEN, Tennessee
BOB GIBBS, Ohio ALBIO SIRES, New Jersey
PATRICK MEEHAN, Pennsylvania DONNA F. EDWARDS, Maryland
RICHARD L. HANNA, New York JOHN GARAMENDI, California
DANIEL WEBSTER, Florida ANDRE CARSON, Indiana
STEVE SOUTHERLAND, II, Florida JANICE HAHN, California
JEFF DENHAM, California RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin ANN KIRKPATRICK, Arizona
THOMAS MASSIE, Kentucky DINA TITUS, Nevada
STEVE DAINES, Montana SEAN PATRICK MALONEY, New York
TOM RICE, South Carolina ELIZABETH H. ESTY, Connecticut
MARKWAYNE MULLIN, Oklahoma LOIS FRANKEL, Florida
ROGER WILLIAMS, Texas CHERI BUSTOS, Illinois
TREY RADEL, Florida
MARK MEADOWS, North Carolina
SCOTT PERRY, Pennsylvania
RODNEY DAVIS, Illinois
MARK SANFORD, South Carolina
------ 7
Subcommittee on Aviation
FRANK A. LoBIONDO, New Jersey, Chairman
THOMAS E. PETRI, Wisconsin RICK LARSEN, Washington
HOWARD COBLE, North Carolina PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee EDDIE BERNICE JOHNSON, Texas
SAM GRAVES, Missouri MICHAEL E. CAPUANO, Massachusetts
BLAKE FARENTHOLD, Texas DANIEL LIPINSKI, Illinois
LARRY BUCSHON, Indiana STEVE COHEN, Tennessee
PATRICK MEEHAN, Pennsylvania ANDRE CARSON, Indiana
DANIEL WEBSTER, Florida RICHARD M. NOLAN, Minnesota
JEFF DENHAM, California DINA TITUS, Nevada
REID J. RIBBLE, Wisconsin SEAN PATRICK MALONEY, New York
THOMAS MASSIE, Kentucky CHERI BUSTOS, Illinois
STEVE DAINES, Montana CORRINE BROWN, Florida
ROGER WILLIAMS, Texas ELIZABETH H. ESTY, Connecticut
TREY RADEL, Florida NICK J. RAHALL, II, West Virginia
MARK MEADOWS, North Carolina (Ex Officio)
RODNEY DAVIS, Illinois, Vice Chair
BILL SHUSTER, Pennsylvania (Ex
Officio)
CONTENTS
Page
Summary of Subject Matter........................................ iv
TESTIMONY
Hon. Susan L. Kurland, Assistant Secretary for Aviation and
International Affairs, Department of Transportation............ 6
Nicholas E. Calio, President and CEO, Airlines for America....... 6
Mark Brewer, A.A.E., Airport Director, Manchester-Boston Regional
Airport, and Chair, American Association of Airport Executives. 6
Peter J. Bunce, President and CEO, General Aviation Manufacturers
Association.................................................... 6
Edward M. Bolen, President and CEO, National Business Aviation
Association.................................................... 6
Edward Wytkind, President, Transportation Trades Department, AFL-
CIO............................................................ 6
PREPARED STATEMENTS AND ANSWERS TO QUESTIONS FOR THE RECORD SUBMITTED
BY WITNESSES
Hon. Susan L. Kurland:
Prepared statement........................................... 48
Answers to questions from the following Representatives:
Hon. Bill Shuster, of Pennsylvania....................... 54
Hon. Frank A. LoBiondo, of New Jersey.................... 55
Hon. Mark Meadows, of North Carolina..................... 61
Hon. Rick Larsen, of Washington.......................... 57
Hon. Daniel Lipinski, of Illinois........................ 58
Hon. Peter A. DeFazio, of Oregon......................... 61
Hon. Steve Cohen, of Tennessee........................... 63
Hon. Michael E. Capuano, of Massachusetts................ 64
Nicholas E. Calio:
Prepared statement........................................... 65
Answer to question from Hon. Bill Shuster, of Pennsylvania... 83
Mark Brewer, A.A.E.:
Prepared statement........................................... 86
Answers to questions from Hon. Frank A. LoBiondo, of New
Jersey..................................................... 97
Peter J. Bunce:
Prepared statement........................................... 98
Answers to questions from Hon. Frank A. LoBiondo, of New
Jersey..................................................... 107
Edward M. Bolen, prepared statement.............................. 109
Edward Wytkind:
Prepared statement........................................... 120
Answers to questions from Hon. Frank A. LoBiondo, of New
Jersey..................................................... 135
SUBMISSION FOR THE RECORD
Louie Key, National Director, Aircraft Mechanics Fraternal
Association, written statement................................. 136
[GRAPHIC] [TIFF OMITTED]
THE STATE OF AMERICAN AVIATION
----------
THURSDAY, DECEMBER 12, 2013
House of Representatives,
Subcommittee on Aviation,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:02 a.m. in
Room 2167, Rayburn House Office Building, Hon. Frank A.
LoBiondo (Chairman of the subcommittee) presiding.
Mr. LoBiondo. Good morning. The subcommittee will come to
order. Today we are going to hear from representatives of the
Department of Transportation and the various segments of the
U.S. aviation industry--airports, airlines, labor,
manufacturers, and general aviation--on the state of American
aviation. This hearing is a good way to wind down the
subcommittee's 2013 activities and begin to shift focus to the
2014 and the next FAA reauthorization bill.
The existing Federal aviation law, the FAA Modernization
and Reform Act, was enacted after 5 years and 23 short-term
extensions: a very painful period that many of us remember all
too vividly. It created a stable-four framework for the FAA and
industry stakeholders. The Reform Act also made important
reforms to the aviation system and to the FAA, in order to
increase efficiency and modernize the air traffic system. The
goal was to maintain a safe, modern, and efficient civil
aviation system now and into the future.
And, as I have said before, ensuring implementation of the
Reform Act remains a top priority of the subcommittee. This
includes all of the ongoing work at the FAA's technical center,
the premier facility in the Nation, in my district, on
important programs such as NextGen, unmanned aircraft systems,
and critical FAA safety initiatives.
But along with ensuring implementation of the Reform Act,
we must also begin to look ahead to the next one. It is an
understatement to say that aviation is a key sector of the U.S.
economy. Commercial aviation represents 5 percent of our gross
domestic product, and roughly 10 million American jobs. General
aviation contributes about $150 billion to the economy, and
supports roughly 1.2 million jobs. Commercial airports support
over 10 million jobs and create annual payrolls of $365
billion.
Clearly, a healthy and safe aviation industry is good for
the economy. It is good for job creation. It is good for
passengers, and it is good for all of the stakeholders. The FAA
forecasts long-term aviation growth, resulting in increased air
traffic. These forecasts highlight the need to modernize the
air traffic control system, streamline certification and
rulemaking processes, and ensure that the FAA is properly
organized to oversee the NextGen program.
Additionally, foreign competition and ongoing funding
challenges must also be addressed. We want to create an
environment that allows for a healthy aviation industry, while
making sure that the United States remains the gold standard of
aviation, innovation, and safety in the world.
As Chairman Shuster indicated in his speech yesterday, in
preparing for the NextGen FAA reauthorization bill we want to
think big and hear from everyone. All ideas are welcome. All
stakeholders should be coming to the table.
We are all working towards the same goals, a healthy and
innovative aviation industry that remains the world's gold
standard, a modern and efficient air traffic control system,
and a productive and effectively organized Federal Aviation
Administration. Therefore, we look forward to hearing from each
of the witnesses today regarding how they believe American
aviation is doing right now, as well as any impediments to
growth and ideas for the next reauthorization bill.
Before we turn to our panel of witnesses, I ask unanimous
consent that Members have 5 legislative days to revise and
extend their remarks, including extraneous material for the
record of this hearing.
[No response.]
Mr. LoBiondo. Without objection, so ordered.
And now I would like to turn to Mr. Larsen for any remarks
you may have. Rick?
Mr. Larsen. Thank you, Chairman LoBiondo, and thank you for
calling today's hearing on the state of American aviation. This
hearing provides us with an opportunity to look back on 2013
and the challenges and successes that we have had in our first
year as chair and ranking member of this subcommittee.
Without a doubt, it has been a tough year for aviation
here, in Washington, DC. We started the year at odds over
sequestration with our aviation system caught in the middle. In
April, air traffic controller furloughs caused by sequestration
led to flight delays, and Congress, in my view, raided the
Airport Capital Improvement Grant program to put controllers
back to work.
Then again, in October, the FAA was partially shut down for
16 days, and 12,000 FAA employees were furloughed. We have
wasted countless hours planning the--we have forced FAA to
waste countless hours planning the 2013 furloughs, planning for
the sequester budget, and planning for shutdown.
So, we called this hearing to explore today's state of
American aviation. Simply put, American aviation cannot afford
the American Government to keep doing the business as we did it
in 2013. We need a balanced and responsible solution for fiscal
and budgetary issues that allows our aviation system to move
forward.
Yet, Mr. Chairman, while we started this year under
difficult circumstances, you and I have continued to work in a
bipartisan way, as we have always worked. And we are ending
this year with bipartisan accomplishments that I think that we
ought to be proud of, and bode well for the work that we will
be doing together over the next year-and-a-half on FAA
reauthorization.
Now, looking forward, I think it is important to note that
the force of globalization, and the growth of emerging
international markets present both opportunities and challenges
for American aviation. And we simply can't write a
reauthorization bill for 2015 without taking a look at what is
happening elsewhere in the world. According to the IMF, GDP in
emerging economies is growing at approximately 6 percent a
year, while in advanced economies GDP is growing at
approximately only 2 percent.
Now, earlier this year, our own State's--my own State's
Governor, Jay Inslee, asked me to attend the Paris Air Show in
his stead. That event made something very crystal clear to me:
the aviation industry is global, it is competitive, and there
are new entrants in the market every day. What happens in
Shanghai, Dubai, New Delhi, Moscow, and Buenos Aires, matters
here, in the U.S.
As an example, the Chinese National Aviation Authority has
indicated that traffic to, from, and within China increased
10.6 percent in 2012 alone. And over the next 20 years, the
Boeing Company predicts China will need nearly 6,000 new
airplanes. The emergence of new international markets is
already having an impact on U.S. aviation. Manufacturers have
to adjust their strategies to target new customers. In my own
State, the aerospace industry is the largest exporting sector,
by value, accounting for $27 billion of the State's $64 billion
in exports in 2011.
U.S. airlines are drawing an increasing amount of the
revenue from international flights. In 2000, U.S. airlines
earned an average of 25 percent of their systemwide revenue
from international services, and today it's about 40 percent.
Congress and the administration must ensure that American
aviation can compete effectively in a global marketplace while
protecting and preserving a strong middle-class aviation
workforce here at home.
And, together, we have taken important steps this year to
enhance the global competitiveness of the industry. We passed
H.R. 1848, the Small Airplane Revitalization Act of 2013,
requiring the FAA to update its small airplane certification
regulations. We have conducted important oversight hearings
this year, examining the FAA certification process. And, based
on these hearings, Mr. Chairman, you and I requested yesterday
that the GAO undertake a comparative study of U.S.
certification processes relative to our international trading
partners. And if we can glean lessons from these international
efforts, perhaps it will lead to a more efficient U.S.
certification process, and we could apply these lessons.
But we also must maintain the highest level of safety in
our process. We have asked the GAO to examine challenges faced
by manufacturers when navigating foreign certification
processes. We have a lot of work to do, Mr. Chairman, and I
appreciate your focus on safety. Safety is a top priority of
FAA, it is a top priority of mine. We need to maintain our
focus on aviation safety, as was made clear in July, with the
crash of Asiana flight 214. We have to learn from that tragedy,
and do what we can to prevent something like that in the
future.
One way to move forward on safety is with the finalization
of rules for pilot training and experience. These represent
significant safety improvements from lessons we learned from
the fatal Colgan Air crash. I am proud that we worked together
with the families from that tragedy to put together stronger
safety rules.
But, as always, there will continue to be work to be done
to make sure our skies are safe. Where the aviation faces
global challenges like climate change, these challenges should
be addressed through international cooperation. That is why,
last month, the bipartisan leadership of this committee sent a
letter urging Secretary Foxx to hold U.S. carriers harmless
from a proposed unilateral European Union Emissions Trading
Scheme.
The United Nations International Civil Aviation
Organization has set forth a multilateral process for
developing a global approach to aviation emissions. The
international community has spoken on this issue through the
U.N., and the EU should be discouraged from going it alone.
Additionally, while the American aviation industry must
benefit from the growth of global markets, it must also ensure
that globalization doesn't harm the American aviation
workforce. Earlier this year, the administration announced that
the U.S. Trade Rep's office will attempt to negotiate a
comprehensive Trans-Atlantic trade and investment partnership
with the EU.
Now, historically, international air transport service
agreements have been negotiated bilaterally by the State
Department and by DOT, under the oversight of this
subcommittee. And issues such as foreign ownership and control
of U.S. airlines have implications that we need to consider.
And the Departments of State and Transportation possess the
necessary expertise to negotiate on behalf of the U.S. aviation
industry and its employees on a bilateral basis.
Therefore, I don't believe that an air transport service
agreement should be considered in the context of a
comprehensive trade agreement negotiated by the USTR, but that
we maintain the existing process.
So, we have a lot of challenges ahead of us for the
aviation industry. We have a lot of opportunities ahead for the
aviation industry, and I look forward to hearing from our
witnesses today. And I thank you, Mr. Chairman, for the
opportunity to offer an opening statement, and for this panel
that we have today. Thank you.
Mr. LoBiondo. Thank you, Mr. Larsen. Before we get to our
panel, I just want to take a moment of personal privilege.
If you have not noticed, you should have noticed, and you
should realize that the working relationship that has been
established by Mr. Shuster and Mr. Rahall is certainly evident
in this committee. And what Rick Larsen is talking about is
something that we have lived by for a number of years together.
Rick is a close working partner. But, more importantly, he
is a good friend. And we have been focused on results. And we
hope, while there is a great deal of dysfunction here in
Washington in this particular arena, that we can demonstrate
that we can be focused on results. And, again, we are taking
our cue from our chairman, Mr. Shuster.
And, with that, we are pleased that you are here, Mr.
Chairman.
Mr. Shuster. Well, thank you, Mr. Chairman. And, Mr.
Larsen, thank you for working together, and that is a great
message to send out. And not only in this committee, but on
Water Resources and Development we have also been able to work
together. And hopefully we are moving forward to getting a bill
out of conference.
But, again, I thank everybody for being here. Thank you,
Mr. Chairman, for holding this hearing.
Yesterday I had the opportunity to speak to the
International Aviation Club in Washington. And my message was
pretty simple, I think, that aviation is extremely important to
the United States of America. It is the industry we invented,
and it provides millions of jobs to Americans, it provides a
trillion dollars to our economy. It is a system that is the
best in the world. But there is no guarantee that we will
continue that way, unless we make some changes to the system.
You look at our history, whether we were the leaders in
textile manufacturing, steel, automobiles, electronics, today
we are not a leader in any of those fields. And we have to make
sure that in this particular industry, we continue to be the
world leaders. And I think that the status quo is unacceptable.
And, as I said yesterday, I think we need to come up with bold,
innovative ideas to improve the system. And it starts with the
industry and Congress listening.
And, as I mentioned, WRRDA, I think that will be the model
as we move forward to the next FAA reauthorization, is having
roundtables, having the stakeholders in, listening to their
concerns, talking to Members of Congress. And it is important
that you are talking to Members of Congress, because I can
assure you there are Members of Congress that don't understand
the aviation system in this country.
So, it is really important for stakeholders to sit down
with Members of Congress and educate them. I think that went a
long way in us being able to assemble a very large bipartisan
vote on the water resources bill that we passed. But it is
about listening to the ideas, taking them in, figuring out how
we can work together.
And I do recognize that our system is unique in the world.
We are the largest system in the world. We have more airports,
we have more commercial and general aviation activity than
anywhere in the world. But the ultimate goal, I think, is to
look at the industry leaders around the world, whether it is
what Canada is doing with their air traffic control system, or
what the Europeans are doing with airports, what other
countries are doing with certification programs for
manufacturing of aircraft, how the Europeans do it much faster
than we do. Compare ourselves to them, and take the best of
what they offer, and put it into our system, all the while
maintaining the safety that we have today, because we do have
the safest system in the world.
And the next reauthorization bill shouldn't be my vision,
it shouldn't be the Congress' vision. It needs to be the
industry, it needs to be all of us working together to come up
with the bold vision that benefits everybody.
Our ingenuity in America is second to none. I think we can
do this, continue to have a more efficient, safe, and modern
aviation system. But working together is, I think, the way we
need to do it.
So, we have about 12 to 18 months to do this. And, as I
said, this is going to be an educational first dialogue to
identify the problems, come up with solutions, and then educate
the American people and educate Members of Congress. And I
can't stress enough to you how important it is to educate
Members of Congress. Because those of us that serve--especially
these gentlemen that serve on this subcommittee, they really
have an indepth knowledge of the aviation system. But, you
know, I learned some things the other day, when I was talking
to some airline folks, that I didn't even realize were going on
out there in the world.
So, if I don't realize it, I can guarantee you there is
435--or 535, I guess I should include the Senate--that don't
have a deep understanding of what we are doing. And for us to
continue to overregulate and overtax the industries that are in
this room is something that I think is harmful, and we need to
make sure we step back and take a hard look at that, as we move
forward.
So, with that, I appreciate you having this hearing today,
and I yield back.
Mr. LoBiondo. Thank you, Mr. Shuster. We will now turn to
our panel.
We are pleased today to welcome the Honorable Susan
Kurland, the Assistant Secretary for Aviation and International
Affairs for the Department of Transportation; Mr. Nicholas
Calio, president and CEO of Airlines for America; Mr. Mark
Brewer, airport director of the Manchester-Boston Regional
Airport, and chair of the American Association of Airport
Executives; Mr. Peter Bunce, who is president and CEO of
General Aviation Manufacturers Association; Mr. Ed Bolen, who
is president and CEO of the National Business Aviation
Association; and Mr. Edward Wytkind, president of the
Transportation Trades Department of the AFL-CIO.
Welcome to all our panelists. And Ms. Kurland, you are up.
I don't think your mic is on.
TESTIMONY OF HON. SUSAN L. KURLAND, ASSISTANT SECRETARY FOR
AVIATION AND INTERNATIONAL AFFAIRS, DEPARTMENT OF
TRANSPORTATION; NICHOLAS E. CALIO, PRESIDENT AND CEO, AIRLINES
FOR AMERICA; MARK BREWER, A.A.E., AIRPORT DIRECTOR, MANCHESTER-
BOSTON REGIONAL AIRPORT, AND CHAIR, AMERICAN ASSOCIATION OF
AIRPORT EXECUTIVES; PETER J. BUNCE, PRESIDENT AND CEO, GENERAL
AVIATION MANUFACTURERS ASSOCIATION; EDWARD M. BOLEN, PRESIDENT
AND CEO, NATIONAL BUSINESS AVIATION ASSOCIATION; AND EDWARD
WYTKIND, PRESIDENT, TRANSPORTATION TRADES DEPARTMENT, AFL-CIO
Ms. Kurland. Thank you. Chairman Shuster, Chairman
LoBiondo, Ranking Member Larsen, and members of the
subcommittee, I appreciate the opportunity to appear before you
today to discuss the state of American aviation as you begin to
consider reauthorization, and to highlight ways in which the
Department of Transportation works to create opportunities for
the U.S. aviation industry to compete effectively in the global
marketplace.
After a long period of restructuring, the U.S. airline
industry has become profitable, despite long-term increases in
fuel prices. For many airlines, a significant component of
their formula to profitability has been to expand their
international footprint. And we are also seeing low-cost
carriers expand into international markets, as well.
International flights connect travelers, shippers, and U.S.
businesses to the global economy, and they create jobs.
Moreover, air travel brings foreign tourists and business
travelers who spend money and carry U.S. products back home.
This also benefits our airports, and contributes to the
economic development in our communities.
The future competitiveness of the U.S. aviation industry
will depend upon the availability of a safe, modern, and
reliable infrastructure. FAA's NextGen program is a critical
ongoing initiative to help enhance safety and efficiency by
transforming our aviation infrastructure. NextGen technologies
and procedures guide aircraft on more direct routes, improve
communication, save fuel, and decrease delays.
The FAA also places a strong emphasis on preserving and
expanding airport infrastructure. In fiscal year 2013, FAA
provided more than $3 billion to airports of all sizes
throughout the country.
The Department also works to foster an environment that
enables U.S. companies to compete successfully in the rapidly
changing global economy. Since President Obama launched the
National Export Initiative in 2010, the U.S. has seen an
increase of 1.3 million export-supported jobs. Secretary Foxx's
appointment to the export promotion cabinet is an affirmation
of the critical role that transportation plays as both a
generator and facilitator of exports.
In 2012, the U.S. exported $39.5 billion in air travel
services. And this includes airline seats and cargo holds in
U.S.-registered aircraft, which constitute exports when foreign
customers purchase international transportation. These exports
could not happen without the ability to readily access
international markets. The Obama administration, working
together with the aviation industry, has achieved much success
in removing barriers to market access.
Through the Open Skies Initiative, we have expanded
commercial opportunities for U.S. airlines in international
markets. The economic activity enabled by liberal air service
agreements has produced tremendous benefits for U.S. travelers
and shippers. We now have 111 Open Skies partners. Communities
of all sizes benefit, either through new nonstop international
services of their own, or through access to international
markets via efficient domestic connections.
We also work to resolve issues that our industry faces
doing business abroad, and to address unfair and discriminatory
practices that interfere with our carriers' ability to take
advantages of opportunities afforded by the Open Skies
agreements. This work is an essential part of our mission,
since the rights that we negotiate in our agreements are only
as valuable as the industry's practical ability to exercise
them.
GA and business aviation sectors are also seeking to
aggressive expand in international markets. And to address this
growing demand, we have worked closely with NBAA and GAMA, and
have led an initiative to develop best practices in the
economic treatment of business aviation operations in the APEC
region.
A difficult challenge facing U.S. aviation is the need to
develop a future workforce with the technical training and
creative ability to carry this industry well into the 21st
century. We are working as part of the Obama administration's
larger efforts to support STEM education, but we are working
with industry, labor, and educators on this very important
matter.
Expansion in international markets will remain a focus of
the U.S. aviation industry, and DOT is committed to working
with members of this committee and all of our aviation
stakeholders.
This concludes my testimony, and I would be happy to answer
any questions you may have.
Mr. LoBiondo. Thank you.
Mr. Calio?
Mr. Calio. Chairman LoBiondo, Chairman Shuster, Ranking
Member Larsen, members of the committee, thank you for the
opportunity to be here today.
I also want to take just a second to thank you for your
ongoing work to fight off the European Union Emissions Trading
Scheme, the EU ETS, which is really nothing more than a money
grab so the EU could spend money however it wanted to. This
committee and the administration were indispensable in putting
a stop to that, and we are deeply appreciative of your
continuing work on that issue.
The U.S. airline industry is indispensable to our society
and economy. It enables our diverse and far-flung Nation be
linked domestically and internationally, as Assistant Secretary
Kurland points out. No other country can match the tightly knit
fabric of air commerce that so conspicuously contributes to our
Nation's well-being. This exceptional accomplishment did not
occur by happenstance, and it won't be maintained by
happenstance, which makes this committee's examination of the
state of the U.S. aviation industry today and Chairman
Shuster's speech before the International Aviation Club
yesterday particularly timely.
U.S. airlines, however large or small they may be, are
successful because of their diligence, innovation, and
commitment. They are in the game, and they are ready to step
up.
Unfortunately, all too often they confront indifferent,
disjointed, or hostile Government policies. We operate in a
public policy setting that sometimes seems to veer from
listless to antagonistic. The current budget negotiations are
an abject example of an antagonistic public policy setting that
impedes the ability of the industry to lead and compete
effectively. The industry, the administration, and the Congress
sometimes operate, as Chairman Shuster has repeatedly noted, as
if the industry is a piggy bank that is bottomless and can fund
whatever comes to mind. In this case, increasing the TSA fee,
not to do better at TSA, but to fund the deficit. More than
doubling that fee is bad for the airlines, bad for consumers,
and bad for the economy and job growth.
It is also bad for the airports and the communities that we
serve. The way our Government acts is in sharp contrast to the
way many of our foreign carrier competitors' governments act.
As the global economy shifts, we are increasingly facing global
competition from carriers that enjoy the benefits of their
governments' cohesive national aviation policies that not only
purposefully accelerate their expansion, they are treated as
strategic assets to develop the economies, to grow the economy,
and to increase passenger flows. Our Government needs a like-
minded understanding of the role the airlines can play,
unfettered from the hugely burdensome tax and regulatory
scheme.
In a speech to the IAC yesterday, Chairman Shuster called
for all elements of the industry to work together, and with
him, in this committee and the Congress, to take a holistic
view of the industry, and what was necessary to maintain our
leadership. We are willing to do that.
He also called for the development of a bold and innovative
vision to achieve that goal. If nothing else, I think the
current budget exercise can serve to underscore the need for a
broad, cohesive, national aviation policy like the governments
of many of our foreign competitors are currently executing. It
is why Airlines for America has been trying to educate the
Congress, the administration, and the public about the need for
a national airline policy.
As many or all of you know, that policy would have five
pillars: rationalize the industry's tax and regulatory burden;
modernize our ATC infrastructure; try to eliminate or at least
reduce fuel price volatility; and those four pillars all lead
to make us more competitive on a global basis, which we need to
do in order to keep growing our economy. We would be happy to
share specifics about any of our ideas in any of those regards
as we move forward.
But by undertaking this policy, this committee and the
Congress could do what previous Congresses did for the railroad
industry in the 1970s and early 1980s, and what it failed to do
for the maritime industry. On the one hand, you have got a
thriving rail industry now in this country that invests
billions of dollars in its own infrastructure. We have no
maritime industry any more.
So, we would encourage you to undertake a look at what
could be done with a national airline policy that benefits all
elements of all parties at this table. And, frankly, I have to
say that the way this committee operates gives me some faith
that this budget exercise can lead to that kind of examination
and that kind of success. Thank you very much.
Mr. LoBiondo. OK, thank you.
Mr. Brewer, please.
Mr. Brewer. Mr. Chairman LoBiondo, Chairman Shuster,
Ranking Member Larsen, members of the Aviation Subcommittee,
thank you for inviting me to participate in today's hearing. It
truly is an honor for me to be here with you today.
On behalf of airports around the country, I would like to
begin by thanking members of this committee and your staff, who
helped pass the long-delayed FAA reauthorization bill last
year. We realize it was a difficult process, but we appreciate
your persistence.
Since the FAA bill was enacted into law, airports and our
colleagues in the aviation industry have been dealing with the
uncertainty of sequestration. The first round of cuts
threatened to furlough tens of thousands of controllers, and
close a large number of contract towers at airports around the
county. Congress wisely intervened and prevented those massive
disruptions and tower closings from happening. But, at the end
of the day, airports were forced to give up $253 million that
had been set aside for important infrastructure projects. This
quarter-of-a-billion-dollar cut came at a time when airports
faced significant capital needs, and are restricted from
generating more local revenue from higher passenger facility
charges.
Unfortunately, further sequestration cuts loom on the
horizon. There are, however, fiscally responsible ways we could
work together to pay for critical infrastructure, and ensure
that people in small communities have access to safe and
reliable air service. With that in mind, we have a few
recommendations for you to consider in dealing with the
sequestration debate, as it continues, and in preparing for the
next FAA bill.
First, we encourage you to prevent AIP funding from
continuing to be diverted for FAA operations. Airport operators
understand the downward pressure on Federal spending and the
difficult choices that need to be made, but we firmly believe
that keeping the FAA running smoothly should not be done at the
expense of our Nation's infrastructure.
Additionally, AIP cuts could jeopardize needed safety and
capacity projects. In Manchester, for instance, AIP cuts
would--could delay our runway and taxiway projects, and our
plans to relocate a roadway to improve safety and comply with
current FAA standards.
Second, AAAE, ACI North America, and a group of large
gateway airports are calling on Congress to raise the Federal
cap on local passenger facility charges from $4.50 to $8.50,
and to periodically adjust the cap for inflation. Considering
the enormous constraints on Federal spending, it is time to
give airports the self-help they need to finance a larger share
of their infrastructure projects with local revenue.
The FAA is predicting that passenger levels will increase
from 737 million passengers this year to almost 1.1 billion by
2029. That is another 320 million passengers, which is the
equivalent of adding the entire population of the United States
to an already-constrained system.
Sixteen years may seem like a long time, but runways often
take 10, 15, and sometimes 20 years to complete.
Airports need to come up with more local revenue to build
infrastructure projects, and to prepare for the influx of
passengers to come. ACI North America estimates that the
airports' capital needs now exceed $14 billion a year, but
airports received only about $6 billion from AIP and PFC
revenues combined in fiscal year 2013. Other groups have also
highlighted the economic repercussions associated with the gap
between capital needs and available resources. Our proposal to
raise PFC cap to 850 and to adjust it for inflation
periodically will help fill that funding gap.
Finally, I would like to thank you and all of the committee
members for keeping the contract towers open earlier this year,
and ask for your continued support during the ongoing
sequestration process. We look forward to continuing to work
with you in keeping those towers open, explore ways to improve
the aviation program, and consider the next FAA bill.
Mr. Chairman, thank you again for inviting me to
participate today. I would be happy to answer any questions.
Mr. LoBiondo. Thank you. Hold on a minute.
[Disturbance outside of hearing room.]
Mr. LoBiondo. If we have to, Shuster, Larsen, and I will go
over and straighten this out. OK, we will try.
Pete, go ahead.
Mr. Bunce. Chairman LoBiondo, Chairman Shuster, Ranking
Member Larsen, members of the committee, thank you for letting
me be here today. And I really want to start by commending you
all. For us, in the industry, to have an opportunity a year out
from the next reauthorization, to have an opportunity to come
and talk to you about the issues involved with the next
reauthorization and doing what we have to do with our entire
system here in the U.S. is--I couldn't ask for anything more
from industry.
So that, coupled with what we were able to do all together
with the Small Airplane Revitalization Act and the bipartisan
way that that went forward and was eventually signed into law
by the President, really shows what this committee can do,
working together with industry.
So, maintaining this competitiveness is absolutely vital.
We are 5 days away from the 110th anniversary of the Wright
Brothers' flight at Kitty Hawk, and we have been leaders in
aviation for that entire period of time. And to be able to keep
that, this Committee has recognized and actually set the stage
in the last reauthorization to ask the right questions. Your
emphasis on certification, to be able to improve the processes
for certification, to have consistency in regulatory
interpretation, started a process that we very much appreciate.
And we have got to keep the pressure on the FAA to be able to
fulfill what--some of the promises that they have made in the
reports to actually make that--strengthen that and streamline
that process.
Last year, the International Trade Commission did a study,
and they actually looked at general aviation manufacturing and
said, how is this competitive in the world marketplace. They
looked at factors and found out that financing--things like the
Ex-Im Bank became very important. Research and development,
obviously. Taxes and fees, to include the depreciation schedule
and the incentive for manufacturing that is included in there
have an impact. But, most importantly, it is certification.
You have given me an opportunity to come before this
committee recently and talk to you about certification. We are
making strides there. But to have the FAA really take a look at
what works in other parts of the world, and take the best
practices from those, we absolutely welcome. So thank you for
asking for that study, because I think that we are able to pick
some things out from other states of design that will actually
help us.
In development programs, the burn rate for the actual
original equipment manufacture is significant. One company, in
their programs right now, has a burn rate of $10 million a
month. Now, if you compound that throughout the supply chain,
you are talking about big money. And any delay that we get in
the certification project, because of overburdensome
regulations or a lack of consistent interpretation, really
hurts that process. That becomes important.
Also, in the last reauthorization, you called on the FAA to
give a report on restructuring and how do we right-size the
National Airspace System. We understand the FAA is starting to
come and brief you all on what their program is. I cannot
applaud that enough, because that really sets the foundation of
our ability to lean the system out there. It is a very safe
system, but we all know that it has got antiquated equipment,
and it has got infrastructure that either has to be brought
back up to speed, or divested from and consolidated, and modern
technology allows us to do that.
So, I hope that we are bold in that process. We wouldn't
have actually had this debate, I think, about the contract
tower issue if, actually, the FAA had looked several years ago
and said, ``Hey, can we remote towers out there? Can we look at
the capability that they already are putting forward in
Scandinavia? In low activity can we remote towers like Reagan
between 2:00 and 5:00 in the morning, and send the feed over to
Dulles, and let them control?'' Smart things like, we have
propagated these GPS-based approaches all over the country.
Do we need to continue the expensive infrastructure of
instrument landing systems that cost a lot to refresh? Can we
back off on the number of radars that are out there now that we
have the ADS-B ground infrastructure complete, and we know when
the mandate is for equipage for aircraft. Can we back off on
the number of VORs that are out there? All of those elements
should be in the FAA's plan. And, with us working together as
stakeholders, to be able to provide you inputs, if we can hold
the FAA's feet to the fire to be able to do that, I think we
will have achieved success.
And the last thing I want to emphasize is, back in 1996 the
mandate was taken away from the FAA, because of some high-
profile accidents, to actually advocate for the aviation
industry. We understand the FAA should be the safety regulator
out there, and there is no question about that. But it would be
very useful, I think, for us as an industry all together, to
piggy-back on what my colleague, Mr. Calio was talking about,
for the DOT to pick up that assignment from Congress. They
should be the advocates for the aviation industry.
We know the Department of Commerce has a lot of industry
that they have to advocate for, but DOT knows the
transportation system. And Assistant Secretary Kurland talked
about what she was able to accomplish with the APEC initiative,
working with industry, and we think we could expand that
greatly through the next reauthorization.
I look forward to your questions.
Mr. LoBiondo. Thank you.
Mr. Bolen?
Mr. Bolen. Well, thank you. I very much appreciate the
opportunity to be able to testify today at this important
hearing. And I would like to just quickly begin my comments
where Mr. Calio began his, with the EU ETS. Clearly, from our
perspective, that is a fatally flawed program. It is very bad
for all of aviation, particularly bad for business aviation. So
I just wanted to associate myself with his remarks.
I am really excited about the hearing today, because it is
so important that we set the stage for the future of air
transportation in the United States. Several of you have
already said aviation plays an enormous role in our Nation's
transportation system and our Nation's economy. And business
aviation, in particular, is important for a lot of small towns
and communities that have no other access, really, to our air
transportation system. And it really provides an opportunity
for a lot of U.S. companies to compete effectively in a global
marketplace, and respond in times of humanitarian crisis. This
is an industry that generates a lot of jobs.
So, it is an important industry, it is one that the U.S.
has always been the world leader. It is also an industry that
is very heavily regulated by the Federal Government. And that
means when we have situations where there are challenges with
our Government and our Government spending, it has a
significant impact on us. Sequestration has been talked about
today. The shut-down has been talked about today. That is a
period when we were not able to buy or sell any aircraft in the
United States for the period of the shut-down. And we are
grateful to this subcommittee for the efforts that you made to
try to articulate the essential nature of the registry, and the
importance to keep it open in times of crisis.
But as an industry that is heavily federally regulated, and
hypersensitive to challenges in our Government operations, I
think it is important for us to articulate that we recognize
that continuing to do things the way we always have is not
going to work. We simply don't have the revenues. We are going
to have to work together to find efficiencies, moving forward.
And that is why the MBAA, the general aviation community, has
tried to be proactive, suggesting changes like streamlining
certification and--again, commending, as Pete Bunce did, this
committee for its efforts on the Small Airplane Revitalization
Act, congratulate this committee for Section 804 of the past
FAA reauthorization bill, which gives us an opportunity to look
at facilities, going forward.
And certainly, as a community, we are trying to prioritize
NextGen, so that we can get the benefits of a modern air
transportation system within the constraints that we have with
the current economy.
But I also want to make sure, as we begin to talk about the
next reauthorization, begin to talk about the future, we
understand that while we have got to move forward, we have got
to change, we have got to adapt and evolve, we also want to
take an opportunity to not just look at what is wrong with our
current system, but also make sure we understand what is right,
what does work. Because, at the end of the day, the U.S. today
has the largest, the safest, the most diverse, and the most
efficient air transportation system anywhere in the world. We
have been the world leader since the inception of flight, and
we don't want to lose those aspects that help make us great.
We also want to recognize that our national airspace is a
public treasure. It benefits all Americans, not just the
traveling public, all Americans. And that is underscored by
those economic benefits we have talked about earlier. You know,
I have heard Chairman Shuster talk about Adam Smith and the
wealth of nations, and what are appropriate roles of the
Government, going forward.
Transportation seems to be one where there is clearly a
national interest, a public interest, and we believe that
Congress is an appropriate place for us to oversee that public
treasure. We think there is a role for Congress, going forward,
and we have seen how Congress has been so vital in righting
wrongs that have been taking place elsewhere, so I don't want
to lose that fact, going forward, that this is a public
treasure, there is a role for Congress. All Americans benefit.
Historically, this Congress has recognized that the general
taxpayer revenues ought to help fund a portion of that. We
think that is appropriate, going forward.
I also want to underscore that, from a general aviation
perspective, the fuel taxes are an appropriate way to
contribute to the system. I know a lot of other parts of the
world use user fees. We believe that anything a user fee can
do, the fuel tax can do better.
So, as we begin to talk about how we move forward, how we
evolve, how we adapt, how we keep America number one in
aviation, we want to make sure we understand not just what is
wrong with the current system, but what is right, so that, as
we move forward, we take the best, and keep it, and build on
it, and make sure that we are prepared to compete in the
future.
Mr. LoBiondo. Thank you.
Mr. Wytkind?
Mr. Wytkind. Thank you, Chairman LoBiondo, Ranking Member
Larsen, and members of the committee, for inviting
transportation unions to provide their views on the state of
the airline industry.
I appear today on behalf of not only our 32 member unions
generally, but specifically our airline unions. I represent
most workers in the aviation sector.
In today's global aviation marketplace, our Government must
be proactive in developing an aggressive--and enforcing
policies that help keep our industry competitive on the
international level. At the same time, our Government must
commit to maintaining a fully functioning and efficient FAA
with stable and robust financing for our aviation industry.
We must also do more to ensure that important safety
reforms are implemented, and current rules are not needlessly
reformed or revisited, based simply on a broad antiregulatory
agenda. The expansion of international air transportation can
offer lucrative business opportunities for U.S. airlines, for
sure. And, if done the right way, can create middle-class
aviation jobs.
But our Government must embrace smart policies.
Specifically, the administration must understand the land mines
and pitfalls of unscrupulous liberalization, protect against
the outsourcing of critical safety and security work, oppose
regulatory overreaches by foreign states, and provide stable
and robust financing for our aviation infrastructure and its
workforce.
The most pressing trade issue facing our industry revolves
around the Trans-Atlantic Trade and Investment Partnership, or
TTIP. Negotiation is currently being held between the U.S. and
the European Union. Despite historical precedent for excluding
air services from broad trade negotiations, the EU is seeking
to include them among the complex issues being discussed in
TTIP.
The EU's aim? Pretty clear. To force changes to U.S. rules
that limit foreign ownership and control of U.S. airlines, and
reserve domestic point-to-point service, or cabotage, to U.S.-
controlled carriers. These laws have helped ensure a viable
U.S. airline industry, and have protected employees against
unfair competition, preserved workers' rights, and ensured
America's status as a world leader in air transportation.
Decades of unfair trade policy have ravaged jobs in many
U.S. industries, and those experiences inform our unyielding
commitment to ensuring that it does not have the same result
for airline workers in this country. The administration must
categorically reject these efforts by the EU. I am pleased that
there is broad support for this position in the House,
including a majority of this committee that recently signed a
letter to the U.S. Trade Representative expressing those views.
In the EU we are currently seeing the negative impacts of
aviation liberalization when labor protections are ignored, or
fail to work as intended. Norwegian Air Shuttle, which is
incorporated in Norway and holds an air operator's certificate
in that country, has developed a suspect business model
designed to exploit European aviation and labor law, and
undermine the rights of employees. NAS is registering its
aircraft in Ireland--by the way, you can't make this stuff up--
and contracting or, more accurately, renting pilots and flight
attendants that are based in Thailand, yes, and covered by
labor laws in Singapore. The airlines is using a flag-of-
convenience policy, one very familiar to our maritime unions:
to shop around and scour the globe for the cheapest labor and
the most compliant regulations for their bottom line.
Why does this matter to us? Because NAS has announced its
intention to serve the United States: New York, Orlando, Fort
Lauderdale, and possibly L.A., and they are clearly trying to
undercut the U.S. airline industry by about 50 percent. An
affiliate of NAS is now seeking an Irish operating certificate.
And just this week it applied for a DOT permit.
The U.S. also must adopt and enforce policies that curb
unsafe outsourcing of U.S. aircraft repair and maintenance, and
provide adequate safety and security safeguards. The FAA has
yet to issue a congressionally mandated rule, now 9 months
overdue, to apply drug and alcohol testing to foreign mechanics
working on U.S. aircraft. It is a simple mandate, one based on
the premise that if you are going to repair aircraft overseas
under FAA regulations, then the same rules will apply to those
workers that apply here, in the United States. We urge the
administration to adopt this rule without further delay.
In order to remain competitive in the global market, the
U.S. must invest in the FAA's workforce and aging
infrastructure and ensure enhanced oversight of the industry
and airspace, and continue modernizing the National Airspace
System through NextGen. We have already witnessed the impacts
that Government shutdowns and budget uncertainty have on these
programs. And each time Washington has another knock-down,
drag-out budget battle, these initiatives designed to make air
travel safer and more efficient, and to expand capacity, are
grounded or idled. This stuff must end.
Under current budgetary constraints, we have concerns
regarding the FAA's ability to fully function and operate
without sufficient and predictable funding, particularly for
its operating budget.
Compounding the problem, the FAA has a staffing crisis. It
is operating under a hiring freeze, and one-third of its
workforce, including controllers, aviation safety inspectors,
and system specialists, will be eligible to retire in 2014.
This is unsustainable, and must be addressed before it impacts
operations and safety.
How we handle these issues and others included in my formal
testimony will help shape this industry and its place in the
world as it relates to aviation travel. I believe that, with
strong leadership and sound policy, we can retain our standing
as the world leader in aviation. We look forward to working
with the committee to accomplish that. Thank you.
Mr. LoBiondo. Thank you, Ed. My first question is for
anybody on the panel who would want to take a swing at this.
Where, in your view, has the FAA been most successful in moving
forward with NextGen, and where has FAA fallen short in
implementing NextGen? Any takers?
Mr. Bunce. Mr. Chairman, I think if you look at the ground
infrastructure for ADS-B, I think it is a true success story.
They have a great program manager at the FAA that has put that
infrastructure almost all out there, and these are--if you
think of the ADS-B ground station as about the size of a
refrigerator--they can put them up on cell phone towers, so it
doesn't take a lot of land. It allows them to divest from other
infrastructure that is out there. So I think the FAA needs to
be commended on that.
When we look at performance-based navigation and going into
airports, we have approaches that have now been put out there.
A lot of them are overlays of existing approaches, so they
don't take full advantage of the capability that satellite
navigation gives you. But one of the problems is that pilots
aren't able to use them. And that is because there are delays
in getting the controllers the guidance, even though we have
had years and years to get ready for the deployment of this
system, we still aren't able to use those approaches.
Denver is a great example. So you had industry and
Government working together, a great cooperative relationship
between pilots and controllers and the FAA, all these--the
airspace was redesigned, the approaches were put in, but then
you talk to my airline pilot colleagues, and they can't use the
approaches because the controllers won't issue them, because
their handbook doesn't give them the guidance to allow them to
do so.
So, there is good and bad throughout this deployment. And
the more that we can focus on trying to utilize systems that
have already been put in place, and then prioritize the NextGen
workflow plan for other systems, I think really would help us
in that quest.
Mr. Bolen. Yes, and I will just build on those remarks. I
mean I think we are in a period where we are making some
significant progress as we are getting to better granularity
about what NextGen is, and what are the hurdles to its
implementation.
Definitionally, I think we have made a lot of progress. I
think we have seen the FAA bring in a very strong NextGen
manager. We have had some NextGen successes, probably most
notably the Greener Skies Initiative in Seattle, where we have
had an opportunity to see where NextGen works. But we have also
identified the problems, including the controller's handbook.
And now efforts are being made to understand and remove those
impediments, going forward.
So, I think, as it evolves, we are finally getting a level
of clarity and a level of understanding that will help us get
to where we need to go. But I think what we are finding is this
is a much more challenging project than we may have
anticipated. And we are finding things like controller handbook
issues that weren't really anticipated.
So, I think we are at a point where the community is
beginning to all get on the same page. There is better dialogue
with the FAA, particularly through the NextGen Advisory
Council. But there is a lot of work to do, particularly in a
constrained Federal budget. And that is why prioritizing those
NextGen projects, to get the right ones done at the right time
so that we are truly making a difference, become so important.
Ms. Kurland. Mr. Chairman, thank you. And I am very pleased
to hear my colleagues' comments.
NextGen, as we all know, is critically important to the
continued stable and world-class aviation system that we have,
and a stable funding source is critical for us to be able to
continue moving forward, so we are not doing it in fits and
starts. It is a rolling program with many different components.
And I am, you know, delighted to tell you that at this point
the FAA is getting close to having the completed critical
foundation, in terms of the software and the hardware. As, you
know, both Ed and Pete mentioned, there are specific instances
where we have got certain programs that have really been doing
well: the Greener Skies program. We are seeing, for example
also, JetBlue in New York, because of the approaches there, is
able to save 18 gallons per flight. And, you know, that adds
up.
So, it is critically important that we continue NextGen. We
are very happy to have, you know, industry working with us. The
National Advisory--the NextGen Advisory Committee has been
critically important, and we look forward to working with the
committee, as well.
Mr. LoBiondo. OK, thank you. Mr. Larsen?
Mr. Larsen. Thanks, Mr. Chairman. I want to just explore a
few issues in the time I have, the first round.
The first issue has to do with ancillary fees, as they
continue to grow as a revenue source for airlines. The majority
of those fees are not taxed. So, for--to start with, Assistant
Secretary Kurland, has this administration looked at that
general issue at all, and have you made any determinations
about that?
And then I want Mr. Calio and Mr. Brewer, then, to have a
chance to respond.
Ms. Kurland. Yes. They, as you rightly point out, have not
been taxed. It is my understanding I thought this is something
the committee might be looking at. But, if I could provide you
some information for the record on that, I don't have that
information at my fingertips.
Mr. Larsen. I imagine it might be something we end up
debating in the next year-and-a-half.
Ms. Kurland. I would think so.
Mr. Larsen. Yes. Mr. Calio?
Mr. Calio. Thank you. In terms of taxing ancillary fees, we
oppose it. You know, too often airlines are treated like they
are some other kind of business. Under the Internal Revenue
Code, ancillary fees or optional services are not taxed as part
of the ticket tax, based on an excise tax, and they are taxed
as income tax.
And I point out, also, that optional services accounted for
about 6 percent of the total revenue. In 2012, airlines made 37
cents per enplaned passenger. Without the optional service
fees, we would have lost $8.12 a passenger. When it comes to
being bold and innovative, I hope that the bold and innovative
vision for the future of the airline industry is not figuring
out ways to further increase the tax and regulatory burden.
Mr. Larsen. Yes. Mr. Brewer?
Mr. Brewer. I appreciate the question, and I appreciate the
opportunity to respond.
Let me take it from a broader perspective, from an airport
operator's perspective. One of the ways that we generate
revenue at an airport to maintain and operate our
infrastructure is through rates and charges to our retail
concessions and to our food and beverage concessions. And we do
it based on a percentage of gross. And I believe that when this
excise tax was imposed on the ticket, at the time it was
imposed, all of those ancillary fee--bag fees and so on--were
all considered part of the gross.
I think what we are seeing now is that the airlines have
found a way to take a lot of things that used to be part of the
gross number, and make it so now the excise tax is taxed on the
net, not on the gross. If the 7.5 percent was on the gross
number, it would be an additional $260 million into the AIP
fund, or into the Aviation Trust Fund, which could help build
the infrastructure that is needed to maintain the systems that
the airlines use. I think it would be a broad-based and very
fair opportunity for the airlines to contribute through this
tax system into the aviation system.
Mr. Larsen. Thank you all for answering that set of
questions. I appreciate it. And I imagine we will continue to
have discussions about the infrastructure financing as we go
forward. That is just going to, I think, be part of it.
Mr. Calio, I had a question regarding TTIP. And does A4A
have a position on the issue of air transport services being in
or out of TTIP?
Mr. Calio. Our position is that we have concerns about it
being in. I would note, though, in terms of the issue of
foreign ownership, we are with our labor partners on that, that
that should not be part of it. And the EU is pushing very hard
on that.
Mr. Larsen. Yes, that is great. Thanks. And then, Mr.
Wytkind, on the--that point of TTIP, can you talk a little bit
more about your position with regards to State and
Transportation handling the issue of air service agreements
versus having it part of a broader TTIP negotiation?
Mr. Wytkind. Yes, thank you. And I--we have been very clear
on this. We think that, in the trade arena, the aviation trade
area is one where you are seeing a lot of progress in opening
markets. Over 100 open skies agreements have been negotiated by
the Departments of Transportation and State. We have worked
very closely with those agencies to make sure that those
agreements, as they are made, impact workers in a good way, and
create and support middle-class aviation jobs.
We are very, very concerned and strongly opposed to seeing
aviation in the TTIP negotiations, which are very broad, very
complex, and there are going to be a lot of trade-offs at the
bargaining table. We are not really interested in being part of
a trade-off. This is too vital an industry to the Nation and to
the economy. And we think it has worked quite well. We think it
is a solution in search of a problem.
We are opening markets. We are growing international
service. It is very lucrative, it supports good jobs. We
support that. But we do not think it is a good idea to jam
aviation into a very complex negotiation over TTIP. We have
been very aggressive with the Obama administration, we have
been very aggressive with the European governments, to let them
know what our views are, and we are hopeful that this committee
will continue to work with us to make sure that that doesn't
happen, because I think it would really harm the airline
industry and its employees.
Mr. Larsen. Yes. And you have noted in your testimony the
majority of this subcommittee has signed the broad letter
opposing having these open skies agreements negotiated within
TTIP.
Mr. Wytkind. Indeed. And I am very heartened to hear Mr.
Calio's comments, too, because one of the core issues involved
in those discussions are the European Union's continued bully
tactics to try to change our foreign ownership and control
laws. They have tried in various venues. They have tried to--
they tried to force it upon the U.S. Government when they had
their last open skies agreement that they negotiated not long
ago. And this is just another attempt to change our foreign
ownership and control rules, which we are very much against,
and we are very heartened to hear that our air carrier partners
are in the same position.
Mr. Larsen. Thanks. Finally, before I yield back, back to
Mr. Calio. Could you maybe give three examples? You noted in
your testimony other governments treat their airlines as
strategic assets to the national economy. Could you give three
examples of--name names, if you want, but three examples of
tools other governments are using to treat their airlines as
national assets, as strategic assets?
Mr. Calio. Look to the Middle East to start. There is more
you can see there.
For one, the level of taxation is very low. The level of
passenger charges and fees are very low, which encourages
people to fly and grow capacity. The level of regulation,
particularly on the economic side--at A4A--we put regulation in
two buckets. There is safety regulation, which is in one
bucket. We work very closely with DOT and FAA on those.
The other side is economic regulation. We are supposed to
be deregulated, as an industry. We are not. And if you look at
the way these other countries are regulating their industries,
they give them the freedom to operate as businesses to maximize
their sustainability and profitability. And, unfortunately,
also, in some cases, because they are almost starting from
scratch, their air traffic control infrastructure is much, much
better than ours.
And we could provide more examples, and we will, to your
staff, going forward.
Mr. Larsen. That would be an excellent help, I think,
moving forward.
Thank you, Mr. Chairman.
Mr. LoBiondo. Mr. Shuster.
Mr. Shuster. Thank you, Mr. Chairman. Broad question to the
entire panel. What types of policy initiatives would you
recommend? And don't give me a laundry list--I am sure you will
have a laundry list--but just sort of the highlights in the
next FAA reauthorization. And those we deal with specifically
in this committee, because I know we are talking tax policy and
things like that, which, at this point doesn't come out of this
committee. But can you give us sort of a couple of high-
priority items in the next FAA reauthorization you would like
to see passed?
Start at the----
Ms. Kurland. Mr. Chairman, the FAA has started the rampup
process for considering what we would recommend for
reauthorization. And after the first of the year, we will
really be ramping that up. And we will look forward to working
closely with you and the committee, as you move forward on
reauthorization.
You know, many--a number of items have been mentioned, in
terms of the cooperation, in terms of--with the committee and
with my colleagues around the table, in terms of promoting our
interests, internationally, and also to--in protecting and
taking a look at small communities and how they fare in
aviation and services.
So, on these and many other issues, especially in the FAA
realm, we will look forward to working with you.
Mr. Shuster. Mr. Calio?
Mr. Calio. First of all, we would like to provide more
metrics and measurement to the FAA in terms of NextGen, so it
can keep the program moving in the leadership at the FAA, which
is working very hard on the issues and has the tools to get
done what it needs to get done, in terms of advancing NextGen.
Measurements will provide a business case for continuing on
down the line.
We would like to see some parameters put around the
regulatory process that require that it be based on sound
science and data, and that there be cost benefit analysis done.
And we would like no increase in the passenger facility charge.
You know, it is interesting. In the last year, in 2013, a
record amount--$12.3 billion--was paid into the Aviation Trust
Fund. And that funds 80 percent of the FAA's budget. For a
variety of other reasons which I think are listed in our
testimony, but we would also be happy to provide, in terms of
the airports. We don't think any change is justified.
Mr. Shuster. And NextGen would have a huge positive impact
across the system. So that really should be a number-one
priority, to move that forward as fast as--or faster than we
are now?
Mr. Calio. It has to be moved fast-forward. We had our
board meeting yesterday, and Bill Ayer, who is the chairman of
the NextGen Advisory Committee, and Margaret Jenny, who is the
president and CEO of RTCA, came in--and Ed Bolen was referring
to it earlier, I sit on the board of RTCA with him--the NextGen
Advisory Committee was trying to provide advice and counsel and
practical ways for the FAA to move forward on NextGen in
measurable bites. Again, prioritizing, even within budget
constraints. Get done what you can to make the business case.
You know, when we talk about 2020, 2025, it needs to move
faster than that.
Mr. Shuster. Right. Mr. Brewer?
Mr. Brewer. Thank you, Mr. Chairman. I think I mentioned in
my earlier testimony--and, as you might suspect, I have a
different opinion on the PFCs. And we believe raising the PFCs
will help with airport infrastructure, will help with the
National Air Transportation System, and make local decisions
and help airports fund projects locally.
We understand the pressures that are on all of you in this
room, and Congress in general, to try and reduce Federal
spending. We believe that this gives the flexibility.
Just a reminder that PFCs, at least in my experience at the
airports that I have worked at, I have never done a PFC project
unless it was suggested by the airlines, or approved by the
airlines in our Airline and Airport Affairs Committee. So it is
not an unusual request for the airlines to actually suggest the
use of PFCs. And we think giving the additional flexibility for
the airport operators to gain additional revenue for that
purpose is appropriate and important.
Maintaining the contract control tower system is essential.
It is very efficient, it is very effective, and I think it
meets every parameter. The GAO has looked at it and said it is
a great program. And maintaining the EAS program for smaller
communities to gain access into the National Air Transportation
System.
Mr. Shuster. One of the concerns I have is that I look
around the country with airports--Airport X wants to build two
11,000 dual runways, where we have got other airports in the
country that are vastly underutilized that are not far away.
And so I want to make sure that Airport X, whatever airport
that is--and I don't want to name names--but, you know, the
airlines are saying, ``Well, we don't necessarily need that
extra runway,'' so I want to make sure that we are being
prudent with those dollars, and that airports, again, that
exist out there, can be utilized, and not just continue to
build on one or two airports on either coast. So that is a
concern of mine.
Mr. Brewer. We appreciate that thought. And, as you know,
PFC programs have to be AIP-eligible. And so it would be
something that would have to be consistent with an airport's
master plan.
Mr. Shuster. Right.
Mr. Brewer. And an 11,000-foot runway that may not be
necessary or justified most likely wouldn't get past that test.
Mr. Shuster. OK, thank you. Mr. Bunce?
Mr. Bunce. Mr. Chairman, obviously, from the manufacturer's
perspective, the emphasis on certification is welcome. And
continuing to ask the FAA to provide metrics back to Congress
to say, OK, are they really making an impact, as far as
streamlining the process, allowing industry to use the
delegation authorities, which then frees up other resources for
companies that haven't had the long expertise.
So, a new startup company that wants to produce a jet, or
has gone from piston production and now wants to produce a jet,
can get the resources from the FAA, because other companies
that have been able to do that for a long time are allowed to
use their delegated authorities to the maximum extent possible
to be able to get product out the door. Because we have to go
through the FAA to be able to deliver anything.
I think, also, what I mentioned earlier about giving DOT
the mandate to promote this industry could be very helpful to
all of us together. As the FAA presents its plan to you for
right-sizing the NAS, to be able to find a mechanism to make
sure they deliver on that. And if we really can find a way
where, if it is incremental and it is rolling over a period of
years, that they come to you with a certain amount of
integration or consolidation, and then the Congress has to
approve it, and then they go to the next tranche, if we can
keep them on schedule, that would benefit us all. Because if we
right-size the NAS, those savings could easily be plowed back
into important programs, like NextGen.
Mr. Shuster. Mr. Bolen?
Mr. Bolen. Chairman Shuster, in terms of guiding
principles, we would first recommend we establish the goal to
ensure that the U.S. remains the largest, the safest, the most
efficient, and the most diverse air transportation system in
the world. I believe that translates into advancing NextGen,
and making NextGen a priority.
I also would urge you to recognize that our National
Airspace System is a public good that is worthy of public
support. And I think that translates into a general fund
contribution.
I also believe, because it is a public good, it demands and
deserves congressional oversight, as we move forward.
And, finally, I would like to establish that the general
aviation community should contribute to our air transportation
system. We believe that the fuel taxes are the best and most
efficient way for us to contribute, and we would urge you to
keep that as a funding mechanism for general aviation.
Mr. Shuster. I have been in discussion with some of the
business groups, and they believe that the time is now--with
low interest rates, to figure out how to bond this thing. And
they believe it can be built in 3 to 5 years, if we really
focus on it, put the money behind it--whatever it is, $40
billion.
Do you believe that it can be built in that timeframe, if
we put the effort on it? Or is it technologically, in your
view, impossible?
Mr. Bolen. Well, bonding has been suggested as a way to
advance NextGen. I think it is worth understanding, however,
that a lot of NextGen is software programs. It is technology,
not brick and mortar.
Typically, we have done a lot of bonding to build roads,
build infrastructure that is concrete, bricks, and mortar. This
is a little something different. And so, if we are going to
borrow money against a funding stream, I think we want to
understand what is it we are borrowing money to purchase, and
how is that going to pay for itself over time.
Mr. Shuster. Right.
Mr. Bolen. We are working, as Mr. Calio suggested, we, as
an industry, are working very hard to understand the benefits
of NextGen, the business case for NextGen, and to figure out
how we can implement it as quickly as possible, and as cost-
effectively as possible.
Mr. Shuster. Thank you.
Mr. Wytkind. Mr. Shuster, thank you for that question, and
I am happy to try to offer a few observations.
First of all, this long-term funding issue is a challenge
that you are facing, as a chairman, in every mode of transport.
I congratulate you for the work you did on the WRRDA bill,
because it did free up more resources, and brought--will
eventually bring more investments into our ports and harbors.
I think the model that you used there to keep the committee
together on a bipartisan basis needs to be used to figure out a
long-term funding system for the FAA, and our air traffic
control system, and the overall aviation sector. So that is
issue one which we want to be at the table to discuss.
I think safety reforms are going to have to be on the table
here. One is if the administration does not act on foreign
repair station regulations, as this committee has already
directed it to do, I think it is going to have to be revisited,
to make sure we don't have unsafe conditions around the world
in the way that we maintain our aircraft that you and I fly in.
And separately, I think that cargo pilot carve-out that
occurred in the administration's pilot fatigue rules can't be
ignored by this committee. Cargo pilots share the same airspace
as commercial jets that fly passengers around, and there is no
reason why we should have tired cargo pilots, simply because
they don't carry people inside their aircraft.
Third, I would strongly recommend that the committee take a
look at some of these international issues. While we can't come
up with a legislative remedy today, we will in the future, if
indeed some of these schemes that we saw with the Norwegian Air
Shuttle continue to emerge in the context of our trade
relationships with the Europeans and other parts of the world.
We don't think we should be supporting policies, trade
policies, that allow foreign carriers to come in, cook up new
schemes that are designed to undercut U.S. airlines and their
employees.
And lastly, I think these workforce challenges in the FAA,
I urge you strongly to partner, as you have before, with the
air traffic controllers, and PASS, the union that represents
inspectors and technicians, to make sure that the FAA has the
resources it needs to have the best workforce that is trained,
that deals with its staffing crisis, and that makes sure that
the workers of the FAA are at the table when you implement
NextGen and other initiatives. I think that is going to be a
priority we will bring to the committee in the next few months.
Thank you.
Mr. Shuster. Well, I thank everybody for their input, and I
thank the vice chairman for indulging. Good to see you.
And I am going to submit this question for the record to
Mr. Calio. I am interested to know the impact of the recent
consolidation in the industry, how it has impacted the small
and medium-sized communities. Because, as you know--and we have
talked before--I care very much about rural America. I am from
rural America. And I want to make sure that there is some
semblance of air service that continues to go out there, as we
move forward, especially. We have just gone through another
consolidation, which I think in the long run is going to be
positive for the industry. I just want to make sure it is
positive for the small and medium-sized markets in America. So
I will submit that for the record. Thank you. Yield back.
Mr. Davis [presiding]. Thank you, Chairman Shuster. The
Chair now recognizes the gentleman from Massachusetts, Mr.
Capuano, for 5 minutes.
Mr. Capuano. Thank you, Mr. Chairman. Mr. Calio, I really
like the concept of trying to come up with a national airline
policy. It is not as easy as the title might presume. We will
have some significant differences of opinion amongst all of us,
tax policy being one of them.
For me, I am less interested in what is taxed, as much as
does the tax raise enough money to do what we need to do. Can
we build runways? Can we address safety? Can we do all those
things? Where it comes from? Let's be serious; it all comes
from the passenger. It all does. Taxes always pass through,
from every company, and that is fine. So, for me, it is more of
a level playing field than the absolute amount of what is
precisely taxed.
You know, regulatory burden? I have yet to see any industry
ever come to any committee I have ever served on that says they
are not overly regulated. Exactly what--again, it is a
competition thing to me. I am looking for level playing fields.
The air traffic control system we talked about. Stabilizing
energy prices. Well, if we could figure out how to do that, we
would all be--I don't know what we would be, but a lot better
than we are.
But I do want to talk about the one item that I think would
bring everybody together in a general way, and that is to
support our efforts to compete globally. For me, I have watched
the shipping industry go from a position during my lifetime
where, for all intents and purposes, there are no American flag
ships. I mean that is an overstatement, but not much of an
overstatement. In the Port of Boston, I can't remember the last
time I saw a significant sized U.S. flag ship. And I don't want
to get to that situation in the airline industry.
And again, I don't mean to pick on Boston, I actually think
they are doing a pretty good job, but we have the same thing,
we have an international airport, and we have international
business interests that we are interested in, and we want
international flights. But just recently, I learned we are
attracting--we are actually supporting a foreign-flagged
airline to bring a flight in to Boston. And to me, it is like,
well, if we really want that flight--which sounds fine, it is
to the Middle East, I think that is great--why isn't one of our
U.S. carriers doing that?
We had a big thing a couple of months ago; we brought our
first direct flight from Beijing to Boston, a long flight.
Again, Chinese company. And again, I am not against that, that
is fine by me. But I guess what I really want to get at is I
would really like to get people to the table to try to figure
out what are the things that are truly putting us at a
disadvantage. Not necessarily to give any significant
advantage, but just to level the playing field. If they can do
it, if the Emirates airlines can do it, if China Air can do it,
why can't any one of the U.S. carriers do it? Why won't they do
it?
And what are we doing wrong to not do that? And I think
that goes to--and I want to stay away a little bit from the
repair basis, because I think that will get us into some
disagreements as to how we do it. And I am not interested in
hearing things about, you know, we need to lower labor costs or
we have to hire everybody from low-cost countries. That is,
again, part of the problem with the station repair.
But I am interested in finding out and maybe talking a
little bit about some of the things that you might see. And I
am going to ask some of the other people on the panel to tell
me some of the things you might see that might be able to,
again, level the playing field, so that U.S. carriers are not
at a disadvantage, so that my kids will actually see U.S.-based
airlines operating in this world, and not all foreign
operators.
Mr. Calio. Thank you, Mr. Capuano. I appreciate your
interest in the national airline policy. And that is what the
national airline policy, or the concept of a national airline
policy, is all about. It is all those elements that you
mentioned. It is the taxation--the taxation does matter,
because the taxation has an impact on capacity and demand, in
terms of how much people are willing to fly. And we would be
happy to sit down and talk to you at a roundtable, in your
office, anywhere with any group, and talk about that.
It is the same on the regulatory side. It is just a
rationalization--there are some ancient regulations that really
don't do much to help anything. There is information that we
are required to report that no other industry is required to
report that doesn't impact safety, and it costs money to do so.
There are all sorts of other things, like global distribution
systems and potential rules on that.
So, the regulatory burden is something to look at, because
these other airlines, as I pointed out earlier, these foreign
competitors, are subject to different regimes. And you are
correct; some things we can't ever compete on. We are not going
to compete with labor--on labor costs, and shouldn't, with
China and the Middle Eastern carriers. They can do things that
we would not be permitted to do. And, you know, we value our
workforce. But we don't want to be undercut by them, either, on
that basis. So there are other things to look at.
We think we have to look at and applaud DOT here, because
Open Skies are great, but you have to look at what happens down
the line after the Open Skies comes. If people can keep flying
here, and it is free for a new Beijing-to-Boston route, a new
Middle East-to-Boston route, or New York route, but then we are
having trouble getting in other countries with whom we are
dealing, you know, on a practical basis, that makes a
difference. There is a lot of different things.
Mr. Capuano. Are you aware of any of your members ever
being subsidized by a foreign government to bring a plane into
their space? I mean I just learned about the air services
incentive program. To be perfectly honest, I am a little bit
surprised and shocked that it even exists. Why are we paying
foreign carriers to come to an airport that is already
congested, and providing a service that certainly we could
provide?
Were you offered, or any of your members offered that
subsidy to be able to fly the same route, or do we just give it
away?
Mr. Calio. Not to my knowledge.
Mr. Capuano. Ms. Kurland, could you tell me what the--I
mean, again, I am not asking about the specific issue, I
wouldn't, that would be unfair. But, generally, the policy
strikes me as crazy as to why are we paying somebody to come in
to an already international airport to provide a service that
any one of our U.S. carriers could have provided easily?
Ms. Kurland. Congressman, I will get you the specifics of
this. But, generally speaking, airports--and I think Mr. Brewer
will be able to also talk a little bit about this--airports are
allowed to have incentive programs if they are offered to all.
If they want to attract a new service, one that is not being
offered at the airport----
Mr. Capuano. Oh, I understand. That is why I am not mad at
Massport. They are doing what they have to do to be
competitive. I am kind of surprised that our policy--why we
have allowed such a policy, why we would encourage such a
policy. Why wouldn't we prohibit just that, to disadvantage a
U.S. carrier?
Ms. Kurland. The purpose would not be to disadvantage
carriers. It would be a community, an airport, taking a look at
the service that they are getting, and perhaps--and I can't
speak to Boston--perhaps--I would assume that they have
approached U.S. carriers saying, you know, ``We have got a lot
of business interests that are interested in going to and from
Beijing. Are you interested in providing the service?''
And sometimes, in order to incentivize and get carriers to
be more interested in providing the service, they may come up
with an incentive program, as long as it meets FAA criteria.
And, again, I would have to get those for you. You know, there
would--as long as it is open to all comers, there could be that
ability.
Mr. Capuano. I understand. But that doesn't get----
Mr. Davis. The gentleman's time has expired.
Mr. Capuano. My time is up, and I appreciate the chairman's
indulgence.
Mr. Davis. The Chair now recognizes the gentleman from
Pennsylvania, Mr. Meehan, for 5 minutes.
Mr. Meehan. Well, thank you, Mr. Chairman. I am
appreciative of the opportunity to participate in this
projection, which is so important, I think, and the time that
you are taking to help us better understand where we need to
go. And I am clearly struck by the emerging possibilities that
we face in the international area. It certainly leads to the
growth--I represent an area in which my own Chamber of Commerce
has identified that the key to growth and our capacity to
attract commerce from around the world is a viable
international airport.
So, we know that these are vital, but it also means a level
playing field competing globally. And I am trying to explore
and understand a little bit better where some of the
impediments to global competition may take place.
Ms. Kurland, I took time to read Mr. Calio's written
testimony. And one of the things that concerns me is, as we are
trying to expand opportunities to reach into certain markets,
one of the markets, the Asian market, Middle Eastern, Chinese
airlines, they are investing a great deal in more wide-bodied
airplanes. We have a statutory mandate to try to strengthen the
competitive positions of our air carriers so that we can
compete with those foreign air carriers.
Can you give me a sense as to what you are doing to try to
ensure that our airlines are able to compete on a level playing
field, and particularly what your level of understanding is
with regard to the kind of not just incentives, but some of the
foreign countries seem to underwrite expenses that our
independent airlines have to be able to sustain themselves on
the open market? What are your observations with regard to
that? What is DOT doing to help keep us competitive?
Ms. Kurland. Thank you, Congressman, for that question. A
few things.
Number one, as we talked about today, is the negotiation of
Open Skies agreements. In order to make sure that we have, with
as many countries as possible, liberalized air service
agreements, so that the U.S. carriers can make the business
decisions themselves for where they want to serve.
Number two, the U.S. Government and, working through the
Department of Transportation, has the authority, which we have
done on behalf of a number of our carriers in the global
alliances, to award antitrust immunity to global alliances
where it is warranted. And what that has allowed companies and
the alliances to do is to create greater synergies, to create
neutrality, to provide greater reach, where a particular
carrier may say, ``You know what? It doesn't make any sense for
me to fly to that particular country,'' but by able to work or
codeshare or have an alliance relationship with a foreign
carrier, they have greater reach and greater opportunities
for----
Mr. Meehan. Have we been promoting these opportunities to
work----
Ms. Kurland. Oh, yes.
Mr. Meehan. We just went through a situation in which the
Department of Justice seemed to be a little bit involved in
antitrust, with regard to where the airlines themselves
believed that they had the competitive opportunity.
Ms. Kurland. Let me just draw a distinction there. When it
comes to mergers and consolidation, Justice makes those
decisions and decides what divestitures or what remedies are
appropriate. And when it comes to granting antitrust immunity
for the global alliances, that decision rests with the
Department of Transportation.
Mr. Meehan. OK. You made a point, though, and I appreciate
it. And I think you were talking about the Open Skies
agreements----
Ms. Kurland. Yes.
Mr. Meehan [continuing]. And other kinds of things. And so
I am asking what you are doing. But with regard to those----
Ms. Kurland. Yes.
Mr. Meehan [continuing]. When you are engaged in those
kinds of negotiations, are there kinds of either legal tools,
or other kinds of things that you need to be able to more
effectively negotiate with foreign governments?
Ms. Kurland. Yes, sir. In all of our Open Skies agreements
we do have fair competition provisions. That is number one.
Number two, on a regular basis, when it comes to specific
doing business issues in different countries on behalf of our
carriers, we are regularly engaged. For example, if a carrier
is having a problem in a country using its own ground handling
facilities, we weigh in and we are able to help resolve those
issues.
When it comes to certain circumstances where a carrier
wants a different time slot, we will work with communities--we
will work with other countries to do that. Just recently we
worked with a country in order--on behalf of one of our
carriers in terms of the types of leasing arrangements that
they had.
The point that you--the other point that you are raising,
in terms of unfair competition, we have a statute that was
passed by Congress--and I cannot pronounce the acronym, it is
IATFCPA--and what it does is when carriers are able to provide
us with the--with circumstances, with evidence, we are able to
file a proceeding with another country, and take actions. And
we recently did this in Italy, where the Italians were charging
our carriers and other carriers different fees than they were
charging their own in the EU. And what we did is we filed a--
this proceeding. We said we were going to take retaliatory
actions against Alitalia. And the EU and the Italians have said
that they are going to rectify that.
So, we do have tools. They are fact-based, in order to be
able to move forward. And, as Mr. Calio, you know, will also--
--
Mr. Meehan. Well, can I--my time is expiring, I thank you.
Ms. Kurland. I am sorry.
Mr. Meehan. It probably has expired. But, Mr. Calio, do you
have a reaction, as--with regard to just the issue of
incentives that foreign airlines and others--countries may be
giving to create a noncompetitive environment for our airlines,
internationally?
Mr. Calio. We work very closely with DOT on many of the
issues that Assistant Secretary Kurland mentioned, and have had
success on those. The partnership is very good in other areas,
and I am going to take the opportunity to thank you and
Congressman DeFazio here, and many members of this committee
and subcommittee who have joined you.
One area where the Government is not working with us, but
is actually working against us, is the creation of pre-customs
and border protection--pre-clearance facilities, particularly
in Abu Dhabi, where the Congress has well noted that this
should not happen. It is going to open January 5th. It is a
country to which no U.S. airline flies. It has low passenger
flows. The State-owned Etihad airline, however, is currently
marketing it publicly as an incentive to fly through Abu Dhabi.
And the CBP and Department of Homeland Security have indicated
publicly that they plan to litter the Middle East with pre-
clearance facilities.
That is all well and good. You know, there are pre-
clearance facilities in some places where there is a lot of
benefit to the United States, where it actually lowers the
lines. But right now we have wait times of 1 to 4 hours in some
places when people try to fly into this country. It is kind of
a slap in the face to U.S. citizens flying back from overseas.
It is a disincentive for foreign travelers to come into this
country. And we shouldn't spend a dime on a pre-clearance
facility somewhere else, until we can get our own system
straightened out. So, thank you again for your support.
Mr. Meehan. Thank you, Mr. Chairman. I yield back.
Mr. Davis. The gentleman's time has expired. The Chair now
recognizes the gentleman from Oregon, Mr. DeFazio, for 5
minutes.
Mr. DeFazio. Thank you, Mr. Chairman. I was very concerned,
and follow up on Mr. Capuano's question about--I was not aware
of this flag of convenience. I have spent many years on this
issue on the Maritime subcommittee, working through the
international organizations.
Assistant Secretary Kurland, has the Department begun or
taken a position, taken this to ICAO or anywhere else? I mean
this flag of convenience thing is total BS, and we got to stop
it now.
Ms. Kurland. Well, sir, Congressman, we have talked--our
door is always open. And we----
Mr. DeFazio. But the question--have you taken--do you
support flags of convenience? Does the Department support that,
that idea? Yes or no.
Ms. Kurland. We support a liberalized aviation----
Mr. DeFazio. So you are not going to say you are against
this scheme where we are going to find the least labor
standards, the least regulated environment for a company to be
based----
Ms. Kurland. Oh, no, I am----
Mr. DeFazio [continuing]. And then they are going to fly
into the United States to----
Ms. Kurland. I am sorry, I misunderstood your question.
Mr. DeFazio. Yes.
Ms. Kurland. Oh, you were talking about Mr. Wytkind's
question.
Mr. DeFazio. Yes, yes.
Ms. Kurland. I can weigh in on that, in terms of that
specific situation. We have raised our concerns and labor's
concerns with the EU at the last joint committee meeting in
June. We have continued to raise them with the EU.
Just yesterday, Deputy Secretary Porcari spoke with the DG
for transportation, Matthias Ruete, and the EU is looking into
this and will be getting back to us.
Mr. DeFazio. OK, good. I would hope that our position----
Ms. Kurland. Oh, yes.
Mr. DeFazio [continuing]. Would be we are not going to let
these people land in the United States of America. Plain and
simple, we are not going to let them land.
Ms. Kurland. Sir, we are exploring this, and we have made
our concerns known----
Mr. DeFazio. OK.
Ms. Kurland [continuing]. To the EU.
Mr. DeFazio. I know, but I always hear that, and I want to
see it go a little further than making our concerns known. You
know, we have lost maritime industry. I have dealt with this
consensus-based process. We have to take a strong stand----
Ms. Kurland. And we do have, in our----
Mr. DeFazio. OK, I got to get through some other questions,
I have very little time.
Was the FAA--have you been consulted on this TTIP, the
foreign ownership? Are you involved in that?
Ms. Kurland. The TTIP is--negotiations are ongoing under
the purview of the USTR, and I can't comment. But what I can
tell you, sir, is that when we have had our bilateral
discussions on aviation with the EU, we have made it very clear
that the issues of cabotage, ownership and control, are matters
that Congress has statutes on, and any changes would have to
come from Congress.
Mr. DeFazio. OK, good. When are we going to get a
regulation on foreign repair stations? It has only been 12
years since I first began raising concerns about security
there. We did finally mandate that you come up with new
regulations. You are 9 months late. When are we going to have
them?
Ms. Kurland. I will take that back to Administrator Huerta,
and I will get you an answer for the record.
Mr. DeFazio. That would be great. OK. Then we have talked a
lot here about transparency and competitiveness and all this.
And I don't understand why the FAA is prohibiting the airlines
from breaking out what goes into the cost of a ticket. Now, why
would we want to prohibit consumers from having that
information? I don't quite get it.
I mean I--you know, I make--you know, I voted for some of
these fees and taxes and that. I am not ashamed. But I think
that, you know, the airlines, like any other--you know, I mean,
you go to the gas station, they tell you how much tax you are
paying if you--you know, so----
Ms. Kurland. That is actually a DOT rule.
Mr. DeFazio. Yes. Well, you are part of the DOT.
Ms. Kurland. Part of the DOT.
Mr. DeFazio. I would assume the FAA was consulted, since
you regulate the airlines.
Ms. Kurland. Yes. No, but it is something that comes out of
our consumer affairs office.
We are trying to be responsive to the--you know, we--to the
needs of consumers as they fly, in making sure that when they
purchase their tickets they are aware of what goes into it. And
I can provide you additional information on----
Mr. DeFazio. OK, I am just very puzzled, why we have that
rule. I mean it is beyond me.
Ms. Kurland. Well, it is a question of making sure that
our--that the consumers are--understand what they are
purchasing.
Mr. DeFazio. Right, which would mean I am purchasing a
ticket, and I would like to have specificity. I would go so far
as to say I like the specificity when the airline imposes a
surcharge for fuel costs. I want to see all that stuff. I want
to know why----
Ms. Kurland. Well, no. There can be a--I believe that there
can be a break-out. It is just--it is how it is done.
Mr. DeFazio. Yes.
Ms. Kurland. And I would be happy to get you that
information.
Mr. DeFazio. OK. Well, thank you. And my time is about to
expire, but I--you know, I just--the concerns about the Abu
Dhabi have already been stated. But, I mean, was FAA--are you
working with Homeland? I mean you are supposed to help promote
our domestic industry. You know, they are proposing a bunch
more of these at places that are--where we have very little
traffic for U.S. airlines.
Are you being consulted in this, or are you intervening or
commenting to Homeland? I mean Homeland came into--I got the
whole song and dance, served on that committee 10 years, I know
it. But I have a concern here that we are going to lose this
industry. We got this issue with these, you know, flags of
convenience, and we got these problems where we are creating
pathways for totally subsidized foreign-owned airlines into the
U.S. with special privileges.
Ms. Kurland. As you mentioned, it is in the Department of
Homeland Security's wheelhouse. But we did intervene, and we
did, at high levels, bring the industry's concerns to DHS.
Mr. DeFazio. OK. Well, please keep doing that, because they
got more plans.
Mr. Davis. The gentleman's time has----
Mr. DeFazio. Thank the chairman.
Mr. Davis. Thank you. The Chair would like to now recognize
the gentleman from Texas, Mr. Farenthold, for 5 minutes.
Mr. Farenthold. Thank you very much. And I am going to have
to echo the gentleman from Oregon's concern about some of the
taxes, fees, and potential lack of transparency with the
regulations requiring complete disclosure of the cost of a
ticket. We are losing transparency as to the fact sometimes
over 20 percent of a ticket is actually taxes and fees. I do
think we are in a position in this committee--I am surprised
that, of all the committees I sit on, we all seem very much
concerned about the same issues. And I do remain concerned
about that, and would like to remain posted on that.
Further, Chairman Shuster visited with Mr. Calio a little
bit about the small and medium-sized airports, and how they are
affected by the consolidation in the airline industry. The
district I represent, our big commercial airports are Corpus
Christi--we have got--you know, we are fortunate to have
Southwest, United, and American in, but we do not have a
SkyTeam carrier. And we are the smallest market Southwest
covers. If we lose them, there is a real concern.
The other major metropolitan area we have is Victoria. It
is an essential air service. And all it has got is a small prop
plane to Houston, an independent carrier, which--I would like
to get copies of the information you provide to Chairman
Shuster, as well, please.
I would also like to ask you--Virgin America is probably
the first new airline that has come about, and that has been
quite some time. Can you talk about some of the impediments to
entry of new carriers?
Mr. Calio. I would have to say that, in terms of entry of
new carriers, I am not a particular expert on that. We could
provide you information on that.
Historically, however, the industry has had low impediments
to entry, if you have the money and can handle the capital
costs.
Mr. Farenthold. Money is always an impediment, I would
guess.
Mr. Calio. I am sorry?
Mr. Farenthold. Money is always an impediment to what you
want to do.
Mr. Calio. Right. But, you know, again, historically, many
organizations--people have started airlines, not quite at the
drop of a hat, but you can get an airline up and running
relatively easily, I think. I would prefer to get back to you
on that.
Mr. Farenthold. All right, and let me go to Mr. Brewer now
and talk a little bit about access to airports. You know, with
the American Airlines and U.S. Air merger, there was some
emphasis on access to airports here in Washington, LaGuardia,
and Dallas Love Field. To what extent does this create a
problem for--again, I am going to stick with new carriers or
the, you know, up-and-coming folks. I mean how do we address
this problem? Is NextGen going to solve it by creating more
capacity, more slots? I mean in Washington there is no real
estate to park the airplanes. Is there a solution to this
problem?
Mr. Brewer. No, I think--I believe that the real issue is
access to the--to DCA, in particular.
I will give you our example in Manchester. Four flights a
day into DCA. With the merger of American Airlines and U.S.
Airways, those slots are in jeopardy. There are 74 slots a day
into DCA that are allocated to our commuter aircraft. The
definition of commuter aircraft are those with 76 seats or
less. But there are now more than those 74 commuter flights
coming in to DCA.
So now, with the merger, U.S. Airways and American need to
get mainline service in to protect the market share that they
currently have.
Mr. Farenthold. So, are you suggesting that there ought to
be--that the carriers need to be bringing in--these capacity-
controlled airports need to be bringing the bigger jets in so
they have more people? Or----
Mr. Brewer. I am suggesting--there are two issues that--my
little understanding it is of the airline industry, there is
are words that we need to always remember. One is yield and one
is demand. Yield is what keeps your existing flights flying.
The airlines need to make a certain percentage of profit on
every flight, or it is gone. And demand is what creates the
need for additional flights.
Mr. Farenthold. OK. I appreciate it. I have one other
question I want to address to Mr. Wytkind and Mr. Calio, and
that is the FCC has recently talked about allowing cell phone
usage on airplanes. I got in a big argument with my family.
Forget safety. There is an annoyance factor there. But do the
folks you represent in your union and do the airlines have a
particular take on that? It is my take the Government needs to
stay out of it, the market will decide that. But I would like
to hear both of you gentlemen's take on that.
Mr. Wytkind. We--thank you for the question. We have
publicly said that we support any legislation to not allow it.
It is one thing to allow the use of smartphones on aircraft for
other purposes, including being on the Internet, et cetera. But
we are against cell phone use. We think it is disruptive, not
only to passengers, but to the employees on the flight that
need to service that plane. We think it creates a potentially
very chaotic environment.
And since things happen on air flights that we don't want
to see happen, when they do, I think if you have got a cabin
full of passengers that are using their phones for calls, we
think it is very disruptive and not consistent with what we
think is a good, safe, and consumer-friendly environment.
And, lastly, I think it is important to note that when you
allow this to happen, the front-line employees, the flight
attendants, are going to be the ones that are going to be
forced to arbitrate disputes inside that cabin when it is
determined that there should not be cell phone use. It is going
to be the front-line employees.
Mr. Farenthold. And I am out of time. If the Chair will
indulge me in letting Mr. Calio answer, I will yield back at
the conclusion of his answer.
Mr. Calio. Congressman, I am busy on a call.
[Laughter.]
Mr. Calio. Seriously, we think that the FCC and the FAA
have to resolve, first and foremost, whether they determine it
is safe for cell phones to be used on an airplane.
If they do so, we believe the decision should be left up to
individual carriers as to whether they want to institute a
policy or not. And that policy will be instituted by individual
carriers on the basis of whether it is safe to do so. And, in
considering that, they will consider the safety of their
passengers and their crews, and customer input on it.
Mr. Graves [presiding]. Ms. Titus?
Ms. Titus. Thank you. I agree with you, I don't want to sit
next to you talking on your cell phone, so I appreciate that.
We are just a little under 2 years away from the expiration
of the FAA authorization. And given the recent history of the
bill, it is not too early to start talking about it now, I
don't believe.
I represent Las Vegas, and tourism is the life blood of our
economy. Nearly 45 percent of the people who come to Las Vegas
come through McCarran, which is the ninth busiest airport in
the country. So we have got to have the infrastructure in place
there to welcome them, speed them along, serve them
effectively, efficiently, and in a friendly manner.
When this legislation was considered before, issued capital
investments and reforms to the passenger facility charges and
the airport improvement program were the top of the list of
things that were concerned. I know this will come up again for
2014.
I wonder if, maybe starting with the Assistant Secretary
and some of the rest of you weighing in, if you could tell us
how those reforms are working, and if you are thinking about
continuing them in the next bill, or if we might want to relook
at that whole issue.
Ms. Kurland. In terms of passenger facility charges, in the
President's budget we have a proposed increase to $8. We--you
know, also, the Federal Aviation Administration, through its
airport office, is always very mindful, and always taking a
look at how its--the capital improvement programs are working
through AIP and PFCs, and I will be happy to work with the
committee on this, going forward.
Ms. Titus. And some of the larger airports don't feel like
they benefit so much from that program and those charges, and
would like to look at it from a different perspective. Is
that--can somebody comment on that?
Ms. Kurland. Yes. As part of the--getting a larger PFC, the
larger airports would have already foregone a great deal of
what they would have normally received under the AIP program.
And if they were to receive a larger PFC, would forgo even more
under the AIP program. They would like to have more autonomy
and more control as to how to spend the funds. But perhaps Mr.
Brewer----
Ms. Titus. Thank you.
Mr. Brewer. For the first time in many years, you have
three airport--the AAAE, American Association of Airport
Executives, Airports Council International North America, and
there is a new organization called Gateway Airports. For the
first time, all are in alignment on the PFC issue, of $8.50 per
passenger, and periodically an escalation.
Right now, the $4.50 PFC has the purchasing power of about
$2.50, compared to what it was when it was initially
implemented. The pressure on all of you to reduce costs on a
national basis on the Federal budget is continuing. This gives
local airports such as McCarran the ability to raise the funds
that they need for PFC-approved--meaning AIP-eligible--
projects, and implement them directly with local funds and
local issue.
Ms. Titus. Yes, sir?
Mr. Calio. Prior to your arrival I addressed the PFC issue.
Airlines for America's members oppose any increase in the fee.
Airlines and their passengers are already taxed too much. It is
occurring again right now, probably today, as we speak.
There are two Government studies that show if you increase
the price by $1 of a ticket, demand goes down by 2 percent.
These are GAO studies, they are not our studies. A $4 increase
would be huge. You know, Las Vegas has suffered some diminution
of service because of lack of demand. And particularly for
flyers to your airport, very price-sensitive, and there is very
little price elasticity.
In terms of increasing the PFC, again, near-record amounts
were contributed through PFCs to the Aviation Trust Fund in
2012. Airport revenues outside of PFCs are $23.9 billion. That
is a record level. We don't think there is a demonstrated need
for the increase.
And I think, if you are going to consider an increase, you
have to look at the impact on airlines and on airline
passengers. Airlines and our passengers are already paying 17
separate taxes and fees. It is over 20 percent of the cost of
the ticket. That could be going up as soon as Saturday or
Sunday, whenever the President signs the budget agreement, if
it passes. And at some point you have got to look to other
sources, not just the airlines and their passengers. Thank you.
Mr. Wytkind. May I offer a couple observations? We have
looked at the financing issues. And one of the reforms that
didn't get adopted in the last bill was a long-term vision for
how you fund what is largely a looming insolvency in our
Aviation Trust Fund, in terms of really being able to deal with
their needs.
We haven't endorsed a PFC increase yet. We think it is part
of a larger conversation. We think we should make sure we
understand the impacts that fees and taxes, whatever form they
take, will have on airline travel, on revenues, on profits,
and, by extension, on the jobs that we support and represent in
the airline industry.
And so, we think some of the compelling arguments made by
our air carriers need to be very carefully considered as to
what happens to demand, what happens to the pricing capability
of the airlines, primarily because of what Mr. DeFazio said. I
wish he was here. Because the lack of transparency means that a
average consumer doesn't even know why he or she is paying the
price they pay because of the pile-on of various fees and
taxes.
And so, I think these need to be carefully looked at.
Because our job is to represent the interests of our members.
And so, what I do is I look at these things and figure out at
what point are you harming air carriers? And, by extension, are
you harming our workforce that we are duly, you know, elected
to represent? And I think that is where the rub is, for us, to
try to analyze this and understand it.
Ms. Titus. Thank you, Mr. Chairman.
Mr. Davis [presiding]. The gentlelady's time has expired.
The Chair now recognizes the gentleman from Missouri, Mr.
Graves, for 5 minutes.
Mr. Graves. Thank you, Mr. Chairman. And I just have two
statements, and then I have to follow up with a question. But
one statement was made earlier--and this is for--just a
statement for the Deputy Director. Advocacy. When we removed
advocacy, or when you all removed advocacy from the mission
statement at the Department of Transportation, specifically the
FAA, I think we took a giant leap backwards in terms of
promoting aviation in this country, one of the greatest
industries and one of the best aviation systems in the world.
And I think that needs to be fixed. I think you are, obviously,
a regulatory agency, but you are--also should be advocating for
and promoting aviation, and I hope that you take that back.
The second statement I want to make, too, because we have
talked a little bit about PFC increases and the lack of money
or stuff for AIP funds, and I tend to agree with Mr. Calio on
the simple fact that, you know, we raided--we did keep the
contract towers open, as Mr. Brewer pointed out. But we raided
the AIP, or the Aviation Trust Fund. We raided it to keep
those, and that was the worst thing we could have done, or
Congress could have done. We took money away from capital
improvement projects and put it into operating, and that was a
bad mistake. It really, really was.
Now, having said that, my question is for Mr. Bunce. And
you kind of touched on it briefly in your opening statement, on
some of the changes we could be making in particularly remote
towers and all. And I am just curious, you know, how our
airspace operating environment compares to other countries, in
terms of size and complexity.
And I also am going to give you a followup question with
that, too, in how is UAVs going to play into this in the
future. I mean I heard on the news the other day that Amazon
wants to start making deliveries, you know, using UAVs straight
to the home. And those things are flying in my airspace, which
is a bit of a concern to me.
But, regardless, I am very curious, your thoughts on that,
compared to other countries, and then how we integrate this in
the future.
Mr. Bunce. Thanks, Chairman Graves. If we look north of the
border, a lot of people have used Transport Canada as a model.
So if you look at their fleet, about 33,000 airplanes, compared
to about 225,000 here. When you take movements, well less than
about 5 percent of movements up north of the border.
If you look at their military, the last I checked they had
four fighter squadrons operational out in Alberta and over in
Quebec. You know, their military is one-fifth the size. So the
need for airspace is not there.
They are using remotely piloted vehicles up in the Arctic
up there, but nowhere near the scale that we are talking about
down here. That has actually now been mandated by Congress.
And the other thing that I think we need to think about in
our airspace is commercial space. What a great opportunity. I
mean when could we have ever thought that we are actually
delivering things to the Space Station using commercial
vehicles now? But when we do a launch out of either the west
coast or the east coast right now, the amount of airline
traffic that Mr. Calio's folks are forced to change their
routing, how it affects general aviation, too, is very
significant. And these launch windows are long. And then you
talk re-entry time. That is significant.
So, as we look at our system and compare it, let's say, to
Europe, they have tried to get single European skies together
for many years now. It keeps getting slid to the right, because
there is no political agreement to align the airspace, it is
just a patchwork of each small country that in a jet you pass
through within, you know, just a few minutes. I think we
welcome the opportunity to compare ourselves with other
countries, but there is no place like the United States and the
amount of traffic and what potential we have to increase with
that. Because if we actually do UAVs in the airspace, the
biggest concern for all of us is that we keep it all safe, and
we keep it deconflicted.
So now you add to all those movements--now we have a manned
aircraft, and try to put unmanned vehicles up there, we have
got to be able to have somebody be able to see them. And for
you and I flying in the airspace, seeing a small, little
vehicle is almost impossible, when you are traveling at those
speeds. We have to do that electronically. So NextGen has to
bring that into play.
So our system is--there is no comparison to anyplace else
in the world. We have got to be very careful when we talk about
making radical change.
Ms. Kurland. Congressman, may I just add one point? And
this goes to the advocacy points that have been made. The FAA
cannot do advocacy. But in the Secretary's office, as long as
we get clearance from the Commerce Department, we do do
advocacy, and we have done a great deal of advocacy on behalf
of our aviation companies. I would be happy to provide you some
of that information, as well.
Mr. Graves. I would love to have that information. But I
got to tell you there is an attitude out there that a lot of--
and I know the FAA has a regulatory job. I mean that is what
they do. But I have got to tell you out there, there is a
strong sense by the pilot community, aviation community, all
the businesses out there that surround aviation, that, you
know, while there may be, you know, some advocacy going on, or
should be some going on, there isn't. It is all about
regulatory issues, regulatory authority. And, you know, and the
unfortunate part is there is a lot of people in the FAA that
don't understand aviation, or don't know the first thing about
aircraft or--you know, or what it takes to run an airline, or
what it takes to run a business, or to fly an airplane.
And that is probably the biggest problem that you have out
there, particularly as we lose people within the FAA that have
a knowledge or a background in aviation and replace them with
people that have no background in aviation, whatsoever. It is
getting worse and worse and worse. And as our pilot community
tends to dwindle, you know, that is going to hurt the FAA, too,
the Department of Transportation, because you are going to put
yourselves out of business, as well.
But that is a neutral comment. I have got a lot of issues
with that. But I would very much appreciate you letting me know
or my office know what you are doing, in terms of promoting
aviation and advocacy. Thank you, Mr. Chairman.
Mr. Davis. The gentleman's time has expired. The Chair now
recognizes the gentleman from Texas, Mr. Williams, for 5
minutes.
Mr. Williams. Thank you, Mr. Chairman. And I want to thank
all of you for being here today for this testimony.
I am from Texas. We got a lot of airports in Texas. I am a
business guy, a small business owner, and I have always been
concerned with Government's aggressive involvement with the
private sector, often with negative results.
My question would be to you, Ms. Kurland. It is clear, from
your testimony, that DOT believes it has been a strong advocate
for the U.S. airline industry. Indeed, one of Secretary
LaHood's--when he first came here, his first airline initiative
was to establish the future of Aviation Advisory Committee to
provide policy recommendations to ensure that we have an
economically viable and globally competitive industry.
Now, one of the recommendations, as I know you are probably
aware, of the committee was for DOT to conduct an independent
evaluation of the airline industry's Federal tax burden.
Now, as you may know, the aviation tax burden--we have
talked about it today--has doubled since 1992, and now
constitutes 21 percent, or $61, of a typical $300 domestic
round-trip ticket. Ironically, the administration included $5.5
billion in new and higher aviation taxes and fees in fiscal
year 2014 in its budget proposal. And I can tell you that high
taxes eventually will strangle a business.
So, my question would be, has the assessment been
conducted? And, if not, when do you plan to do so?
And then, can you also explain how increasing the aviation
tax burden on passengers and airlines by 25 percent makes the
administration a champion of the industry?
Ms. Kurland. Thank you, Congressman. That was a very
important recommendation from the Future of Aviation Advisory
Committee. The recommendation recommended that we get an
independent source to conduct the inquiry. And we have been
looking for one. And we think that the GAO would be a very good
candidate to do such a study. And if perhaps, through your good
offices, you could gauge their interest in performing such a
study, we would be very appreciative of that, because we do
think it is an important study, and the GAO would be a good
entity to perform that.
With respect to aviation taxes, no one likes taxes. It is.
But the system is an expensive system. It is a system that
needs to have a stable funding source. And the airlines and the
passengers who are the primary beneficiaries are--you know, we
want to balance the--this burden.
As also has been mentioned, there is a certain portion of
the funding of the aviation system that does come from the
general fund. So it--the--excuse me--the approach of the
administration is to be--to try and come up with a balanced
approach to the taxation.
Mr. Williams. Well, I appreciate the administration's view
on that. I, as a small business owner, sometimes realize--
sometimes fewer regulations and fewer taxes kind of creates
competition. And competition, in the end, benefits not only the
business, but also the--in this case, the passenger. I would
like for you to take that message back to the administration,
have them start taking a look at fewer regulations, fewer
taxes, to create competition and better service for the
consumer.
Ms. Kurland. I will. Thank you, sir.
Mr. Williams. We will try to help you with the GAO.
Ms. Kurland. Thank you very much, sir.
Mr. Williams. Thank you. Yield back.
Mr. Davis. Thank you. The Chair now recognizes Mr. Coble
from North Carolina for 5 minutes.
Mr. Coble. I thank the chairman. Mr. Chairman, I apologize.
I was tied up in Judiciary. So, hence, my belated arrival. But
it is good to be with all of you. Good to have the witnesses
before us.
Mr. Bunce, let me start with you with what I regard as a
feel-good question, which I hope will elicit a feel-good
answer. How do you view the contributions of aviation to the
economy and communities across our country, A.
And is there a broader public benefit to aviation that
policymakers in the administration and the Congress need to
recognize in our respective funding and policy decisions?
Mr. Bunce, first, and anyone else who wants to put their
oars into these waters are welcome to do so.
Mr. Bunce. Well, thank you, Mr. Coble. And, as you said,
aviation is just a crown jewel for this country. We are an
aviation Nation. And the vitality of the entire aviation
system--myself, as a general aviation pilot, represent general
aviation manufacturers, we are all inner-related. So I want to
see a very healthy airlines. I want to see a very healthy
network of airports.
And our tax policy is integral to be able to keep that
healthy. But also, we need to recognize that, as we look at
employment in this country in this aviation industry, it is
truly significant. Just in general aviation alone, it is 1.2
million jobs. We have been hit hard during the down-turn. We
haven't asked for a bail-out. We have been proceeding on board,
and we rely on this committee--and I really think you all have
done a very commendable job of trying to help us look at smart
policy that can not only preserve the jobs that we have, but
actually expand it, because we do have that capability.
And this airspace system that we have in this Nation is one
of those incubators for that. We talked about unmanned aerial
vehicles just shortly a little while ago, a commercial space
launch. But also, you look at the new technology that we are
pumping into cockpits to be able to facilitate NextGen.
As my colleague, Ed Bolen, pointed out earlier, it is not
just ground infrastructure. We are providing amazing technology
that is making people safer in the skies. And also, we are
reducing our footprint environmentally. The new technology that
we are putting up there just with engines alone, let alone the
composite structures that we are putting for airframes, is
significantly lowering our carbon footprint.
And then you add that to these approaches that we have
designed, we are really making significant gains. That is why
our leadership is so vital. Ground infrastructure for ADS-B can
allow us to do some things with separation that we never could
do before with radars. That is why it was so important for us
to try to prioritize and keep this on track. And we rely so
much on you all to help the FAA along in that process.
Mr. Coble. Thank you, Mr. Bunce. And I hope that my next
statement is inaccurate, but I fear that the average American
citizen does not fully appreciate the contributions submitted
by the aviation community. And I am appreciative to you for it.
Anybody else want to be heard?
Mr. Bolen. Well, I would just say, Mr. Coble, it is
clearly, internationally, that there are a lot of parts of the
world that want to move to the center of the world's aerospace
stage, and they are investing heavily in their infrastructure,
in their airlines, in their manufacturing base, because they
recognize aerospace is a remarkable industry with a lot of
high-tech, well-paying jobs that connects communities, it
connects people, facilitates trade and commerce and jobs.
And so, the rest of the world wants aerospace. We are
currently wearing the crown. And I think that we, as a aviation
community, and Congress, and the public ought to be aware of
what we have and how we can preserve and enhance that so we
retain that mantle of the world leader in every aspect of
aerospace. Because the rest of the world wants what we have
got.
Mr. Wytkind. Mr. Coble, may I? I just have one observation.
The airline sector has been sort of an island for middle-
class jobs in this country for the entire history of flight.
And if you look at the quality of the jobs on the operating
side, on the maintenance side, on the manufacturing side, and
everything else in between, those jobs are jobs that elected
officials and the private sector ought to be fighting to keep.
And I am worried that if we do not rationalize our
policies, if we do not look at the way in which, for example,
we deal with taxes and fees, if we do not look at the way in
which we regulate commerce, if we do not look at our trade
policies to make sure we are not creating a sort of a runaway
flag of convenience model that is going to guide the future of
the airline industry, then we find ourselves stuck in a
situation where we will ravage yet another American industry
that is an island for middle-class jobs, the way we have across
most sectors of the economy, which is why we have been with
many elements of the industry on issues involving tax and fee
burdens. It is because we see that at some point the piggy bank
doesn't work any more, and you need to go somewhere else to
find revenue to deal with the problems we have.
And that is why we have been trying to cooperate with our
employers, because of that island of middle-class jobs that we
are trying to protect.
Mr. Davis. The gentleman's time has expired.
Mr. Coble. Yield back, thank you.
Mr. Davis. The Chair now recognizes another gentleman from
North Carolina, Mr. Meadows, for 5 minutes.
Mr. Meadows. Thank you, Mr. Chairman. And I wanted to use
just the first opening to thank the gentleman from North
Carolina that just spoke. He is the dean of our delegation.
When you use the term ``gentleman,'' Mr. Coble is really the
epitome of that word. And we are going to really miss him when
he retires at the end of this term. And I just wanted to go on
record as thanking the gentleman from North Carolina.
Mr. Coble. If I may, Mr. Chairman, thank you for your
generous comments. This may end up costing me.
[Laughter.]
Mr. Davis. The Chair agrees.
Mr. Meadows. I am going to just close with just two points
and two questions. Mr. Bunce, I would like to come to you and,
the Assistant Secretary, if you would weigh in on this, as
well.
In 2003, Vision 100 was passed. In there it had a deadline
for TSA to approve the repair station--the security rules for
repair stations abroad. They missed that deadline.
Then again, in 2007, as part of recommendations from the 9/
11 Commission, we passed it again. And that particular rule
gave them a new deadline, of which they have missed again. The
problem with that second issue is that it prohibited the FAA
from certifying, if that was missed.
And so now we are here some 10 years later without the TSA
essentially making a ruling on that particular thing. And, Mr.
Bunce, is that lack of issuing the security rule affecting
manufacturing of some of our U.S. companies?
Mr. Bunce. Yes, sir. It is impacting us significantly. And
if you really look at a situation where when DHS did not
respond to the Congress, then the FAA was put in a position
where they couldn't authorize any new repair stations. So then
we, as industry, were kind of made the lunchmeat in the middle
of this argument of one agency not responding to the Congress
appropriately. And, as you say, 10 years is just unacceptable.
What we have seen in the process is if you cannot get your
aircraft repaired throughout the places where this global
industry flies, what happens? People don't want to buy an
aircraft that has an FAA certification on it. So, effectively,
you are negatively impacting jobs here. And, actually, the rule
is very simple. We work very closely with our colleagues on the
labor side of the House. It has been debated back and forth.
And the rule, just to provide basic security mechanisms over
there to make sure something nefarious isn't put on an aircraft
should be fairly simple. And we just cannot get it out of the
administration.
Mr. Meadows. So what you are saying is the lack of the TSA
to make a rule in 10 years is affecting jobs.
Mr. Bunce. Absolutely.
Mr. Meadows. OK. So can either of you, under any
circumstance, figure out what is so complicated that, for the
last 10 years, there wouldn't have been this--because it sounds
like it is even undermining our certification process, where
other people look to have it certified in another country or
without that, it sounds like it is undermining that. But at
worst case, it is affecting manufacturing. Is there any
possible scenario why that would be accepted?
Ms. Kurland. I can't speak on behalf of DHS. I am sure that
they are taking a careful look at it. But as you----
Mr. Meadows. I would say very careful, if it took 10 years.
They are taking a very careful look at it.
Ms. Kurland. But as you noted, the FAA, without that,
cannot issue any new certifications for foreign repair
stations. And, from the FAA's perspective, we will--you know,
once that happens, we will only certify those stations where we
know that we have the ability----
Mr. Meadows. OK. Can you put some pressure on the TSA? I
know that is a different agency, but it is all under the
executive branch. Can you put some pressure on them to make
that, or should we have them in here for a hearing?
Ms. Kurland. Well, Congressman, we will go back and we will
talk to them----
Mr. Meadows. So you will personally call----
Ms. Kurland. I will personally call over to the TSA. But--
and convey your comments.
Mr. Wytkind. Mr. Meadows, is it possible to offer an
observation? Because we have been involved with this issue,
too. We agree with you, that 9-plus years to get that
regulation completed is completely unacceptable. What I want to
caution, though, is that rule was put in--that legislation was
put into effect with bipartisan support. We supported it,
because we were concerned about the security risk of this
massive outsourcing of foreign--of aircraft maintenance
overseas.
And, yes, they should have it done. It should have been
done years ago. We are concerned, though, that the rule needs
to meet high security standards, so that we don't run into a
situation where we are sending so much maintenance overseas,
and it is being done under substandard security rules.
But we completely join you in calling on the DHS to get
this rule done. It is absurd that we are about to hit a
decade--I was a much younger man when that legislation was
passed, and we fought for it. But we didn't fight for it so
then the regulation sits for 10 years. So we agree that it
needs to be finished.
Mr. Meadows. Well, and I think at this point, if we don't
address is, Congress needs to act to go back the other way. And
TSA needs to understand that. You know, I will close with this
quote. There is a quote out there that--I love the quote. No
matter how beautiful the strategy, we must occasionally look at
the results. And the results of this have not been effective.
I yield back.
Mr. Davis. The gentleman yields back. The Chair would now
like to recognize for 5 minutes the gentlelady from Nevada, Ms.
Titus.
Ms. Titus. Thank you, Mr. Chairman. As I listen to you, it
seems that a theme which is emerging is kind of a lack of
coordination. The Secretary at one point said, ``Oh, that is
the public relations division of FAA,'' or, ``That is DOT,''
or, ``You have got--that is Homeland Security,'' or ``That is
TSA,'' or ``That is Commerce doing trade.''
I wonder if you would start, Madam Secretary, addressing
how you coordinate efforts within your agency, and then we
might talk about how to improve them overall, so we can hope to
some day get to an overall plan, like Mr. Wytkind said we need
for aviation in this country.
Ms. Kurland. Well, thank you very much, Congresswoman. We
do coordinate. There are two types of coordination that go out.
We coordinate within DOT across our modes. And if I don't
particularly have a certain piece of information today, I will
get it to you for the record.
We also coordinate, on an interagency basis, on various
activities. For example, in terms of exports. The idea of--we
work closely with the Commerce Department, in terms of being
able to advocate on behalf of U.S. transportation and U.S.
aviation companies, where they are seeking to do business and
get contracts in other countries. We work closely with the
State Department in negotiating Open Skies agreements and in
helping to resolve doing business issues on behalf of our
carriers. So we do have ways of communicating with each other.
I am sure they can always be improved, we would take back any
suggestions or thoughts or ideas that you have.
Ms. Titus. Anybody else want to weigh in of what we can do
to improve it, or what we, as Members of Congress, might do to
help make that better?
Mr. Bunce. Congresswoman, I would just add that when this
committee worked during the last Congress on, like, consistency
of regulatory interpretation, all of us are affected, day in
and day out, by regulators that come in and perhaps in one
region of the country have a totally different interpretation
of how this regulation should be applied than another. And to
be able to have the FAA look at this holistically, try to make
sense of the millions of pieces of guidance that are out there
that--we have to repair aircraft, we have to operate them, we
have to manufacture them and try to get a handle on that. This
committee has been very helpful in trying to put pressure in
that regard.
When we go and even work in the stovepipes that exist
within the bureaucracies, and let's say we manufacture an
aircraft that can work up at the high-altitude airspace, and we
manufacture to a standard that the FAA says, ``Yeah, it is good
to go,'' they bless it, but then it goes over to the other part
of the FAA that deals with the operators--and this is actually
within the same directorate within the FAA--and we have to
reprove again that the plane can do what one part of the FAA
already blessed it to do--that is inefficiencies in the system.
And so, with your help, we try to emphasize this, put
pressure on it. And then, as Mr. Calio said earlier today,
metrics become very important. The more metrics that we are
able to produce, agree on, and then be able to report back to
you, we can actually establish whether we are making progress.
Mr. Wytkind. I have one observation I want to make. The
Obama administration has been incredibly proactive in working
with the labor movement in the aviation trade arena, which is
an important issue that has been raised in this hearing today.
And the amount of input we have to make sure that aviation
workers are at the table, and that their concerns and their
rights and their jobs are being considered by those that
negotiate trade policy in the aviation sector, has been
incredibly good.
And that is why we are worried about TTIP and jamming
aviation into those broad trade talks, because we have a lot of
faith that the State Department and the Transportation
Department understands what is at stake when you open markets
abroad, and understands that the needs and the rights and the
jobs of middle-class workers in this country have to be at the
table, and we are worried that they won't be.
So, I want to say, for the record, there has been a lot of
back-and-forth about some of the problems with DHS and with the
DOT and other agencies. But I have to tell you. On the aviation
trade issues, they have worked very, very closely, and have
made it very clear that the rights and the jobs of middle-class
workers in this country are at the table, and we are there to
protect them.
Ms. Titus. OK. I guess it is not as bad as I thought it
was.
Mr. Davis. The gentlelady yields back. First off, thank you
to the panel. As a freshman who is sitting here, I learned
early that I would rather give time to everyone else to ask
their questions instead of jumping in mid-term, so you have got
one more to put up with me.
And I want to start by asking Assistant Secretary Kurland
for a response. I am hearing that reports are--I am seeing in
some reports that--we all know that the FCC has a very
important meeting this afternoon regarding passenger usage of
cell phones in flight. But I am seeing reports that DOT may
actually preempt that decision. Can you confirm or deny that
that may be taking place? And what might that decision be?
Ms. Kurland. It is my understanding, Congressman, that the
FCC is, in fact, having a public meeting today, in which they
may be taking a vote in order to go--whether or not to go
forward with a rulemaking on the use of certain types of
equipment.
The only thing that I can comment on from the FAA
perspective would be that the FAA would take a very careful
look at any safety implications, whether it is from avionics
interference or from cabin safety. So--but, like, this--the
first step right now is for the FCC to be having--they are
having this meeting today.
Mr. Davis. So the FCC is having the meeting, yes. But the
reports are that DOT is going to preempt them with a decision.
Is that----
Ms. Kurland. I am going to have to look into that, and I
will provide you an answer for the record. I don't have that
information.
Mr. Davis. How long will it take?
Ms. Kurland. As quickly as I can.
Mr. Davis. OK.
Ms. Kurland. As soon as I get back to the office, I will--
--
Mr. Davis. I will ask a few more questions. If your staff
could kind of text their folks over at DOT and maybe get a
response, that would be great. We would very much appreciate
it. I mean we are on the--we are very concerned about what is
going to happen with the FCC decision today. And seeing reports
that DOT may actually already have a decision made, I guess the
question that I need answered is, is it inevitable that you are
going to actually make a decision that would or could affect
whatever comes out of the FCC?
Ms. Kurland. As I say, I will have to check that. You may
have more information right now than I do.
Mr. Davis. OK. We will come back. Mr. Bunce, first off,
thank you for being here. I think this committee has been a
model for bipartisanship and working together to find
solutions. An example of this, obviously, is the Small Airplane
Revitalization Act, which was signed into law this year, and
focuses on streamlining the small aircraft certification
standards. The sooner these new Part 23 standards are in place,
the better it will be for all of our aviation community,
especially general aviation community, and our economy.
I guess my question is, from your perspective, what can be
done to facilitate the FAA's development and implementation of
this Act?
Mr. Bunce. Well, thank you, Mr. Davis, and thank you very
much for your cosponsorship of that important legislation. That
was substantive for us.
And I just want to let you know the impact. I was in
Cologne at EASA, which is roughly FAA equivalent over there.
And because of the effort of the Congress that started here, in
this committee, actually, EASA has said that is one of their
number-one rulemaking programs, going forward. So they call it
CS-23, we call it Part 23 over here, but this is truly global
rulemaking.
We had eight different countries participate in that
rulemaking process, but we were very worried during that that
certain elements within the bureaucracy would start to parse it
up and break it up, and we wouldn't have the game changing
effect that it will have now, because of your help. How do we
make this actually happen over the next 2 years to try to get
the FAA to deliver it is actually just, we think, having this
committee very engaged in saying, ``OK, what is the progress to
date.''
If we get this right, now we can expand this to rotocraft
and then Part 25 transport category aircraft. So it is just not
stand-alone. We are not just talking about aircraft below
12,500 pounds. In rotocraft right now, we have to modernize the
regulations. Because, to keep them safe, we are having too many
accidents, because we are not properly able to use new
technology to keep pilots safe. So we can extend this if we do
it right. But this is fundamental.
Mr. Davis. Well, thank you. And, I mean, obviously, keeping
the committee engaged is a priority. But do you foresee any
other problems in meeting the December deadline in 2015?
Mr. Bunce. Having worked with the FAA, there could always
be problems, sir. But we are going to report back to you if we
see any problems in the process.
Mr. Davis. Well, thank you. Mr. Brewer, thank you for being
here today. I appreciated your testimony with respect to
protecting our contract towers. These cost-effective
partnerships, they promote safety and are absolutely critical
to small communities and many of the small airports that I
represent.
There are a number of great contract towers in my district.
We have Bloomington, Decatur, and, actually, Bethalto, St.
Louis Regional Airport. And, in fact, Carl Olson, who is the
executive director at the Bloomington Airport, just contacted
us the other day and let us know they received another perfect
score from the FAA on their safety inspection.
The question I have for you--I am confident Congress is
going to keep working together on this, but what can be done in
the near and the long term to promote and protect the contract
tower program?
Mr. Brewer. I just want to say thank you for bringing this
up again, because it is such an important and cost-effective
way to maintain safety throughout the system. And, as you
indicated some of the contract towers in your own district,
there is 252 of these contract towers in 46 States and 4
territories around the country; 28 percent of all of the tower
operations go through the contract tower program.
I think the funding of it needs to be maintained. And, as
we look forward to the new FAA reauthorization bill, ensuring
that that program is protected, I think, is key.
Mr. Davis. Well, thank you, and I couldn't agree more. Mr.
Calio, you knew I wouldn't forget you.
Hey, I have got a great workforce training facility at one
of my community colleges in Springfield, Illinois, Lincoln Land
Community College, where they are training aviation mechanics
for the future. And by 2016, reports are that one-third of the
aviation workforce is going to be eligible to retire.
Besides the facilities like Lincoln Land Community
College's program, what can this committee do, in your opinion,
to help prepare for that future, and bring more individuals
into the workforce in aviation?
Mr. Calio. Well, Congressman, you identify a significant
problem. Mr. Wytkind referenced it before, I think, and it is
not just machinists and other airline workers, it is the air
traffic controllers, as well.
And, candidly, I think the best thing that this committee
could do would be to take today's hearing and use it as a
springboard to look holistically at the entire industry and
what needs to be done to let us maintain our world leadership
and make us more competitive. Because we do have problems, we
do have challenges. Particularly on a global basis across the
board, we all are challenged.
And so, if you can continue your work and make it serious,
and produce the kind of results you had previously on WRRDA, on
the certification bill, that would be it.
Mr. Davis. Thank you. Mr. Wytkind?
Mr. Wytkind. Thank you for that question. The only thing I
would offer is that, first of all, the machinists union has a
partnership with at least one, if not more, high schools that
train future mechanics. I will send more formally to the
committee information about that program. It might be one that
the committee might look at as a way to expand training.
But I do think this outsourcing problem, where we now have
one-third of--excuse me, 70 percent of all maintenance is
outsourced in the airline industry, more than a third goes
overseas, we are creating disincentives for people to even want
to become airline mechanics in this country, because the jobs
are going overseas.
So I think, if we connect the dots, you have got a public
policy challenge of making sure we keep the level playing
field, that we don't incentivize outsourcing abroad, but at the
same time we have the shortage looming. Well, you can't
ignore--those two points are related.
And so, I think, as we go forward, we are going to be
offering some suggestions about workforce training issues that
apply to not only mechanics, but to pilots, to air traffic
controllers, to other FAA workers. And I am looking forward to
working with you on that. I think it is an area where we can
find some bipartisan support and agreement.
Mr. Davis. I agree. Thank you. Assistant Secretary Kurland,
any new news?
Ms. Kurland. I understand that the press is making
statements, but I will have to go back to the Department and we
will have to get back to you and report back to you on that,
sir.
Mr. Davis. OK, because I am told that another committee--at
a committee hearing today the FCC chairman said the DOT was
working on a rule to regulate voice calls. And I guess it
perplexes me----
Ms. Kurland. I don't know.
Mr. Davis [continuing]. To know that something is going on
with DOT and this committee can't get the same answers that
another committee can.
Ms. Kurland. And I apologize, but I don't have that
information at my fingertips. But I will get back to you. Maybe
I do.
Mr. Davis. You want to say something?
Ms. Titus. Thank you, Mr. Chairman. I just----
Ms. Kurland. We will be making a statement later today, and
we will make sure that we get it to you. Thank you.
Ms. Titus. Well, Mr. Chairman, I am just reading here, it
came out 6 minutes ago. ``U.S. Carriers, FCC Reach Accord on
Unlocking Cell Phones. FCC chairman, Tom Wheeler, said before
Members of Congress that an agreement was reached between the
carriers and the agency, and details will be presented at the
FCC meeting later on. The agreement would ensure that providers
notify,'' et cetera, et cetera. So apparently, you are right,
Mr. Chairman.
Mr. Davis. Thank you.
Mr. Calio. If I could just clarify, I believe--in terms of
carriers, so nobody misunderstands--that would be the cell
phone carriers, not the airline carriers.
Mr. Davis. Thank you for that clarification, Mr. Calio, and
thank you. And, Ms. Kurland, if you could have your staff get
back to my office with a--as soon as this is made public, so
that we can be aware, and let our constituents know, and also
let the rest of this committee know, I would sincerely
appreciate it.
Ms. Kurland. We will certainly do that, sir. And thank you
for your patience.
Mr. Davis. Well, thank you. And I guess I will end by
saying does anyone have any comments on this cell service
issue? I am happy to take them now. Otherwise, we will adjourn
the hearing.
[No response.]
Mr. Davis. Seeing none, this hearing is adjourned.
[Whereupon, at 12:28 p.m., the subcommittee was adjourned.]