create the right platform for a stronger security for our country. >> and i'll show how wise i am and give john deutch the last word. >> thank you, madam chairman. i want to make -- i'll just close on some remarks on transportation. first of all, whatever we do with respect to the use of liquid petroleum products for transportation it's going to be modest compared to what china does in other rapidly growing companies in asia. what's going on in india and china with respect to petroleum demand is much more severe than in the united states. what terms transportation, demand in the united states are basically three things. one is population growth. people don't realize our driving-age population is growing at 1% per year and they want to be in cars at least as much as podesta is.

secondly, economic growth. [inaudible] >> is it a small car? if we have pleasure of economic growth in this country we'll be using more gasoline. and finally, it's the price of the gas. and so i filled up my car with gasoline yesterday. it will cost me about 60 bucks. i was completely stunned by this, but it made me think about how much i drive. in the long run it is only going to be, if we shift to another source of energy. in the near term, it's certainly natural gas for automotive use, whether it's in compressed natural gas or gas to liquids. it's going to be biofuels from cellulosic biomass if we can get the costs down and it's going to be plug-in hybrids and electric vehicles. if we get on that path, the price of gasoline remains high, i believe that over the next

couple decades we will see a very sharp decline in our use of petroleum for transportation. our problem is to make sure that others in the world do that as well. >> thank you. i'd like to thank everyone for coming here today and participating in this discussion about a critical part of our energy security strategy. and i want to thank our panelists and to dan and bill for their preparations. so thank you all. [applause] -- for their presentations so thank you all. [applause] [inaudible conversations]

[inaudible conversations] [inaudible conversations]

>> live pictures from the u.s. chamber of commerce this morning. this day they are hosting an all-day conference on the aviation industry featuring the head of the federal aviation administration and senior executives from southwest airways and other airlines. this event comes in the midst over the debate air traffic controller fatigue problems and investigations of recent incidents where southwest airline planes ripped off in midflight. this is live coverage. again, from the u.s. chamber of commerce here in washington, d.c. >> we're ready to get this on the road, everyone. [inaudible conversations] >> oh, my goodness, listen how

quiet it has become so quickly. well, we're 4 minutes late for our pushoff, but we will consider it an on-time pushoff because there's lots going on this morning. good morning to all of you and even those who are sitting in the room next door. this is a very special welcome because this is our tenth annual aviation summit. it has surpassed all numbers ever in the past. and it's because all of you, we thank you. we are most appreciative of what the sponsors have done. this would not be possible without our sponsors and i hope

you take a look at this fantastic program. it has the names of all of our sponsor from cover to cover. and i am going to tell you about a couple of things that we're going to do differently today. simply because as you know, we have a huge number of speakers and we want to make sure they all have time to take your questions. and so in order to save time, we are not going to read the bios of our speakers but rather, we are just going to say their title and their name, for the most part, and i want everyone to not be offended when we don't give them lots of kudos because they all deserve them. but at the same time, it's better you hear from them than hear me read something that you can read in your program. so that being the case, and before i go into any more detail about today's program, i am

going to demonstrate that format because i am not going to read the bio of our first speaker, who is well-known not just here in the united states but around the world. and so, ladies and gentlemen, please help me in welcoming the president and ceo of the u.s. chamber of commerce, tom donohue. [applause] >> being well-known is not as important as knowing what's you're well-known for. but anyway, carol, thank you. good morning, everyone. we appreciate everyone that's taken time out of very busy schedules to join us here today. i want to particularly thank carol and the national chamber foundation team for putting together another outstanding conference. i understand, as she said, this is the best attended we've ever had. in this town and in this room, i

find that that is generally created from an equation that the level of problems have gone up and, therefore, the level of attendance is more significant looking for solutions. i think the high level of interest is being driven by one overriding question: what's next in the aviation industry? the industry has weathered a decade of storms since we first started hosting this annual summit 10 years ago. that was 911 and the war on terror. there was -- there were two recessions. the last one -- the most severe since the great depression. the silver lining in these storm clouds was the suppressed demand that took the pressure off the system that was reaching its limits. not only in aviation but let me say also in ports and on roads

and all of the supply chain system and the movement of people and goods was being pressed with a fast-rising economy and we got some relief on that. the bad news was $60 billion in losses for passenger airlines and the loss of 150,000 jobs. airports had to get creative to accommodate new and consisting evolving security requirements, cargo airlines struggled to deliver on customer expectations like next business day delivery while keeping up with those same security requirements. and don't forget, huge spikes in fuel costs wildly fluctuating fuel prices can threaten profitability and look what's happened in the last few days and what may have been the most challenging decade in aviation history, safety has actually

improved. several airlines managed themselves back to profitability through consolidations, alliances, adjustments to fleets and schedules and a la carte offerings for customers. overall, the past decade has been tough on aviation. where do we stand today? the faa says the industry turned a profit last year of $9.5 billion as the u.s. economy began to rebound. so we're doing a little better but there's a difference between doing a little better and doing well, and we're not doing all that well yet. there are many challenges ahead. perhaps the biggest one is this, how are we going to deal with an expected 36% increase in fliers by the year 2015 and huge increases in cargo? today we don't have the infrastructure to accommodate

that. it's been almost four years since the faa bill was reauthorized and we're making progress towards getting a good bill now, but we lost a lot of time. funding for badly needed systems like nextgen has been inadequate. and its implementation much too slow. every aircraft flying in the national aerospace system still needs its own equipment. rising energy prices, burdensome regulation and mischief by national labor boards are also major obstacles to success. why should the public care about these challenges to aviation? they just want to get a ticket and get on a plane and go someplace. let's not forget commercial aviation accounts for $1.3 trillion in economic activity. that's a lot of jobs.

that's a lot of economic activity or 5.6% of the whole u.s. economy. and supports 12 million jobs. the nation's economy relies on a safe, secure, and efficient aviation system. so how do we get from doing better to doing well? by concentrating on the fundamentals, that's what we say in business all the time. by assuring a sound infrastructure, modern technology, reasonable regulations, a flexible work force and stable energy prices. stable energy prices. now, there's another whole meaning. so here's a brief flight plan to help the aviation industry take off. first, let me say a word about infrastructure. nothing is more fundamental than basic infrastructure. we need to expedite air traffic modernization and grow systems

capacity through smart investment. that's what is needed to get the faa reauthorization bill across the finish line. it's been passed by the house and the senate so let's get the conference going. let's get the deal done. nick will take care of it and report back to us shortly. what will the chamber look for in a faa bill? first adequate investment to fully realize the benefits of nextgen. we have got to get on with that. components of that system are operating. a few weeks ago, the high tech air traffic control system command center was dedicated. it's an infrastructure element that drives increased productivity and greater mobility for passengers, freight, and business aviators and, of course, re-enforces our commitment to safety. the command center is a true success story, but we can't stop there. we'll never achieve the full

benefits of nextgen if we don't equip the planes with the technology necessary to make the whole system work together. let's be frank. the equipment that is required here represents a large investment. perhaps as much as $5 billion. although, you know, $5 billion doesn't sound like quite so much money as it did some years ago. i mean, we're moving $5 billion around like poker chips around. and this would make a fundamental change in how we do our business. we don't think that cargo business or passenger airline aviation should have to bear the full brunt of this cost when there is such a great public benefit from nextgen and so this has to be a cooperative effort. it has to be bourne by many of us together. that's why we believe the faa reauthorization bill must assist the aviation community with the equipment necessary to move

nextgen forward. and don't -- and let's not forget about the airports themselves. i had breakfast with one of your speakers. he's going to tell you about an airport he took over as a volunteer. it was a private airport in illinois. and he took it from the can to one of the best airports in the country, and that story is a great story. and we can do this all over the place. financing for air port improvement plans is a classic example of cutting off your nose to spite your face. we need adequate funding levels to maintain, modernize and expand our airports. how? we invest aviation funds is also critical as much as the overall amount. congress must provide budget firewalls, ensuring that all dedicated aviation revenues are utilized exclusively for their intended purpose. marion, you and others know what

happened in the highway deal. we got more highway money going to everything but highways than you know what to do with and we cannot have that in the aviation business. that means, by the way, that airport and airway trust funds shouldn't be used to pay for security costs but specifically for air traffic and airport maintenance and improvement. you know, look, all of this 9/11 cost is a societal cost, and we need to find a fundamental way to do that. and by the way, when it comes to building infrastructure or making changes to manage the air space, we need to streamline the project review and approval process. it takes far too long to build anything in this country and everybody knows it. anybody that's been to china goes there one year and they say in a hotel and there's a hole next door. they come back next year there's a 50 story hotel.

in the united states we've been spending four years to get the permits. we have got to take another approach. the bottom line is this, we have a choice. we can make smart investments to ensure our aviation system remains one of the crown jewels of our economy or we can starve it so badly of needed funds and watch jobs and economic growth disappear. congress has many difficult choices facing it today. and everything from entitlements to budgets and debt, but aviation success has got to be one of them that holds this economy together on a global basis. now, one way to restore consistent profitability to the airlines is to bring more stability to what are now very volatile energy prices. as i said, this could be a whole other meeting. jet fuel prices increased by more than 20% in the first two months of this year alone. i think it's probably up more

than that now. and cutting deeply into aviation profits, if you look at the latest numbers. consider this, if jet fuel prices increase from 215 last year to 3 this year -- $3, it would raise the u.s. airlines' fuel bill by $15 billion. now, that's getting to be a large number. when it comes to energy we are shooting ourselves in the foot in this country. we have locked away vast reserves of oil or oil shale on natural gas on federal lands and off both coasts. meanwhile, we're sending hundreds of billions of dollars to overseas to buy other people's energy. and a lot of it from dangerous, unstable places. does that make any sense to you? i think it makes less sense than it did a year ago, that's for sure. federal lands alone are estimated to contain 2.31 trillion cubic feet of natural

gas and 31 billion barrels of oil of what we know now but there's a lot more to find. producing at least some of that energy could reduce our imports, ease price volatility, create american jobs and generate huge tax revenues to reduce the deficit. it doesn't sound like a very hard decision to me. but even less sweeping reforms can make a difference. imagine the impact of more runways would have. you would have fewer planes unnecessarily circle in the air, idling on the ground and burning up fuel. it's time to increase domestic energy production all across-the-board. traditional and alternative, and our national and economic security depend on it. now, to another system, is the labor system. more reasonable labor policies would also have a tremendous positive affect on the airlines. labor is your number one cost.

we need strong government action on funding, infrastructure and energy but on labor, we need government to ensure a safe working environment and workers right and then get the hell out of the way. if you look at what's going on now in this industry, with this government pushing labor agendas that don't help anybody, we've got a real problem. we're deeply concerned about politically driven proposals by congress and the administration that will undermine the success of this industry. we are very pleased that the house version of the faa reauthorization bill included a provision repealing a recent ruling by the national remediation board made on behalf of afl-cio. the national -- excuse me, mnb ruling would overturn more than 70 years of precedent and make

it possible for a union to be organized without the support of the majority of the employees, in that class, and make it virtually impossible to decertify a union. it doesn't sound like a good idea. the way the rule was rammed through the board, where thousands of comments were ignored, the majority member was excluded and heard dissent censored underscores its blatant political nature. the time-tested rule jettisoned by the board was fair, it worked and it should be maintained. in a separate manner, i want to say we'll do everything in our power to oppose the national labor relations board attempt to prevent boeing from building their new 787 at its nearly completed plant in south carolina. and forcing them to build the plane in washington state.

now, we have -- think about the implications of this. we have lots and lots of states, 24, 25, i think, that are right to work states. and we're going to tell them they can't invite business into their state? i think this is going to be a hell of a fight and i'm looking forward to it. and we're on a slippery slope when the government attempts to interfere in legal, legitimate and reasonable business decisions so that it can reward politically favored groups and it ain't going to happen in this country because we're not going to stand for it. let me just wrap up with a couple of comments. i want to say something about cargo and business aviation. when discussing aviation we can never overlook the importance of cargo and business aviation which helps create jobs, improve productivity and facilitate trade. i could give a separate speech on each of these

enhance safety and minimize the financial and technological burdens of complying with multiple and inconsistent regulatory requirements. this is a very important issue

we've got to get it right. on business aviation, we think the attempt to make public flight plans for business aviation uses an ill-advised populist movement that should go the way on some of the things we've hauled away in here. it poses a security threat to the users of business aviation and there's no legitimate reason for it. we said as much to the house when we weighed in on the faa reauthorization, and we're pleased that their version of the faa bill blocks the agency from moving forward. now, let me conclude, carol, i'm afraid into your schedule already. if you'll excuse the pun, i've given you a quick 30,000-foot view of some of the basic steps we can take to improve the aviation industry, an industry that is so critical to our economic success and our way of life. much like the u.s. economy, u.s.

airlines are climbing out of a deep hole in the wall and we have a long way to go to be financially strong. to assist in that process, we've got to redouble our efforts to educate policymakers about the importance of aviation. we must ensure federal policies recognize the link between the national aviation network and jobs, between the link and economic development and global competitiveness, between this link and the quality of life and between it and national security. and the industry itself must continue to innovate, transform and reinvent itself to meet growing demand, to force the profitability and meet competitive challenges from around the world while improving safety. and today you're going to hear ideas on how to strengthen the aviation system from some of the nation's leading authorities.

right now we're going to start talking a little bit about infrastructure. so i'm going to turn this over to jack potter. jack recently joined us after a laugh time and a half as postmaster general of the united states and he's working on a major project to look around the world of the global supply chain and how we can assist it on a policy basis and with him is janet who leads all of the chamber's transportation efforts including our efforts on the infrastructure side. i'm going to leave it to you guys -- i want to thank everybody for being here. this is a very serious piece of business. it holds this nation and the rest of the world together, and we can't screw it up. thank you very much. [applause] >> well, thank you, tom, for

that hand-off. as tom said, i'm here with janet kavinoky and janet has a very complicated title so i told her i'm going to let her introduce herself. [laughter] >> so if you'd give the title, we'll follow carol's rules. >> so i wear a lot of hats at the chamber. if you take one of my business cards i'm executive director for transportation and infrastructure in congressional and public affairs and i'm the vice president for the americans for transportation mobility coalition. i begged actually for a card that was double-sided but it didn't work out that way. >> well, this morning, what we're going to do is pick up from tom's very comprehensive remarks because i think he set the table for the whole day. and talk a little bit about infrastructure -- and i'm going to start by talking a little bit about the background, kind of the world that we find ourselves, and i'm going to pass it on to janet and she will talk more in depth about the particulars about where the chamber stands on a lot of

legislation that is pending on capitol hill and some of the studies that are being done by our organization that you can expect to see over the course of the year. so let's just talk about the backdrop. where do we find ourselves? i was fortunate enough to go with tom to japan. and i have to tell you, you know, as he said, i'm working on supply chain management and what better place to look at supply chain management than at japan and the challenges that face us today. and i have to tell you, i walked away very impressed with the japanese people. they've taken good care of the situation as a result of the tsunami. obviously, there were some tragic losses there, but they had some 450,000 people who were displaced, homeless, and they found homes for all but 150,000 of those folks already. and they're working very hard. you don't hear any horror stories. when it comes to japan, i was shocked to learn that they have two electric systems and the way i say it in plain english is, half of the country is europe

and half of the country has got the united states electric system. the bottom line is, half of the country is fine. tokyo area is impacted by the fact that they have nuclear power plants that are down and it's a real challenge going forward. but the fact of the matter is, japan is open for business. and, you know, it's working very well, but the experience there did cause everyone to step back and look at supply chains in general and ask a couple of questions. so around the world people are questioning nuclear power. around the world, people are starting to think about, gee, does it make sense to have one supplier in one location? do i need to have redundant suppliers. and what's going on in the supply chain area is something we all have to be cognizant of and be very mindful of going forward because it does represent a very interesting

challenge. now, on top of that, we have everything that's going on in the middle east. and there, obviously, we have a situation where we have political turmoil. we have wars. and, of course, we have terrorism. now, that has a direct impact on all of us in this room because first of all, in the short run it's having a tremendous impact on energy costs. and they've spiked tremendously. how much of it is speculation, we can have a big debate about it as tom said, but it's affecting your industry and it's also affecting the kind of decisions that are being made going forward about where you get those supplies. in addition to that, it has an obvious affect on security. and i have to tell you, as somebody who is at the post office for 30 years and ran it for 9, i always had challenge dealing with the folks that worked for me, particularly those people who in a sense if you think about it we regulated

the mail industry, who found it much easier to fix things by pushing the burden onto mailers, pushing the burden onto suppliers. .. >> at the same time though we have to do it in a pragmatic way so that it doesn't dramatically impact our economy. at a time when our economy is challenged. and speaking of that, we are going to talk about

infrastructure today. i'm going to pass it to jenna to talk about it but when you think about infrastructure, much of the infrastructure in america is funded through the government. and as tom said, government, governments around the world right now our challenge. our own government is challenged. people are looking at ways to, you know, narrow the debt as best they can. we have to again make sure that we are a voice and janet is a voice from the chamber, talking about how important infrastructure investment is and how important it is that funds that come in or are targeted or are earmarked, that people pay them for infrastructure actually go to the infrastructure. so it is a dynamic time, and i think that the fact that with so many folks here today is just a recognition of how challenging a time we live in, and it's important that we are out there as a group talking about the

fact that if we don't keep up with our infrastructure and invest in our infrastructure, we are not just impacting, you know, ourselves today, but long-term, putting ourselves in a disadvantage from an economic standpoint. so with that as a backdrop, talk a little bit about some of the details of many of the programs that tom mentioned, janet kemp if you would. >> thanks, jack. thank you all for being here today. i just got my five minute signal from over there, so how i give you a legislative and regulatory update in five minutes is, well, i think it's impossible task but limited a little bit about what our priorities are here when it comes to infrastructure. so the third hat that i wear at the chamber is running our let's build america initiative. this is our focus on transportation, energy, water and broadband infrastructure. it's the chamber's way of saying when we make decisions in this country, whether as a federal

state or local level, we have to make decisions about infrastructure investments that are about economic competitiveness. what we find is there are a lot of other countries in the world whose infrastructure policies are driven by the question what does this do for our long run economic competitiveness in the world. we don't ask that question here nearly in its focus focus to ways to our efforts are built around making sure that economic competitiveness is a core part of that conversation. we launched something last to call this transportation performance index to try to really aim very, very's narrowly on that focused question. we asked a lot of you. we asked people around the country what really matters for business when it comes to transportation infrastructure. we heard about time, reliability, cost, the availability of infrastructure, and we heard repeatedly we need to be preparing for future

growth. we put together a series of factors into an index to look at whether the performance of infrastructure is getting better or getting worse over time. and then to look at how that related to economic growth. what we found is by record levels of investment since 1990 across all modes of transportation, we're just kind of bumping along as it comes to performance. that speaks in many ways to the ingenuity of the business community, the ability to adapt. but what that also tells us is we're not really thinking about the future. when you look at an analysis of our index, and i think we have provided for you today, we find we are really headed into a decline as far as how well transportation infrastructure meets the needs today and tomorrow. and, in fact, economically this is critical. we are at a point of choice. if we continue with the status quo, if we continue saying you know what, we've got all these other pressing needs, we got to

do with debt and deficits, today will do health care, tomorrow we will do x. y. or z., it's a lot like looking at a situation where we have it leak you growth, i will put a bucket under that lake. and pretty soon you are replacing your carpet and your bedding and your ceiling and replacing your roof and i thought a lot more expensive in the long run. we can either make target and strategic investments, by over $300 billion on a year-over-year basis, or we can continue with the status quo and dropped out $300 billion a year. that ends up being a pretty big chunk of change. so, i would encourage you to make sure that you are signed up for our updates so you can see the letters with sent on f.a.a. reauthorization. our focus on trying to make sure that we're taking care of all of the areas of our membership in the aviation industry, we're watching what's going on not just any f.a.a. but in other areas because we need to bring a

senior focus of economic competitiveness across infrastructure, particularly within aviation. it's a system of going to test out later tonight when i fly to san francisco, so whoever is here from united airlines i will be giving you feedback later. and with that -- [inaudible] >> i never check my bag, jack. and with that, the hook is here and i might even take that back. thank you so much. we really appreciate this, janet and jack. i wish we could continue on but as you know we have a very busy schedule this morning. so let's give them a big round of applause. [applause] >> as they are leaving, i wanted to go through a few housekeeping details. and the first one is, this isn't housekeeping, this is just a genuine thank you for being here, from making this possible

today. and i am carol hallett, counsel to the chamber. and i work on our aviation summit every year and it's a great team and a lot of fun, and it's all because of you that we can do this. and particularly, it is because of our sponsors. and only because of our time constraints, and with so many sponsors, i am not going to read their names off, but please look in your booklet, your program. because they have some spectacular ads in addition to being listed on the back of the front page. i am going to single several out because they are exceptional in terms of their sponsorship if we could not do this without bowing. boeing is our number one sponsor. they are what we call the title sponsor. and jeff agris binders to take home with you that our compliments of our sponsor, boeing. you might also see that you have

a sticky ipad holder from rolls-royce, another one of our sponsors. i particularly also want to thank the air transport association because they are one of the top sponsors, along with the hill. our media sponsor for all of their work. so please do not be offended by my not reading any of your names, but they have been at the top of the list. and now, i also want to just remind you of a few other things. all of our moderators will simply introduce each person on the panel by the name and title. and all of their background is in your programs so you can learn about them, and that will be true with my introduction of all of our speakers. this is in order to save time because we have so many speakers. but i also want to just ask you to remember a couple of other things. you need to stay all day if you want to participate in the drawing at the end of the day.

we have found this is the best hook in terms of keeping you here because if you take a look, the airlines that are once again giving away spectacular flights for two, include -- because the international flight, but we have usair, we are united, we have west jet, we've got jetblue, and i probably leading another airline off. i will get back with those names later, but this is really very, very special, what we are providing you today, thanks to those airlines. so, with that all said, i also unfortunate have to give you this disclaimer, and that is that the drawing, no chamber of commerce employee, no f.a.a. employees are eligible to draw. and i regret that comes out that's the way it goes. i have also drawn names in the past and the people had already left and they lost that

opportunity. so please do all day but it's going to be a nice event at the end of the day anyway. so, i'm now going to introduce our next panel. and this is a very special panel but even more special is the moderate. because as i introduce marion blakey, the president and ceo of the aerospace industries association, i know that you really in this industry, you all know marion for her many years of work in the industry, but also, of course, as serving 14 years as the f.a.a. administrator. and with all of the great thing she did in that particular role, it made her the perfect choice to be the ceo of aia. but there's a big compliment that i want to tell all of you about, because aia has done something so significant in the

last 15 months. they have increased their membership by 85%. that is an enormous undertaking. we congratulate marion and her team. and we thank you for being delayed as our moderators this morning, marion. please come forward. apartments. thank you, care. and thank you for that not only gracious introduction but for the team. thank you. you know, i am delighted to be here as you can imagine that for one thing, it's among those but as i look at this audience, this is a group of colleagues and folks have been pulling together for a long time. and carol, i do have to congratulate you. 10 years. this is a very impressive gathering and the largest number of people ever for it. but i always do enjoy this kind of forum each year because it does give us a chance to really advance the ball on policy issues. and i think it's noted for that.

it's known for his substance. so again, my congratulations. i will also say i enjoy being here with my panel. the bios are in the book so i won't go into that further. except to same that david melcher is senior vice president of itt corporation, and president of itt president of itt defense and information solutions. joining him is russ chew, managing partner of nexa capital partners. and an old colleague and friend. the title of this section is sensible modernization solutions. to me that is code to the next generation air transportation system. and for reasons that i hope this session will make a parent, i also would title this panel sensible transformation solutions. i think one of the things that a lot of us involved in the next you are guilty of is often characterized it as modernization process. quick and simple to do that.

but it implies to the public that the single activity, just simply making the current system more modern. nextgen of course is a system unto itself. it's a total transformation of our current architecture. its implementation is going to fundamentally change their travel. now, almost everyone in this room can probably give these remarks at this point so i won't take you out all of the benefits of nextgen. but i did notice on the program, i was impressed, a very broad range of folks who have been drawn to this. including a lot of folks from surface transportation and the investment and venture capital community. so indulge me for just a moment to set the stage. nextgen satellite-based technology will replace a 1950s era radar, that we are also used to. it's infrastructure on the ground and in aircraft will use

satellite position signals getting much more accurate aircraft location to both pilots and controllers. going to be like pulling out of your garage and from that point on, all the lights are green. the backbone of nextgen is the hundred and hundreds of automatic dependent broadcast ground-based, that is being installed by the f.a.a. all across this country. the transmitters are also facilitating how the performance represent an our panel today. we have our reasoning the benefits of nextgen as transmitters installed in florida, with all across the country, gulf of mexico, philadelphia, atlanta. in addition, more fuel efficient performance space flight procedures are being commission virtually every day around the nation. with these changes comes many benefits. more efficient environmentally

friendly system, dividing big increased capacity. we are going to need it because the f.a.a. is telling us that we are going to have 1 billion passengers by 2021. so brace up, nick. it's going to be tough. and yes, nextgen will transform our air transportation system. but we've got a challenge. 793 ground-based transmitters projected to be in place, and congratulations, dave, on-time and on budget so far, by 2013. the other half of the architecture, the airborne infrastructure is not going to be required until 2020. that represents a seven-year gap before we start seeing systemwide nextgen benefits. i project that's going to give us a real seven-year itch because we want to get it done.

according to the joint economic commission committee, airline delays, congestion and our aging system our cost is $40 billion a year. do the math. it's pretty easy to see what is at stake if we don't change course for more timely implementation of nextgen. in an ideal world, operators would start upgrading their aircraft with adsb, at equipment, everything in place now. but it's not an ideal world. and the civil aviation operators, even during healthy economic period, the business case, large capital investments dependent on future, and i should future, government procurement, is fraught with risk. so in these tough economic times, it should be no surprise to anyone that the airlines, business community, business aviation, general aviation, all of us are looking for ways to mitigate the risk. the question on the table today

and on this bill is going to address common innovative financing mechanisms. how do we equipped the civil in a win-win situation for the taxpayers as well as for the government and the airlines. a partnership of sorts that requires skin in the game. that's what we're going to talk about. but before he turned to the panel let me give you good news because around this path is not enough good news i find these days. ai a recently conducted a public opinion poll. we don't do a lot of this. you can imagine what we figure that state. and it shows that 68% of americans support new technologies to improve air safety. that's a big percentage. in fact further, 65% are in favor of maintaining or increasing f.a.a. funding levels. only 19% of those we polled said that they would be in favor of

cutting f.a.a. and, finally, a majority of americans, and a surprisingly large number, are knowledgeable about nextgen said they support timely implementation. these budgetary times those are good numbers. so let's turn to our experts for the challenges ahead. and carol, i know what you said about those files but let me tell you about a painless because i think it's important to understand, they come from very different parts of the nation and technology world. but both have tremendous operating experience. a smelter, formerly an army three-star with broad logistics and operational authority within dod, now running a big defense and technology company with responsibility of eight years. russ, a former commercial pilot who lived on to managing operations, both in american and jetblue, and, of course, somewhere in between running all of our operations for the f.a.a. ceo. and now, finance.

they have teamed up on this new venture. itt nexa capital which will touch on a minute. date, let me turn to you for the first question if i could. how do you see the challenges of nextgen, what's going to take to make it work, both from the f.a.a. standpoint and from the standpoint of the committee, the whole community? >> thanks, mary and. i'm always daunted by being the first to be used as an expert because in this room of people have been in this industry for many, many years, i met relative gnostic i learn everyday for my great team, at itt about the things that we're doing to try to support this effort. and i've a great deal of respect for all of the folks in the because i know this is a key method i guess that would be the first thing i would say about it. photo to make a successful it's going to have to continue to be a team effort between us and those we work with, the operators that are out there and industry, those that support and reinforce the aviation industry. and certainly the congress and the administration.

so that's sort of job one is to try to bring all of these varied interest together in way that makes sense. with respect to this program, certainly there are a lot of elements that have to be in place for it to be successful. merion has addressed a few of those. the ground infrastructure and things that were working on today for the f.a.a. is part of that solution to put in place, to stations that are needed to enable the transfer of information that will occur and will make us able to have safer flying spirit but that's not the only piece that has to be the procedures that a company that. there has to be the modernization in the aircraft goes along with it. and as we all know, that's going to happen over a period of time. and a bit of time in which budgets all across the government are going to experience pressure. so i think it's important certainly for all of us who have a part of this program to continue to execute well. that's important we all know what happens to programs that are not executed on time and a

budget. we will have to collaborate with each other and to educate the non-aircraft industry public, the flying public as well as congress about what we need to do to make this thing successful and before. part of that is, in fact, the solution that goes to equipping the airlines with the equipment we need to go forward. i will stop there. >> you look at this from the airline standpoint, from the standpoint of the ato running things inside f.a.a. talk to us for a minute about how you see this the equipping the carriers with the necessary air traffic control equipment. how do you see an? >> the problem has been around for a long time. i can remember going through this in 84, joined the f.a.a. with american. it's always hard in any operation to justify the capital necessary for equipment. it doesn't currently touch the

custom. business is about topline and the bottom line, and both are aimed at producing value. so, when it comes to equipping airplanes, if you can't close the business case, then it's really never going to happen. enclosing the case in the case of nextgen is hard to do but not impossible. we spent the last couple of years looking at this, and itt have a lot to do with that, and helping us do that. and we found a path that can basically help airlines and other operatives close business case for equipping airplanes. at the same time fulfill the need for investors, which is necessary because they commercial operators in spite of the fact that they shrunk to profitability have is pretty weak balance sheet. so making a large investment into something that will not be around in terms of benefit in maybe five or six years will be hard to do. you know, it's common sense and

business that you can't use sort of capital at a high single or double digit percentage rate and expect anyone to spend that kind of money to get something that will happen five or six years away. the third piece is the government itself. from providing an environment where opportunity to increase value in business exists, all this technology. and one of the things that's more interesting about that is the economic value that nextgen brings doesn't automatically come with the technology. the technologies the beginning of the. it's what we do with the technology that makes a difference. so we could all go out and invest a lot of stuff, modern technology, but it into airplanes, but if we don't do something differently with that it doesn't actually produce all that economic value that we think it's going to produce.

so that's why the business case is so important. the business case is about rationalizing that investment capital into producing something that will produce not economic churn, but economic fight with return. that's what businesses do. that's what we think the public-private partnership model is so important because it brings private sector capital that must have a rationalization for investing in the conflict. we think that is basic business sense spent let me ask both of you because public private partnership is something that always i think you can generate a lot of enthusiasm, especially with those of us in industry, but a mixed case at the when you look at infrastructure across the board. what do you see is looking at infrastructure elsewhere that gives you reason to think this can 60? what are the parallels because i think there are a number of very good parallels in terms of loan guarantees for public-private partnerships that have been

expended not only to aviation industry post-9/11, but also rail industries, surface transportation, there are several examples that a very good ones where that loan guarantee has been extended and return has been positive or there's been no default. i would expect that would be the going in opposite with respect to the. i would also add that what we've been working on is not the only idea out there. i'm sure there are many ideas that people might have about how to broach the subject of we want to bring forth one option, one alternative to get the dialogue going to have this might be successful as of the public-private partnerships have been in the past. >> yeah, so i think the example that dave mentioned, surely there are programs that other partnerships that transportation existing models for maritime, service, rail, that we would suggest that you could apply to aviation as well. when we think of the key to any

of these programs is the skin in the game. that it's not a free ride for anybody, but it is a good ride for everyone. so, you have to put money in and you have to be up to justify that. but if the bounce is what you project is your business case that everyone goes in with an expectation that something on the onion is going to happen, very specifically, that's what a business case is, and the fund we produce isn't just about lowering the cost of capital. it's about structuring it in such away that there is and accountability for the return on the end. i don't think we get there without, i don't think there's anyone that will borrow money at 10, 11 to 15% on the hope that something good is going to happen on the other end. there has to be something very specific, and that's what that comes in. i mean, if we apply public-private partnerships not just, but to other things in a government that have to do with nextgen, the budgets of the f.a.a., i think to be huge

pressure on the new facilities that the f.a.a. we need to build to make nextgen happen. there is a lot of infrastructure in fund, private sector funds that are versioning now. that's because there's much more patient capital prior to 2000. the capital can be brought to the robert and provide a good return not only for the economy because that's what it's all headed, but for those who are investing. >> well, i will tell you a lot of us have been following the faa's reauthorization very closely, have been very encouraged by the insertion of metrics for the f.a.a. we are hitting markers as we move into full-scale implementation of nextgen here but i do think that accountability matters. let's talk a minute about the political climate, the situation in terms of the hill, does this require enabling legislation? if so, what would you give as odds on that?

>> russ, you go first. >> so, i think it does. for aviation. like i said there are other programs, other programs that use loan guarantees is one of the ways that's a commonly used, and successfully used. to stimulate investment into something because it helps to reduce the cost of capital. but at the beginning because you have to present program. the enabling legislation is to allow aviation the same kind of stimulus it would give rail or service or maritime. some kind of program that allows the government to jumpstart private sector capital, to bring in at a rate and bring in in a way that produces a scenario where a business can be closed. that's what it's all about. if you can get a business case closed, then you can make the investment. and that legislation alone is

key to that kind of stimulus. >> well, let me tell you, my conversations up on the hill, and i'm looking around to see face of recognition and other people here, it's a pretty tough environment right now. and when i've been discussing faa's reauthorization, the conversation does not do what i believe very firmly in these broad benefits, you know, fuel reduction, although savings, goes to actual offset within the faa's budget. what can you do to reduce that budget, or to bring in line, or overtime what will nextgen do to make this more manageable, for the federal taxpayers and for the congress. dave, i know that's a tough question because i've also asked folks inside the agency, that both you and russ thing for a minute. and i would be curious about your experience also as a businessman in trying to rein in

within a budget conflict, as well as the u.s. army tackle in your expected beauty is not -- >> that context in the f.a.a. is a tough question. and it is derisively new one to me, but i did sleep at holiday inn express last night so i will give you an opinion. know, my background is, army for 32 years, and we go through all these kind of cycles with boom and bust and that quantization as well so budgets are always an issue. before he left the army we are looking for ways to try and become leaner and more effective, more productive and more efficient in the way we deliver capability to the few. that capability being ready units that were going into combat, and even even in a peacetime environment how to do that better. when i came to idt, i was very gratified to see same climate with respect to looking for ways to be more efficient and more lean and use the supply chain, you know, most productively and

to make the business effective. i think in almost any initiative that the government would entertain, whether it's a government agency or whether it's the congress, you want to look at how is this going to make you better. i mean, how will it make the organization be able to function in a more competitive way and in a more lean way. that's what i think the offsets come from, from an imagination about how you might use this to streamline what it is you're infrastructure, or the elements of cost that make up the total cost of the agency. i think that should be looked at. and i think it is appropriate if you look at as it is in any number of contacts across the federal government today. this is a tough climate. we were putting entire programs and other things on the table for scrutiny, you know that all discretionary spending inside the government is going to get a very close look. so it's not unreasonable to ask that that be examined as part of it. >> i'm going to turn to the audience in just a minute for

questions, but let me ask one more because we are a global industry. and i'm curious in thinking about this innovative financing come in different ways finance. you are facing the same problem. -- the europeans are facing the same problem. the question is how big are we facing on this. but tony, what you see from your, you see parallels? advocate any other solutions that we ought to be picking these up, and where does this all go? >> well, i think of we've been to europe a couple of times talking about our programs. they face the same issue. some ways it's a lot harder because they have literally 30 providers of the service but and they're struggling with it. what they've set up as a program of demonstrations and hoping to show there's benefit somewhere someone will invest. i do think the industry has been successful and industry are way in the business case.

certainly there's places where they make sense but it doesn't need to sort of global equipment of nextgen. in the end, what we will need to do, and i think the hard part of this whole thing is actually demonstrate very -- you'll have to close the business case but not a business case for nextgen project to close a business case for a piece, and you have to keep closing. the whole world is not based upon one giant system and so it makes a giant business case, everyone goes forward. every business makes decisions individually, and we need to create a level of accountability and expectations that close the business case on that face. i think this is new, and if i had to place one risk on this, because i think would solve a lot of financial risk, at least we think we have found that, there's an institutional and political risk that's just as difficult to overcome.

and for those three of us who've been in government, you know they are not insignificant when you're trying to make change. the good news is i think nextgen has the support of the community at large here certainly when we run around congress talking about there isn't something we don't think nextgen should go ahead. there's an overall the feeling that we should go ahead with this, something that should be done. we have been having trouble converting that feeling to something tangible to make the investment for. i think we need to build upon that. i think we need to make sure that we are not afraid to be innovative. because it is really hard in any institution, even in the private sector, to step out and do something different because you might feel. especially when there is money involved. and yet that's what we have to do. we're going to have to take -- i think we can do. i think we found a way to do it but i think it's going to be individuals that do it,

individual companies and individual people that will make a different. >> and i agree with russ that really gets back to the business case, and do you believe the business case. i think the poll you cited just reflects what russ said which is the growing level of sentiment that we do believe the elements of the business case. i'm encouraged by those with an early -- and our example is somehow a doctor this technology and a putting it into their aircraft. and i think that example, it's company with the right procedures which allow them to begin, you know, experiencing some of the benefit. they will experience the fuel savings and we will all experience the benefit from the environmental savings. i think that example coupled with some innovative equipping options that allow the government in a very constrained time to make this accessible to the airline industry. i mean, eventually what you want at the end of the day. you want these forces to come together in a way that will allow the nation to benefit as you and tom indicated it could by this endeavor.

>> questions from the audience. >> russ, for about two years now grants have been talked about as a way of equipping for nextgen. talk to us about the federal budgetary difference between loan guarantees and grants. spent well, most of it is about, take a billion dollars, say i want $5 billion of nextgen for whatever reason. you have to score that billion dollars when you're obligated to do so it's course the billion dollars in the budget deficit it on the other hand it is a want to do a loan guaranty and i want to borrow, i don't know, 90% of that, and i don't have to put up what we called a credit risk premium for the fogarty which means i'll have to put the deficit, depending on the level

of risk, something or 10 or 15% of that. so instead of $1 million you will be entering 100, $150 million. moreover, you can offset that by requiring the applicant to pay some of the credit risk. in the case of like the railroad rehabilitation program, with the applicant puts up all the money there is no appropriation to affect that loan guaranty. there's lots of options to use loan guarantees in a way that doesn't really score negatively against the budget i think that's the attractive part of the government. >> other questions? back there. >> a heckuva thing when your own guys ask you a question. [laughter] >> go ahead, john.

>> and it's going to be hard-won. russ, could you say something more about the particulars of the concept of nexa capital has been putting together? i think you talked in generalities, maybe some more specifics? >> sure. so specifically, the fund basically uses private sector capital, which itt is one of the investors, to augment the amount of money at risk that needs to be put into the pot to stimulate a loan guarantee and then borrow that money from the commercial side, private sector. that bought equipment will provide it to the opera's comp commercial operators, airlines, at a rate as good a better than they can do on their own, number one. but number two, it involves taking the risk out of the return by deferring the payments on the loan until the benefit is delivered. and the benefit is delivered, this is the hard part.

how do you measure that? but it has to be measurable. one of the good parts about nextgen is digital. you can measure everything. and so we can determine what is being used and how much is being used. and all it requires is the operator to say, i will borrow the money if you say i will get this at this rate, were to reduce something that i will actually be able to return to my investors and my customers as an operator. and that's the key to the whole thing. the interesting thing is, if you talk to every operator, it's different. one operator wants something, wants are and become another wants datacom, another one wants -- they all want something different. so the only way out of that, the only easy way out is let's mandate the whole thing. the trouble is mandating it doesn't get you it. it doesn't provide the kind of what i call a guarantee of the

return. so we instead put together what we call best equipment, best served. which binds the operative pay for things when these service providers, but this cake -- this case, the f.a.a., they will deliver at a certain time and at a certain use. and that binding is what creates the ability to close the business case. i don't think there's anyone in here that would put your life savings up for something that might be delivered in 28 years. especially if the track record of delivery is uncertain. the only way to do it is to say, okay, i will put the money up, but you need to tell me he would deliver this. if you don't deliver it, that has to be some accountability of what happens. and that's what that is all about. >> all right. one more.

>> so, why do you need loan guarantees? what are you guaranteeing with the loan guarantee? >> welcome loan guaranty reduces the cost of capital. it's not impossible without a loan guarantee. it's just harder. remember, the key as dave would say, the key is the business case. if you can't close the business case, i don't think anybody should. i would hate to say this aloud sometime but the reality is if you can't close the business case, there's not a good reason why you shouldn't invest. i mean, and while that's not exactly the line everyone likes to use, it's the reality of capital. whether we are funding a government agency, whether you're running an airline, whether you're flying an airplane for your own use, you make a business decision every time you spend something on that organization. and there's never enough capital to do everything.

except the last two weeks of the fiscal year and is plenty of money to do everything. but there's really never enough talent. you compete for those dollars. so, all that does having a loan guarantee is it reduces the barrier, the investment barrier going in. and helps you close the business case. >> i think that's what the answer, the cost to capital and making it affordable and having basically the government as sponsoring and endorsing and backing up that promise. >> all right. i'm going to ask one final question, lightning round. we all watched what happened with the first lady's plane. what would be different on nextgen? it was handled properly, we all understand these things happen in a system with some frequency, but we nextgen have changed it? what you think? yes or no? >> yes, just. and i think the answer is yes because the situational awareness that can be in the

cockpit, and there's no latency there in terms of understand where you are in relation to other aircraft spent great. we get those benefits top to bottom. thank you very much. we have enjoyed talking to you today. [applause] >> marion, thank you so much. dave and ross, just a terrific panel. what a great way to keep the morning going. and now we're going to have a very interesting presentation from the administrator of the f.a.a. and i want to tell you a couple things because we're going to do something that is a little bit different. we are going to -- you will have three by five cards on your table, and we're going to ask you if you have questions for the administrator or ed bolen, to please write them, wave them like this, and someone will pick them up and bring them on a. for the q&a session. and we are going to first have

administrator babbitt speak for a few minutes. and then he will join ed bolen it is, as i think all of you know, the president and ceo of the national business aviation association. he will be sitting here at the podium. and when administrator babbitt finishes his comments, he will go over and join ed, and they are going to do an interview with one another but it's going to be fun and interesting, and i know that you'll enjoy this. and at the same time, administrator babbitt is also going to come as i said, bring you some remarks first. so, anyone who has a question at any time, please write it out and have someone pick it up and they will bring it on up. now, if the two of you will join us. and administrator babbitt, i'm going to give you, again, as i mentioned and as we've been doing this morning, very brief

introductions. but i'm going to steal something from ed bolen because i think it is so fitting and appropriate to share. and it is a quote that i will use again and again, if i may come as long as i give full credit to ed bolen. because he said at a recent hero club speech, and i quote, if you doubt that aviation will be the defining mode of transportation in the 21st century, two miles of waterway will take a boat two miles. two miles of highway will take a car two miles. and two miles of railway will take a train to miles. two miles of runway will take an airplane anywhere in the world. that is our industry. it's a great one, and let's work

together to promote it. and we have ed bolen to thank for that quote. and it is so appropriate now to introduce the administrator of the f.a.a. and while he needs no introduction, i would just say that in 1995, that was the year that randy became, after a long flying career ending his career as captain at eastern airlines, he then came in 1995, he and i both became president at the same time. he became president of alpha. and i became president of ata. and we work together and it was a great working relationship, and we had many successes because we were able to work together on issues in which we all had agreement. he is the kind of person who is able to bring people together. he's had a great career, as i said, as a pilot, as a businessman, as an alpha leader.

and so he was the perfect choice to become the administrator of the f.a.a., and i give you randy babbitt, administrator. [applause] >> well, thank you very much, jill. does a very kind introduction. i appreciate that. good morning to ed and other distinguished guests here. this is a great cabinet i'm happy to be here. of course, anytime we get this many folks together with aviation, i know you have other interests, but a lot of you have particular focus on aviation. a quote came to mind, carol had a good quote. we had a professor, john and richardson, professor at american university made an observation, he popularized this phrase. he said when it comes to the future, there are three kinds of people. those who let it happen, those who make it happen, and those who wonder what happened. well, in this room we have the

people who make it happen. and that's why it makes it so interesting to be here today and to be able to chat with everyone. business as and entrepreneurs are america's economic engine. they produce the new materials. they produce the new technology, the new avionics and the new capabilities that are going to power and move our industry and our country forward. and at the f.a.a. we're always working, number one priority, is safety. we also recognize that it is an incredible amount of innovation in the marketplace that we believe will lead us to even greater safety boundaries, and even additional efficiencies. and we certainly want to encourage that at the f.a.a. we want to find a way that we do business within the f.a.a. so that we can certify new aircraft. we can certify new equipment as expeditiously as possible. obviously being consistent with our safety mandate, but the last thing we want to be is the choke

point in the assembly line of progress and technology. at the f.a.a. we're in the midst of a complete transformation of the national airspace system. we are transforming what we have today, step-by-step, to the next generation of our national airspace system. we are moving towards a system in which air travel will be far more precise, it will be safer, it will be more efficient and equal importance, it's going to be more environmentally friendly. so is the rest of the world. we are not alone in this quest but in working with our partners around the globe to create uniform nextgen standards so that the goal is of course a seamless transition through the airspace even when controlled in the airspace is controlled by different countries. a lot of times when people hear the term nextgen they think of some far off future, some never, never land that we all talk about. but here today that nextgen is here and it is here today. it is in use. it has practical applications and we are continuing to develop

them. the transition from ground-based radar to space based satellite navigation is well underway. we have a lot of companies in this country today that are seeing real savings, fuel savings in particular. and it's of particular importance when using kerosene or jet fuel today priced at better prices are headed towards $140 it appears. nextgen is adding real dollars to the bottom line for a number of carriers. we're happy to be part of that. let me give you a couple of examples here. southwest airlines to stop start using gps procedures originally a 12 airports around the country recently starting in january. they estimate when they go systemwide with these types of procedures that they are using, they will be saving $60 million a year. this is one airline, $60 million a year in fuel savings. but the peace that we all sort of overlooked, strategic on

southwest partners, but we all benefit. we all benefit from fewer delays that we all benefit from lower emissions that they are producing. alaska airlines is joined the f.a.a. along with the board of seattle and the boeing company to further develop gps procedures at seattle tacoma international airport. that's part of our green or skies over seattle initiative. that project should literally save millions of gallons. not thousands but millions of gallons of fuel annually. it's going to cut and decrease greenhouse gas emissions in the process. we estimate that the airlines using gps-based systems at seatac right now, not tomorrow, right now, they are enjoying a savings today of about $9 million annually. that number is only going to increase as more airlines equip, and that's also based on today's fuel prices which i think we could all make a full cast -- a

forecast. that is of money. we do understand that. but the going rate of savings produces 34 times less of carbon dioxide emissions. 34 times less. that's big will the taking 5600 cars off the streets of seattle. these are just by procedural changes, this technology works. it's been enjoyed by people who are deployed a. in atlanta, delta airlines reports they saved 60 gallons of fuel per flight using the more efficient procedures we have designed. this is where aircraft descent continued all the way that i'll rather than powering up and arriving in steps each way on the way down. i have made the equation, the difference at this optimize profile% versus the step down where you power up. it's the difference between walking down the stairs and sliding down the banister.

sliding down the banister is not a more efficient, it's more fun. we want to seek the safety and his type of efficiency not just at a few select airports but we want to see this go systemwide. this fuel saving can get any airport back and enjoy this optimize profile the sense. we are also installing literally hundreds of additional ground transceivers stations across the country. they will allow air traffic controllers to use gps to track aircraft very precisely. the aircraft will be using automatic dependent surveillance broadcast. so better known as a bsd. this type of tracking is already well in use at a private of places. to use it throughout alaska, the gulf of mexico recently has had full deployment, over a year now, places where there was hostility no radar coverage today in the gulf of mexico, they have radar coverage that coverage 250,000 square miles precise ability to track

aircraft, particularly helicopters that work out there. i was surprised to learn that every day, everyday in the gulf of mexico we move 10,000 people on and off oil rig. 10,000 people. those helicopters are saving about 100 pounds of fuel per flight, and obviously hundreds of those flights daily to address a joint five and 10 minutes per flight by the ability of going direct today as opposed to an old navigation that we're those -- forced to use and the past that we're also parting with jetblue. equipping some of the aircraft. this allows them to equip some of their carriers, or the equipment, airbus a320. of using this but this allows them to fly routes down to florida into the caribbean using not unlike, special routes that avoid congestion. so this partnership is going to allow them to use the equipment. they will provide us, david

tells us how much, when and what they fuel savings occurred, and hopefully this will encourage others to equip your i feel it will certainly be jetblue to continue their own expansion and equip the rest of the fleet. it's obvious he a trial period, but i think we will have success there. we are certain going to enjoyed getting the data. we very much doubt you these public-private partnerships, because of show things. they bring immediate benefits everyone but they also demonstrate the benefits, the real dollar and fuel saving benefits to everybody in the industry, but they are not forecast. we can show you that it happens, not that it is going to happen. civil aviation in this country is enormous. and i think most of you in this room understand what an economic engine it is. it accounts for more that 11.5 million jobs. it accounts for $396 million of

wages in the aviation industry. and these are good jobs. these are jobs that americans nationwide, they have the skills to achieve these jobs and they are proud to perform them. so we are pleased that both the house and senate have passed reauthorization bills for the f.a.a. it's a very important step for us. we've been living under a number of short-term extensions and 18, for those of you who are counting. adore three and half years operating on extension. it's very difficult to run an agency when sometimes your budgeting for weeks, not years. but we are pleased both of our houses have move forward. we need the restoration of predictable long-term funding for aviation programs. i think it's critical to our agency. i think it's critical to the mission that i think it's critical to the safety of the traveling public of the united states. by having reauthorization we're going to be up to move forward to improve our transportation infrastructure. i think that also leads us to

great and generate new jobs and spur economic growth. the authorizing funding levels in the house bill are well below what the president has proposed in his budget. and i've been very candid when i tell you i am concerned that funding at these levels would be -- as we know today. i recognize any doubt that we're in a very tight budget environment, and that means we are going to have to do our homework but we have to prioritize very carefully. we have to choose very carefully what we can deliver in the technologies and programs that will help us move into the best in improving both safety and efficiency, and we will do that diligently. we already run a very efficient f.a.a. today, and i think it will be even more efficient tomorrow. we have literally over the last four or five years saved hundreds of millions of dollars in our acquisition cost, are operated structure cost, and by strictly reviewing and restructuring projects that are

underway we needed. we will continue to be careful stewards of the tax dollars that we receive. .. safest and the most efficient air transportation in the world. so i want to thank you very much. i think we've got some time -- ed and i are going to chat a

little bit and we'll take this sitting. >> and while randy is getting mic'd up let me just remind everybody again, we're going to have a policy conversation, but we'd like to give you all an opportunity to participate as well. so feel free to use the index cards that are on your table. there are pencils there as well. write down any of the questions and we'll try to touch on many of them as possible as we touch on them in our conversation. randy, let me start by acknowledging the purpose of this panel is to talk about next steps for nextgen. but clearly, there have been a lot written and a lot said about the issue of fatigue in aviation, whether it's pilot fatigue or airplane fatigue or certainly controller fatigue and i think we would be remiss in not touching on that. can you just bring us up to

speed on some of the steps that have been taken. >> sure. >> with regard to fatigue and where we are? >> sure. i've noticed there have been a few things written. [laughter] >> i have started more than one set of comments. the press certainly has focused a great deal on this. and i've expressed a little disappointment. i saw in the sunday paper i was recognized for having the worst week in washington. and i was very disappointed. i actually had the worst three weeks in washington. [laughter] >> so i'm fully aware of the situation. you know, it's very unfortunate. we had, you know, the initial incident. and that certainly made me furious and i expressed my concern. we have started a top to bottom review. interestingly, by our own diligence in going in and looking, we discovered we had had other cases. and so those have -- we've been very transparent. put those to light.

we have worked collaboratively with the employees, certainly with the air traffic controllers. interestingly, we had ordered about a year ago -- we had jointly agreed to sponsor a fatigue study and we had just gotten the results of that and we're starting and we'll continue with that. we also put in some short-term initiatives. one of the things that was pointed out in that report that we could do very quickly was to add an hour to the break between shifts for controllers. we have done that. they have concurred. they've been good partners through this. this has been a very serious professional embarrassment, i think, to the professionals in that world. to all of us. and, you know, we're going to take it on, head on and we've got a number of issues to work on. have we done enough to recognize what fatigue is. what do you do to combat it? is it okay to say to your

supervisor, look, i'm fatigued. i need to step away from here and the answer to that is, yes, it's okay. so we're looking a number of things to make certain that they have the tools. they're earnestly looking to improve their own professionalism and we want to make sure we're teaching so we're going to completely review what is taught in our academy so they have a curriculum that's meaningful to them. it defines what a professional is and gives them the tools so that they can be even more professional. they can mentor each other and have a better, safer organization for it. >> when you have an event, you obviously want to handle it promptly, but you also want to handle it thoroughly and well. are you comfortable that as much is being done as quickly as it can be? i know there are laws and other things that take a lot of time. but you feel like we've had a good balance between the urgency to address the situation and the time to do it thoroughly and well? >> yeah.

this is -- i want to emphasize -- i mean, if there was an easy push button solution i would have pushed that button, but this is -- we have done a number of things that we knew in terms of priorities that would bring us an immediate stabilization. we've also started an additional series of steps that will take time. we're going to work -- i mean, we have to -- for example, we're looking at our scheduling system and we want to incorporate science into that. science tells us when you overlap schedules and when you change schedules, what happens. and we're going to work with our teams including professionals who have, you know, helped us with scientific studies. we've got some experts from nasa, the ntsb has provided us insights as well. we're going to look at all of that and incorporate it but it doesn't happen overnight. we have to have, you know, the negotiations and so forth. some of these things have been agreed to contractually. some actually have regulatory restraints on them. so we need to work our way through all of those components

so we're well underway but i want to emphasize, you know, i'm not going to hand you the final document is next week and say we're done. we're not. we're also looking very candidly with acknowledgement from the controllers and the professionals that there's some culture changes that need to come about. and those don't happen overnight either. they didn't get here in two weeks. we're not going to fix them in two more weeks. we're going to make huge strides. we're going to work together but it will take time. and the good news is, we're getting a lot of cooperation with all of the working groups within -- and i want to point out, we have a lot of people other than air traffic controllers that work around-the-clock. those radars don't repair themselves magically nor do the v.o.r. systems nor all the electronics. we have 12,000 pieces of electronic gear out in the field. there are people who take care of them round the clock, monitor them and make sure they're working. and they're up all night, too. so we have lots of people, and we want to migrate our knowledge

of fatigue mitigation across all those lines. >> well, you're a professional aviator. you have been throughout your entire life. you know the system and we have confidence that you'll continue to stay on top of the situation. i'd like to transition a little bit now to nextgen which is, obviously, a focal point of this entire conference. but in doing so, i want to go back to a comment that you made earlier, which is the economic environment in which we're dealing. and i think really for a lot of policy people -- if you look at our system today, our air traffic control system is the largest. it's the safest. it's the most diverse and it's the most efficient air traffic system in the world. and it might be to look at this environment and say, okay, we'll just rest on what we've got. but i have known you for a long time and we have had a lot of conversations. it seems to me to be a real personal urgency on your part to make nextgen a reality.

and i guess i wanted to just touch on that a little bit because it does seem personal to you. >> it is. you know, one of the things -- when i accepted and said i would do this job, you want to make the progress that you see is in front of you. there is so much to be gained, so much potential when we shift into the next generation of navigation, and it goes from the highest to the lowest ends of aviation. the full spectrum, small airports, big airplanes, little airplanes. there's an enormous amount to be gained here. and the -- this is one -- i said it in the speech and i'll repeat it here. this isn't something when someone says how much is this going to cost to do this? this is something where you say, what's it going to cost us not to do this? can we afford not to do this? can we afford not to redesign the air space in the metroplex areas of this country? no. i don't think we can. not if we expect to see the growth and, yes, we did get to, you know, see traffic set back a

little bit. but traffic is growing again. the economy is improving again. and we're going to see the returns of those traffic levels. this system -- we're either going to agree collectively that it will be okay to be delayed 20 minutes every time you get in an airplane and we have a system that can mitigate that and we're going to adopt those changes and the savings will pay for it. i firmly believe that the business case -- if this was a board of directors and i brought you a proposal and i said, i would like the board to approve an $8 billion acquisition and i will show you that the first year we have it up in operational we'll save $4 billion a year from then on, there isn't anybody in this room as a board of director wouldn't agree to this. you could return your entire capital investment in two years. henry ford just got out of his grave. >> of course, he would do that. you know, people look at 6 and 7-year recapture. this is a 2 or 3-year recapture.

so i think it's a mandate to do this. >> you know, let me ask, though, a lot of skeptics have said, the faa can't pull off nextgen. it's a major transformation program. and the faa has not historically done transformation particularly well. a lot has changed over the past decade in terms of the structure of the faa the training of the faa. are you comfortable at this point that the faa has the right people with the right training and expertise and the right organizational structure to make nextgen a reality? >> good question. let me answer that with telling you we have two programs under foot. let me start at the beginning of your question and answer affirmatively yes, we can do this. we have the talent. we have the people. the structure -- we're taking a hard look at. a lot of the structures that we have have been passed along and go back all the way to the roots

of the faa, back in the 50s. this isn't the '50s. and we have a program called destination 2025 which we sought and made it very transparent and a lot of people in this room were offered input to this. my confidence and desire to work with the industry i don't think needs repeating. i welcome -- when we put out a program, we welcome your input. we've certainly done it in a number of areas and the numbers we've used for nextgen and we've taken those and taken heed for those to follow but i can see a point to restructure, and we've -- we've gone a long, long ways in doing that and destination 2025 sets a series of aspirational wave points. i don't think anybody is silly enough to think that we could have a strategic plan that i could honestly sit here and tell you what we're going to be doing in 2025. nobody can do that. too many variables but it does

mean you can't run your organization to be nimble and to have aspirational goals and to be flexible and as technology changes you can adapt and you can bring those technologies in. and so that's where a lot of our focus is. we're going to make our waterfalls. we're on track. we have a number of key programs that are progressing. yeah, they've had setbacks but, you know, there's a lot of programs that have setbacks whether you're building airplanes or airports, sometimes technological bumps in the road occur but i'm comfortable we're on our waterfall schedule and i'm comfortable given the funding and the support of the industry that we'll be on track nextgen. >> one of the problems the faa has had the stakeholder has been involved maybe too little too late. are you comfortable with nextgen that you have from the stakeholders that there will be community buy-in, that we are

all getting on the same page? >> i believe so. to him the real balance point is when internally people are complaining that there's way too much stakeholder involvement and externally the stakeholder thinks there's not enough and we have struck the right balance. in all seriousness, we have been very transparent. we've got a number of groups -- we certainly have our nextgen advisory board which has been very helpful, having people who actually use the system and the equipment and the technology. having them give you direct feedback is very, very helpful. none of this equipment or procedures should be designed in a vacuum. and i hope the perception out there is that we're not in a vacuum. i applaud the work that the rtca has done for us. they took our nextgen implementation plan. i think there were more than 300 people in every walk of industry had a hand in it. and they basically said to us, these are all great ideas but

some of them -- you don't need to do them first. you need to do it fifth or seventh or, you know, maybe 50th. these need to move up and so we redesigned our nextgen implementation and i applaud both the rtca and i applaud the people that committed a lot of time to give us that roadmap and i think we're very much on track for that. and so what you're seeing, things like chicago o'hare a great example. when you can deconflict airports, right, five years ago chicago o'hare was one mass of air space that included midway. so if you had 20 flights coming into midway well below the capacity of midway but that 21st flight overloaded the overall system, everybody was delayed further. today, with r & p arrivals and departures in the midway, midway runs independent from o'hare. it doesn't matter so midway can run its own schedule. we're looking to do that more places. think of the new york metroplex. you got four big airports up there. if one of them gets overloaded, essentially you overload the

whole system. we can deconflict those with more departure arrivals and flight patterns. >> one of the questions that we had from the audience brings up the question of unmanned vehicles. and just give your kind of thoughts on how nextgen can and should incorporate what is clearly an emerging technology and i think a reality of the transportation system of the future. >> they go by a number -- i think the -- you know, unmanned aerial systems vehicles, remotely piloted aircraft whatever you want to call them are the wave of the future. they are perform missions for a variety of reasons. they are perfectly suited to and they can stay up long periods of time, whether it's for surveillance. they can do the forest system uses them to fly over the forests and look for warm areas, spot forest fires before they start. you're seeing their use in tokyo today. you can fly them very low over high levels of radiation without

putting, you know, humans at risk. there's a lot of things they can do. we've worked very collaboratively. we now have most of our northern border allows surveillance, border surveillance with these type of vehicles. nextgen will move us is notch. i mean, one of the key components if you think about the big step for us is a basic, basic tenet of safety in the air is the ability to see and be seen or surveil and be surveilled so that we can keep separation, keep airplanes apart so that's a fundamental tenet. well, in addition to that, when you see or seeing can you take the proper action? can you accept a proper command, you know, from your own input from your own site or from an air traffic controller? that's the piece that we need to continue to develop. right now, the latency between the control of a remote vehicle

doesn't allow you to put it, you know, into general operation into the mass. now, we can make unique exceptions, give it more room, more buffer, that's fine. it's the first step, but there's a great potential there, and i see a great future for those airplanes. >> i have to -- carol looks like she's getting ready to cut us off but i have to ask one last question. we can a lot about nextgen technology and data com and gps and one of the questions of the audience asked the role of the ipad in the future of the air transportation system and you have done a lot of work in that area. >> well, they're now approved in certain situations, i think, under part 91, i'd have to go get into the details but we clearly are using electronic flight bags, the ipad itself has approvals. i believe a couple of the commercial firms are making approach plates and things that the pilots can use. clearly the wave of the future.

i mean, one of the interesting pieces that comes from it, having lugged a flight bag in my professional career, you're carrying around about 10 pounds of charts and information with you. that can be reduced to about, you know, 14 ounces and have a lot more information. so -- i mean, there's an economic -- not only an economic, there's an environmental aspect. you're not having to burn the fuel to carry a lot of charts and stuff with you. >> okay. well, this has been fabulous. and administrator, thank you. ed bolen, thank you. thank you also, ed, for the sponsorship by nbaa. we are most appreciative of that. just a couple of comments, first of all there's a phenomenal simulator, 737 nextgen simulator in the herman lay room that you all have an opportunity to see in the first break that we have after the next panel. the next panel that is being led

by none other than than craig fuller, they also have the aota simulator in that room. so this is a flying day. but i just can't thank you two enough, randy, great to see you. thank you for all of your efforts on behalf of aviation. and the same to you, ed. thank you, and let's give them both a big hand. [applause] >> and as randy and ed are getting demic'd, we will start with the next panel coming forward. and i want to again just -- thank you, randy. i want to introduce our moderator, again, these are brief introductions. but i think that it is particularly interesting -- my friendship with people in the aviation industry goes way back,

but i think the longest-sitting friendship is actually with craig fuller because we both met as 172 pilots back in, oh, let me see, the last century. and it was actually longer ago than what might seem in the last century, but it was in the 1980s -- was it 1985? craig? no, it was 1975. 1975 in los angeles where we were both pilots and both involved in a way in politics. and so it's great fun to see craig here today. and particularly because he has certainly gone much farther ahead than flying a 172 and he's actually just as comfortable flying and being in the air as he is being in washington and walking the halls of congress and the white house. i think that he has spoken at more of our summits than anyone

else. this is at least your fifth summit, and we thank you for that. we particularly aopa for all that they do and i know he's got a great bio, as do all of the panelists. and so i will simply say this is now -- i will turn it over to the president and ceo of the aircraft owners and pilots association, craig fuller. >> carol, thank you very much. thank you so much. it's great to be back. congratulations to you and your whole team for assembling a wonderful audience here in the room next door. you've been very attentive. you've been very patient. and we're all that stands between you and a break and maybe a little lunch and all that sort of good stuff. i thought i would start with a little audience participation. now, don't get nervous, don't get scared and no one will get embarrassed. we're here to talk about airports. so far this morning we have had

a great discussion of things that fly. i've flown over 40 years as carol suggested. there is no more symbiotic relationship in aviation than between the pilot and the airport. very few people successfully fly around and avoid runways, most of the time anyway. so it's a very important relationship. and what i found a lot of people don't understand that much about this infrastructure that tom and others have talked about, as it relates to airports. so we're going to do a little pop quiz. i'm going to give you a few clues. there's about 29 or 30 major hubs. most of you, that probably all of you fly, used to fly in those carriers. actually they search about 450, 500 different airports around the country. so 50 states, 450, 500 commercial airports, it's sort of daylight now across the country. there's about 5,000 aircraft in

the system that randy babbitt was talking about that the faa is controlling. there's a considerably additional ones that are flying over the course of 50,000 airplanes will be handled today by the faa or traffic controllers. so when you think about -- i do have an official federal source for this. when you think about airports across america, all kinds of airports across america, how many do you suppose there are? so i said there's about 5,000 served by commercial airlines. so if you think there's more, then let's say 8,000 airports, put your hands in the air. hands in the air. this is the attendance participation part, come on, folks, more than 8,000 airports. keep them up. keep them up. keep them up. some of you don't get around enough, i guess. more than 10,000 airports, more than 10,000 airports. if you think there's more than 10,000 airports keep your hands up. more than 12,000 airports, keep your hands up. aopa staff is not allowed to

participate, i'm sorry. more than 15,000 airports, some are still believing this. 16,000, 18,000. more than 19,000? you work for the faa? [laughter] >> folks, there are, according to the faa in 2008, 19,734 airports in the united states, 19,734. now, it's sort of a trick question because 14,555 of those are actually private airports not available for public use. private airports that are not available for public use. i was at an airpark two weeks ago just below stanford airport, some people live on these private airports but there are 5100, 5100 public use airports. some publicly owned by public

entities, some privately owned but 5100. meaning that we have this amazing infrastructure that allows us the kind of mobility that was talked about. commercial airlines serve about 10% of those. they do it very well. they move us around the country. but those of us who fly general aviation aircraft were able to go lots of places. i thank carol by the way for this beautiful photograph above us. it's the cessna mustang. fantastic aircraft. it gets people all over the country. if you're interested in that or would like something a little larger, jack is here with us today and will be happy to talk to you. i'm encouraged as i get around the country and i now fly 350 hours a year, or more -- as i get around the country i see operations increasing. slowly, but it's growing. some places not as much as others. business travel is up.

of our air show activities that have already occurred this year -- larger numbers of crowds, people buying aircraft again. so we're encouraged by all that. but everything about aviation that's -- when it comes to flying starts and ends at an airport. so i'm particularly pleased to have such a distinguished panel with us today to engage for the next 45, 50 minutes and a little discussion. the bios as you have been told are in the book. i want to start next to me with dan goodwin. dan actually needs a little more introduction because he is a very distinguished businessman from the chicago area. the ceo of a real estate business of real prominence in that region but today, for today, more importantly, he's the chairman of the dupage county authority and represents a wonderful airport with a great success story that serves the

general aviation community and we're going to hear from him a little bit about how all that happens. greg principato is going to -- is going to help me fill in on all the other kinds of airports because he represents the airports council international and works with all kinds of different airport operators around the country. and then locally here our own lynn hampton who is the chief executive of the metropolitan airport authority is going to talk to us and share with me what i have to do to get in dca with one of my aircraft. but anyway, it's a great -- it's a great group. what i would like to start with is really maybe turning first to dan. and give us a little bit -- we've gone through a business cycle that's been the toughest in 70 years, the economists tell us. so describe what's happened in dupage county and how you in some ways i'd say beat the odds

a little bit with some encouraging growth certainly in the last year or so? >> well, i'll try to keep this brief. my role really has been to oversee the operation of the airport. the dupage county airport is a general aviation airport. and we're in the middle between a landing strip and the big passenger hubs. and our main business is dealing with corporate jets, charter flights, cargo and recreation. so those are the users of the airport. and we are fortunate and we have several runways and by and large our recreational planes land in one section of the airport and take off in our big arraign which is 7,200 feet. that is where we deal with the corporate jets and the charters. so about 8 years ago, i was asked by the dupage county board to become involved in the airport because the airport was

losing money. there were several scandals in the airport that the press was attacking the county board and the political leaders over the inefficiency. it was a big drain on property taxes for the area. and they asked me to come in and run it like a business. and with that mandate, i assumed control of the airport. and began a series of changes that dramatically altered the landscape for the airport. and we went from losing $2 million a year to where we make net profits of $2 million a year. we have lowered the property tax levee from $18 million a year down to $6 million a year. we have eliminated all debt. the airport had $28 million in debt when i assumed the chairmanship. it is debt-free and we have completed a recent economic impact study and our economic impact now has grown to the hundreds of millions of dollars

for dupage county. and the story of that would take about 5 minutes. you want me to tell more of the background or did you get to go to someone else? >> let me ask you a quick question and i'll come back because we want to hear more of the story in pieces. and i want to bring others in. but you're on the airport authority in dupage county. what kind of entity are you? >> we're owned by dupage county. >> okay. >> and we are authorized under a state statute. >> okay. >> so our rules and regulations were all established by state statute. and we are on the tax rolls, the property tax rolls and that was the big rub in the past that was draining the county property tax levees without producing much meaningful benefit. >> so i want to go -- we'll go a minute and talk sort of economic growth in what airports can do where we'll pick up with your story. lynn, i want to go to you. you're the washington airport

authority. what kind of entity is the washington airport authority? >> the washington airport is really a municipal corporation. we have a board of directors that are appointed by virginia, maryland, the district of columbia, and the president. but we're independent of all of those entities. we're organized very much like the port authority of new york and new jersey with sort of a multistate jurisdiction. we were privatized basically from the federal government back in 1987 so we're getting ready to go on our 25th year. and over that 25 years, we've done about $7 billion in construction. >> wow. >> and so over this economic slowdown, are you seeing things pick up some at the airport? >> we are seeing some pickup, but i will say something about the washington market is when times are good, people come to washington. when times are bad, people come to washington twice. [laughter] >> that's an enviable position to be in, i guess. so greg, tell us a little about

the association and the range of kind of membership that you have. >> thanks, craig. i want to i think that the chamber, too, for doing this. this is the second or third time i've participated in this. you know, one of the -- probably one of the reasons we don't make more progress sometimes in aviation issues nextgen or whatever because it's an internal discussion within the aviation industry. and the chamber by broadening the discussions of the broader business community i think really serves a terrific service and carol and tom and the rest have done a great job there. so i want to commend them for that. our organization represents commercial service airports, so if you -- if you're organized to accept commercial service, you can be a member of our organization. we do have general aviation airports as part of our membership. for example, i see a representative from the port authority teterboro, the port authority and teterboro is part of our relationship. we focus mostly on the commercial airports that you've

talked about before. >> are most of the commercial service airports are public entities of one sort or another. we've heard a couple of different variations here maybe but there are also private airports that have commercial activity of some kind, not too many. >> not too many. you have the one out in branson, for example, but airports are organized in a variety of different ways. they are very unique and worked in state government back in the 1980s and remember -- and i remember when that was done. there are some who are city departments. there are some that are regional authorities, there are a number of different -- i guess paul leerfeld in the back. they are all one way or the other one way or the other exceptions that you talked about -- they're all one way or the other public entities serving the community. and i want to get a little bit later to some of the -- some of

the unfavorable ways the federal government and the local entities -- the federal government gets in the way of the local entities being able to promote -- to promote growth and take care of that airport economic engine. >> maybe we'll get to that. let's bridge from the discussions we've been having about nextgen because, obviously, part of the nextgen discussions that are going on is what goes on with the aircraft and how do we make handling the air traffic, more efficient, more efficient. reduce distances between aircraft and weather. these aircraft are landing or taking off from your airport. so what's in it for the airports when it comes to nextgen and how are you all thinking about that. and maybe, lynn, we'll start with you? >> well, we are working with the faa really on the air space issues coming into the airport that lead into nextgen. you know, i think that the scheduling issues are really the key -- the key winner for the airports.

to be able to know when an airplane is landing and an airplane can take off which is the real win for the airports. >> and greg, are we going to have -- if we're managing aircraft in the air more efficiently, are we going to have congestion on the ground? how are you going to manage that? >> well, that's a huge point. we like to say nextgen begins and ends at the airport. you need to take off and you need to land. all the stuff you do in the air is great but if you don't ever get up there or have a place to land, then you've got a problem. right now, this sort of leads into the point i wanted to talk about a little bit. right now you have a situation where airports are local entities runned by the communities and you have a situation with the local government with the tacit corporation really of the airlines is standing in the way of local entities being able to invest in those -- in those local facilities so that -- i know you're in the real estate business, so that all that local development that could occur in and around the airport, that's also being stifled.

the airports are a real economic engine but it's actually people in the audience and the general business community may not know this but with a small exception it's illegal aside from selling hamburgers and so forth for the airport to generate its own resources through user fees the way it's done in the rest of the world. in the rest right world you have governments and airlines to invest -- ed bolen talks about 2 miles of runway will take you all around the world. we have a system in this country, frankly -- i appreciate the fact that mr. donohue earlier talked about the need for the airport improvement program and for that kind of investment, but the real bang for the buck and what's used around the rest of the world is getting away from reliance on government. getting away from a reliance on rates and charges from the airlines which come directly out of their bottom line moving towards a more user fee situation. the international air transport

association pushes this all around the world and you see the investments. you see the results in the middle east and the asia pacific, even in latin america. you don't see it here because a law that was passed preregulation prohibits airports with the exception -- it's called the passenger facility charge with the exception of $4.50 which all the way lends to 4.50 -- i flew out of dullis the other day. the $4.50 i paid for went for projects that were already completed and underway and that's pledged out for, what, another 10 years or something. >> 1938. >> 2038. >> 2038 and i don't think -- i don't think i'm still going to be working then. maybe, you know, somebody -- a young guy like craig still will be. and that's just ridiculous. and so mwaa can't generate its own resources to invest in anything now and 2038 at dullis unless it comes out of the

airline's rates and charges and that makes no sense. and he said we haven't been able to get out of our political way in washington and the past legislation that would either increase the cap or get rid of the cap like we have in most of the rest of the world. and the airlines unlike the rest of the world where they are pushing a user fee system and getting away from government grants and having it all come out of their bottom line, here they have been fighting with us because they want to have more control over the airport. it helps keep competition out. and i think this is -- i'm sorry to spend so much time on this but i think this is a critical issue and a critical point. you know, there's actually a couple of airports -- i think midway is one where their pfc is pledged out past 2050, a long time and so that mechanism is used all over the world to do all these wonderful exciting things you're hearing about in the middle east and dubai and abu dhabi and other places and australia and canada and the rest. we don't have that here.

and again, you know, the government and the airlines are working together to keep a boot on the neck of the economic growth engine that's the airport. >> greg or lynn or anyone and we'll get dan in it. if we had it and it was the will of the congress to approve it, what would the passenger experience? where would these charges go? what would it look like? >> one of the things i think is important to note here is these fees do not pass through the government. they are collected by the airlines for the airport. and so they are a local revenue in that sense. you know, it would be -- you know, an airport would have to decide what they're going to do with this money. right now it is limited to capital. you know, that's not the discussion we're having today, you know, if we could get some money for capital, that would make me very happy. if we were able to get this -- there's some things that we could do. you know, we have a temporary facility out at dulles that was

built in the early '80s. you know, if you stomp your feet in that particular temporary facility, you'll understand that it is a temporary facility. you know, we have spent an enormous amount of money continuing to maintain that building. we're spending another $30 million today just to add air conditioning in areas, to improve the air conditioning. we need that facility -- the facility needs to be improved. that facility needs to be improved not only because it's a temporary facility but the airport is basically -- it can't grow until we're able to replace that facility. so these are the kinds of things we would look at. this is important. at national airport we also have an old facility that was built by the airlines in the early '60s and that facility itself has the same problems. it has the same maintenance problems. it has baggage facilities that were built when it was built new in the early '60s. and again, that facility needs to be replaced in order for the airport to run efficiently. >> dan, let me pull you into this in two ways. first, let's go back to nextgen

for just a minute in terms of how dupage county figures into this. i've flown in there. you have approaches, you're using satellite-based technology to fly very precise approaches into that airport. so in some ways, those of us who fly in dupage are taking advantage of elements of this next generation system that relies on satellite-based technology. has that been growing at dupage county? is that something you look to increase in the future? >> well, we're fortunate in that we really don't have the issues with planes stacking up on the ground, and we don't have issues with planes landing. we've got several runways and it's just not an issue. in fact, one of the first things i did was determine where the airport got its revenue, what was the income? and i quickly found out that our best source of income was fuel sales, mainly jet fuel.

unleaded fuel we have some of that, but the big money is in the jet fuel. we get virtually no user fees. we don't count on that income and we really don't use that. we focus -- and one of the reasons is, we try to make the airport as inviting as possible and we're very competitive on fuel because that being one of our main sources of income, we want to attract as many planes to the airport, especially, transient flights 'cause they fuel up. and when we get a lot of big corporate jets who land there and fuel up. and we have a 24-hour customs so some of our corporate jets like mcdonald's and the other big chicago area companies base their planes there and fly to europe and that's great income when they fill up planes flying to europe. so fuel sales is very important. the other thing i did was develop a periphery of the airport with hangars and facilities for fbos. those are businesses that serve the airline industry. so we're collecting a tremendous

amount of rent now where we built over the last eight years from that and we're collecting the revenue from the jet sales, fuel sales. and that has powered the airport to be able to power down all this debt. >> you also have business parks and others that may not be on the airport grounds but they grow up adjacent to which, obviously, helps the tax base. >> that's another thing. as a developer i was able to facilitate building other businesses on the land surrounding the airport especially in the runway path because we want to avoid having any residential structures there for future problems. so we do have a business park and we have a golf course that we built. and the golf course serves two functions, water mitigation -- storm water mitigation as well as providing a neighbor who never objects to our planes taking off and landing. so these facilities also bring income into the airport. and so our goals is to completely remove ourselves from

the tax rolls by focusing on operations of the airport. we have reduced employment costs dramatically. in fact, when i got there and looked at the employee benefits, the employees were getting not only 401k plans but they participate in municipal retirement fund and social security and we pay patching -- the airport was paying matching contributions for all three. there were 18 paid holidays for the employees, overtime was triple pay. and that was largely because the airport was a patronage haven and it was used by the local political leaders to give business to their favorite contractors. and they were overspending on contracts. reforming all that caused this dramatic turn-around where we went from a losing operation to a profitable operation. in fact, since we eliminated the debt we've been able to build up a capital fund and we're paying for the widening and lengthening and hardening of our main runway

right now. that's an $8 million project and that's being funded by ourselves. >> so you in many ways -- well, you've certainly done an exceptional job and you oversee an exceptional airport but there are many others that i see around the country where you see this kind of economic growth, economic activity stimulated by the airports, airports that have commercial and private service. are there some lessons here in terms of how you find the financing to do the expansion that our friends who work on the commercial airports could take advantage of? >> well, our financing -- in the past financing was by issuing bonds and tax-free bonds because we're a municipally owned airport and, of course, the interest rates of tax-free bonds is much lower than taxable bonds. and we used that initially but then we paid all that off. so we're not really a good example because we're funding everything ourselves.

we're a little more fortunate now because of the growth in the income on the airport. but for other people, that is a problem. i heard the earlier panel talking about raising money when public/private partnerships and certainly that's a great idea. we've done that in illinois in many areas and that's a big advantage. and for the other airports to fund the runways -- in fact, traditionally we got most of our money for airport expansion from the faa as you well know. but we haven't gotten much lately. even though we still apply. >> right. >> and we're hopeful. we're hopeful that we'll be reimbursed for some of the money we're spending on our runway improvement. and we'll see. >> i don't know whether randy babbitt is outside or not, but i hope -- >> yeah, put in a good word for us. >> so, greg, there was money that came to airports because there were a lot of shovel-ready projects ready, i guess. and i don't know whether that's been spent. we hear some concerns that it hasn't -- that money hasn't been

spent as rapidly as possible. will that benefit the airports? will that have a lasting impact or is that a short-term impact? >> let me say a couple things about that. for those in the audience what craig is talking about is the billion dollars in the stimulus package. there's two aviation elements in the stimulus package. i'll talk about this and i'll mention the second. lynn really is the expert on that second -- the second element and let her talk about it. but the billion dollars in shovel-ready spending that went to airports, you know, you could have taken that whole billion dollars and spent it in atlanta. you could have taken -- you could have taken 10 times that and spent it in los angeles. and a lot of other places. the decision was made to spread it around the country as much as possible. i think there are about 300, 340 projects. the money was actually obligated very, very quickly, all but a couple thousand dollars were obligated and about half of the time that was given to the agencies to get it out and the people at the faa did a really marvelous job of getting the money out the door and creating

a lot of jobs. we went out to our members and we were able to note and document how many jobs were created with that money. one of the problems with it -- like i said, you could have put a lot of money into atlanta or los angeles or new york or a lot of other places. maybe washington. but $15,000 limit on how much could go to any particular airport. so smaller airport, you know, that money goes particularly far and there were some extensions and safety areas and some really important things that were done. in terms of -- in terms of being -- there was no game-changer. it put people to work. it got some projects done that needed to be done, that would have been taken a couple more years to do. it was good from that point of view. the money got out the door and the faa deserves a lot of credit. the other part of the stimulus that was -- and i want lynn to talk more about this if you don't mind because she's really the expert on this thing. we took airport bonds, two-thirds of all airport bonds are not tax-free. they're subject to the

alternative minimum tax penalty on them. and there was a two-year holiday given those bonds that redefies -- it defies any way of the two-thirds are. the market was frozen at that time and because of that provision that got passed 16 billion in airport bonds were sold, 12 were subject to the a & t. lynn you may want to address that. >> let me address the money. greg is right the billion dollars was spreads around the airports and it was capped when you have airport systems. our two airports we were capped at 20 billion. we were able to spend it right away because we had a lot of projects on the shelf. conversely, on the real project we were also building, we had $100 million. so, you know, that kind of shows you how this was skewed really towards really other type of business revenue in the aviation business. we appreciated both of them and it made a difference in both of

them. what greg is talking about is the amt holiday. back -- before we all knew the recession was going on, it was sort of in that -- is it or isn't days in august and september of 2008. many airports ran into a wall and could not sell bonds. there was no market for selling bonds, and that was because of this provision that any of the revenue from the airport bonds was subject to the alternate minimum tax and it had not changed when it was created way back in the '60s. so that meant probably half of this room or more than half in this room were subject to the alternate minimum tax and that limits the demand for your bond. so while we were explaining this to -- to congress that this was a problem in trying to get to the market, the recession happened and everyone noticed the recession and all of a sudden people started listening, understanding that airports -- if we could sell bonds, we could

build. so immediately when it was passed, we sold bonds. we did a lot of work. airports did a lot of work in this two-year period and as greg said, this has now expired and now you're seeing again airports starting to get back into the market but paying a penalty and the market has not taken off a lot yet so we're expecting the same kind of problem that we experienced because again the market for amt bonds is very limited. >> if we're going to have kind of expansion that i think marion spoke of and carol has spoken of in terms of passengers, what is the airports going to have to do? are we going to get new airports? are we going to expand present airports? some combination of both? >> yes. [laughter] >> yes, overall. i go back to the point i made earlier, airports -- some of the best business people i've ever met are the people who run

airports and who chair their boards. there are some tremendous business -- there's a lot of tremendous business running the airports. lynn was named chairman of the airports well deserved. and chairman plus one also got that award. some really terrific business people out there. but again, as i said before, airport leaders are hamstrung in how they can -- obviously, not everybody is, you know, have the advantages that you have -- that you have, dan. but out in los angeles and you look at a lot of other places they are hamstrung in being able to generate the resources, to do the projects that everybody knows is needed. when tom friedman writes that that your airport is the symbol of decay as a symbol as to what's going on in the rest of the world, that's an airport that needs investment and the woman who runs the airport has great plans and she has a great

mind for this but they're hamstrung in what they can do because they're limited in the resources they can generate. i want to go back to something lynn said before about the passenger facility charge and the user fee. lee says it's not -- for you conservative business people out in the audience there are a few, i guess, if you were designing on this blank sheet of paper a way to finance infrastructure, you'd come up with, you know, something paid by the user at the point of service, project-related. it has to be project-based. we have a couple of former faa administrators in the audience. it has to be approved by the faa. you have to consult with the airlines. not a single penny goes to pay a single bureaucrat's salary or benefits and all the benefits you talked about before. not a single penny goes to any of that. it sounds like a really good conservative way to fund infrastructure. and it's -- by world standards, what we're allowed to do is so minimal that that -- that that

is completely taken away. the government grant program is not going to expand. nor do we particularly need to have it expand. if we can do something about this, we can even cut the government grant program. i think a lot of larger airports would gladly say, no more government money. and a lot of smaller airports would say no more government money. let us generate our own resources and let's go and do these things. and if we don't get there -- if we don't -- if we can't do those things, the additional passengers that are being -- that are being forecast out for the next 220 years, it's going to be like thanksgiving day travel every day for them. >> if you're getting anxious to get in this debate, we can do some questions in just a minute from the audience. i want to come back to dan. i have the good fortune in going out to austin, texas, i think, in six or eight weeks. they are opening up a new executive airport. one of the things, i think, those of us in general aviation are very much aware of is that to the extent you can have success stories like dupage, like the new airport like they

are looking in austin for private aircraft, you free up some of the demands on the -- on the airports that are used by the air carriers where there can be congestion, are you seeing people come to you saying, gee, what we want to do in our city, in our community what you've done in dupage. is this something that's allowed to be copied is what i'm saying. >> i'm not saying every kind of airport has the same kind of abuses that dupage had when i took over. in some sense it was -- it was not -- it's not as difficult as it may sound. we compare ourselves to all the similar size airports around the country with our fuel sales and the number of takeoffs and landings that we have. and we've seen with this recession ending we've seen a

nice increase in traffic and a nice increase in fuel sales. and we have -- we just won -- yesterday, we won the state of illinois airport of the year award so recognizing the things i talked about. so what we did more -- instead of focusing on aviation is focus on the business operation of the airport. that was a little different. obviously, we're all about aviation. but we thought about offering regular passenger service, too, but the cost for us to do that would be huge. we'd have to reconfigure major areas in the airport to have security sections and allow for gates. so that's something that we still think about, but that's -- that's a little further off. so right now we're happy just being a general aviation airport, and i think some of the things we've done regarding the business operation, compensation, benefits and

competitive bidding, making sure we're getting -- keeping politics out of it, some of those things could be replicated in other airports. and -- but i think the circumstances that apply to dupage whereas i said were almost unique and really provided a wonderful opportunity. and i don't propose to know as much about aviation as the other people on the panel you know more about it, i'm sure. but i do know business and maybe that's the angle and have people who are good at business look at the business operations of the airport. the faa part of the airport, of course, is pretty well taken care of by the faa. we keep the snow removed and we keep the buildings in good condition and we maintain the security systems and that kind of stuff. but the faa does most of the takeoff and landing, most of the flight issues. >> you mentioned security, one more question from me and we'll

get the microphones around because we do have some good time remaining. you mentioned security. you know, when you've been on for a long time like carol said we could hang out at airports, commercial airports, general aviation airports one of the concerns i get from people as i travel around is that airports have become in many ways an unfriendly place. i mean, big signs, fences, barbed wire. the access isn't as easy. i guess i think i know the answer to this. but how -- what are you finding with regard to security? is it -- has it changed the way people interact with our airports? greg, if you would start or lynn. >> over the past 10 years, there has been a great change in the way the airports operate, really integrating with the tsa to operate the airports.

we've always operated safely. i mean, that's sort of the first thing that all of us do. no one will ever sacrifice safety. that's the faa certification process. the security process over these years has really been a learning process. and i will really say in the last two to three years the tsa has focused on customer service. they've looked at it. let's tell people what's going on. let's keep things moving. let's work together with the airports to be able to move people safely through the security procedures. you know, we have spent enough time looking at it to say how do we make people comfortable? if you go out to our airports you'll see what we call student ambassadors in gold shirts that are out in the concourses to be able to look at people and say, where are you -- is this person uncomfortable? can i help this person and reach out and make these people comfortable. you know, it is -- you know, one of the things that you see when you go to an airport or surveys show when you go to an airport, what are you expecting when you

get there? well, i come prepared for anything. they are coming with their boarding passes, coming ready for anything. you know, it is our goal to make sure that anything while they're there has an element of customer service. we provide restaurants. we provide entertainment. we provide anything to make people feel comfortable so that when they get on their flights or when they arrive, it is a good experience. tsa has been working with us really especially the last, say, three years or so to make that experience better. ..

>> we have concentrated on security and increased the size of our fences. we fenced in more areas. we have remote tv cameras placed on the perimeter of the airport, gates, dloked off certain roads, and because security isn't just for the passengers. it has to be for the airfield obviously, and the faa sent a letter saying they want emphasis on increased security in the airfield, and we did it, and i think we have one of the most advanced systems protecting the airfield, but not having the passengers you have at the other

airports is a big advantage. it makes everything easier, not that we wouldn't like to do it, but at this point, there's only so much you can do. chicago, of course, could use another major airport, but that's very political. chicago has -- >> actually we have one they tore up we want reopened. [laughter] >> right, but o'hare and midway are jobs for people and contractors get deals there, and that's all i'll say about that. [laughter] we don't go into their turf. we are a reliever airports and get flights when the two major airports are backed up or weather conditions are bad. with regard to keeping our

runways clean, last winter, we had the only dry runways in chicago on four different days. we were the first to have the cleared runways and kept them clear. there's things we pride ourselves in. we purchase our own fire trucks and work with the local fire departments for emergency issues so i think from a business management point of view, the airport is a good example with the caveat that we're not dealing with passengers, and that's a big caveat. >> the overarching security point and there's questions from the audience and there's a good panel later chaired by don phillips, and by the way, i will say that rosy and the folks who run the airport do a good job, but the point is on security. tsa got better in the years with customer service and there's

entertainment options and so forth because people spend more time past security. the point is ten years since september 11th and we put the metal protecters out and take your laptop out, richard reid with his shoes, and i would have put in my exploding underwear joke two years ago and people would laugh, but now we had that. we just keep adding these things one on to the other, and at some point it's not sustainable. i will say the airports, the airlines, a lot of people working together, a lot of them in the room talking about what should the system look like 5-10 years further down the road, let's develop a set of principles, more risk-based, intelligence sharing and those things so we can have a better passenger experience rather than just reacting and throw it it in

there and adding to the stress level for the passenger, and the reason of the chain it isn't to reduce the stress of the passenger although there's good security reason for that, but to make a more efficient system because a more efficient system is a more secure system and less efficient system is less secure system. >> i appreciate those comments. in the aviation community, we too are aware of the necessary security requirements. the last thing we want to see is another incident involving the aircraft, and then the restrictions will grow. i think we are all search r for what's the right balance, and anyway, we're in that one with you. how about some questions from the audience. there we go. there is a microphone coming and since this program is being broadcast to thousands of people around the country, use the

microphone. >> bob loom, beach croft. your question started out as what are you doing to promote young people getting into aviation at your particular airports. i'd like to hear from the panel because as you know and the industry knows, if we don't have our feed, you know, folks coming up, younger folks coming up interested in aviation, we will have to worry about the airports. we'll be scrambling. what do your airports, your members, dulles and national are more of a challenge, but what can we do to promote young people, the nose up against the fence type opportunities. >> is there flight training at dupage? >> there's a business that does training. we invite the girl scouts, boy scouts, high school students to

have a tour by our executive director, and it's exciting and motivational when they get there on the runway and look at the aprons, see the jets and watch them take off in the field, yeah, i think we're doing something. >> an annual event open house? >> no, we just make available dates. we pretty much have to schedule. we try to do it on saturdays when the students are not in school and they come out and take their tours. we did have air shows in the past, and there's some shows for military, but air shows are problematic. the insurance costs are very high, and they're not necessarily profit makers. they are really designed to develop new business for your airport and they usually end up costing a little bit, but that's the public outreach, and the one other thing i wanted to say about the stimulus money. when those programs came down, we decided to focus on the roads

around the airport leading into the airport because that's a different stimulus package given the states to do shovel-ready road construction and lobbied hard and got some significant improvements in our access roads, so from that point of view, we were able to benefit from the stimulus money. >> i'm sure there's active programs bringing people to the airport? >> we do, and i think it's a highlight of everybody's day. we have programs, i mentioned the student ambassadors in both airports, and as you pass through the airports you'll see our yellow shirts. we also have school partnerships with schools in virginia and the district running regular programs of bringing the students over to the airports and staff working with the students including most recently we started working with a trade school, and that has been just amazing because you know in this area there's not a lot of industry and working with a trade school and work and try to plan on bringing people in at

the younger ages into filling car carpenters and painters and these types of jobs. we have programs of internships, and many of the internships worked with us in the summer and during various school breaks, and they have seen aviation as a career and are now full-time employees. bringing people into the industry is important. one thing we have at national that people are not aware of, we have an aircraft maintenance school. it's one of the hangers, it's part of the university of the district of columbia, but i am told every graduate of that program gets a job, so i think, you know, it's something that we like, it's something that the young people coming around make the day sparkle. >> there's other examples, i'm sure? >> what lynn talked about in national and dulles is remitted around the country. my son was an intern in national

years ago, and now he works on capitol hill, maybe he can help educate people what happens at an airport. even if they don't go into aviation, they still understand the business better. there's airports working with schools, and even at the elementary level before you want them working at the airport, but getting out there. i have a dream still someday to get a real good faa reauthorization bill passed down the road, get this one passed and a good one passed later, to work with national geographic and groups like that. you can use aviation to teach so many things, and then really get people interested in aviation that way. >> time for one or two more. okay. i might take the final question. there's one over here, okay.

>> i'm bill culli began with itt. it seems like the funding for airports promote capital intensive projects, but the world and private industry seems to be gravitating towards services or cloud-based solutions in many cases. what could be done either with ait or pfcs to change their eligibility service-based approaches or cloud-based solutions? >> anybody want to take that on? >> well, i'm not real sure of the question, but i'll try to see if i can get into the cloud technology. i think all of us are looking at using cloud technology to sort of improve the efficiency of our i.t. systems whether it's security systems or just business systems. i think the cloud solution is something that we all look at to

become more efficient. i think the fact that we have, you know, 100,000 people a day coming through our airports, those are people you have to provide one-on-one services. we do have free wi-fi at the airport, but those are the services we want to provide people, and people and businesses take other intensive businesses to serve them. i hope that answers your question. >> i think with what i say is you mentioned pfc and ata and all that. what i look at doing is -- i'm not as tech savvy, i guess lynn and i are people of the 20th century, not the 21 #st century and it took me awhile to understand the cloud technology. the pfc is set up almost like a grant program. it's the airport's money, but there's restrictions placed on

it and all the rest, and i would argue airports prove good stewards of the money and they are run by tech-savvy people not only to run the airport better, but to improve the customer experience and help the airline attendance as well and so the restrictions should be taken off. it should be seen as green, airport capital. it's their money and they can use it for a variety of purposes. >> we're going to wrap up. i'll start with dan, ask you to think about each -- each of you think about the same question. we're sitting here across the stress from the white house. you leave the building, you happen to bump into the president of the united states next door, and he says, gee, i heard you were at the u.s. chamber of aviation and what should we do to improve airports? >> that's a tough question. i would ask not to have unfunded

mandates, requirements that the federal government puts on us that we have to fund ourselves. >> okay. >> very quickly, you want to invest in infrastructure, and you don't want to increase the deficits, so global it off the pfc, you invest in infrastructure, it does not add to the federal deficit, not a single dollar coming through washington, and it helps you meet both because you invest in infrastructure, create jobs, and no impact on the federal deficit. if you show me a way to create tens of thousands of jobs in that way, and unless you can't, mr. president, you should go in this direction. >> same direction. airports are economic engines for their regions. we have aging facilities, facilities that need replaced, and facilities that need to be built to grow. let us be able to do this, finance it it with passenger

fees. let us be able to access that market, and we can build it, and we can be that economic engine. >> well, let's hope they are listening across the street. i always enjoy these panels. we had a fourth member of the panel, and on behalf of ron ricks express his regrets for not being here. he's an executive of southwest airlines. he's a great friend of ours. they didn't miss his flight, but they bought an airline yesterday and got tied up at headquarters. please joined me in thanking this distinguished panel, and it's been great to be with you. [applause] >> well, gregg, you did not ask me, but i would tell the president that if there are anymore stimulus packages, please put the airlines and the aviation industry at the top of the list rather than the bottom. i think we were deeply offended by the way in which we were

treated in the stimulus package, but i hope there are not anymore stimulus packages. thank you very much. you were a great panel. greg, great to have you here, and certainly dan and lynn, first time, but i hope not the last. thank you all very much. [applause] well, we have some interesting surprises for you. first of all, this is going to be a long break. it's going to be a 25 minute break, but at 12:10, we really want you back in your seats. now, there is a formula in the way in which you'll eat. some of you will eat, and some of you won't eat. no, i'm just kidding. [laughter] sooner or later you'll all have your lunch. those of you who have a signal on the bottom of your badge that gives you a table number, that means that you get to eat in

here. all of the others who have nothing on their badge, we are going to ask you to wait in the herman lay room until they set up the tables next door in the briefing center, so you will eat a little bit later, but we'll all eat at the same time and we'll all hear not only the presentation was carol hallett award, but you'll also then hear our keynote speaker. now, before you leave, let me tell you a couple of things because here in the briefing center, we have some of the displays as well as the fabulous display of the 787. across the hall in the herman lay room in about three minutes, a very exciting display is going to start, and it will include

jet fuel. we have os treian airline pilots who are going to be walking around the room with their jet fuel packs on their backs filling up your coffee cups with high octane and low octane coffee. that will be fun. at the same time, the 787 similar mewlator is in there, and it is a knockout. when you see it, you won't believe what the future holds for us, and we are so lucky that the faa put this in here, set it up, and they are going to be doing actual simulators. we have the aopa simulator, so many of you will have the opportunity to operate those sims and actually fly, and we are most appreciative for the effort made to put them here. i am going to ask you when you come back for lunch, please sit

in those assigned seats, and all of the rest of you have a bc i am told on your name tag, and i don't know what bc stands for, but you can figure that out. it means you're going to be in the business center, so with that, we'll see you back here at 10 after 12, and thanks again to our panel. [applause] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] >> leave your things on your chair, and please get out of here. [inaudible conversations] [inaudible conversations] >> so as you heard the moderator saying, she's encouraging people to take lunch. it's a 25 minute break, and when the chamber of commerce aviation continues, we'll hear from boeing's airline company. aviations impact on alternative fuels with officials from the biofuel section and boeing and others and discussion on airplane and airport safety followed by a look at the next ten years in the aviation industry. we'll have live coverage in 25 minutes here on c-span2. with the nation's first caucuses

10 months away, c-span goes to iowa to get the talk there about the potential presidential candidates. live coverage at 1 eastern on the exchange program from iowa city. tomorrow, the jich fisher show in davenport, iowa. at 2:15, ben benanke holds the first reports. today, he'll answer reporters questions about it, and you can see live coverage on c-span at 2 p.m. eastern followed by your phone calls. tonight on c-span2 book tv and at 9 eastern, former defense secretary on his mom mori, and 10:15, author, bruce riedel

looks at the global jihad movement. our coverage including highlights of past dinners and your comments from facebook and twitter streaming at c-span.org. >> well, the aviation commerce is at lunch, we'll show you comments from donohue's goals

for the conference. >> anyway, carol, thank you, good morning, everyone. we appreciate everyone who has taken time out of very busy schedules to join us here today. i want to particularly thank carol and the national chamber foundation team for putting together another outstanding conference. i understand as she said this is the best attended we ever had a in this town and in this room, i find that's generally created from an equation that the level of problems have gone up, and therefore the level of attendance is more significant in looking for solutions. i think the high level of interest is being driven by one overriding question: what's next in the aviation industry? the industry weathered a decade of storms since we first started hosting this annual summit 10

years ago. that was 9/11 and the war on terror. there was two recessions, the last one most severe since the great depression. the silver lining in the storm clouds was the suppressed demand that took the pressure off the system that was reaching its limits, not only at aviation, but let me say also in ports and roads, and all of the supply chain system and the movement of people and goods was being pressed with a fast rising economy, and we got some relief on that. the bad news was $60 billion in losses for passenger airlines, and the loss of 150,000 jobs. airports had to get creative to accommodate new and existing security requirements, cargo

airlines struggled to deliver on customer expectations like nest business day delivery while keeping up with those same security requirements, and don't forget huge spikes in fuel costs wildly flux waiting fuel prices threaten profitability in an instant. i'll probably say more about that, but just look what's going on in the last days, and yet in what may have been the most challenging decade in aviation history, safety has actually improved. several airlines manage themselves back to profitability through consolidations, alliances, adjustments to fleets, schedules, and alla carte to passengers. overall, this has been tough on aviation. where do we stand today? the faa says the industry turned a profit last year of $9.5 billion as the u.s. economy began to rebound, so we're doing

a little better, but there's a difference between doing a little better and doing well, and we're not doing all that well yet. there are many challenges ahead, perhaps the biggest one is this: how are we going to deal with an expected 36% increase in fliers by the year 2015 and huge increases in cargo? today, we don't have the infrastructure to accommodate that. it's been almost four years since the faa bill was reauthorized, and we're making progress towards getting a good bill now, but we've lost a lot of time. funding for badly needed systems like nextgen is inadequate and imp policemennation too

slow. we need our own equipment. there's mischief by national labor boards are also major obstacles to success. why should the public care about these challenges to aviation? they just want a ticket, get on a plane, and go some place. let's not forget commercial aviation accounts for $1.3 trillion in economic activity. that's a lot of jobs. that's a lot of economic activity, or 5.6% of the whole u.s. economy, and supports 12 million jobs. the nation's economy relies on a safe, secure, and efficient aviation system, so how do we get from doing better to doing well? by concentrating on the fundamentals? that's what we say in business all the time. by assuring a sound

infrastructure, modern technology, reasonable regulations, a flexible work force and stable energy prices, stable energy prices. now, there's another whole meaning. here's a brief flight plan to help the aviation industry take off. first, let me say a word about infrastructure. nothing is more fundamental than basic infrastructure. we need to expedite air traffic modernization and grow systems capacity through smart investments. that is what is needed to get the faa reauthorization bill across the finish line. it's been passed by the house and the senate, so let's get the conference going and the deal done. nick will take care of it and report back to us shortly. what will the chamber look for in an faa bill? first adequate investment to fully realize the benefits of nextgen. we have to get on with that.

components of that system are operating. a few weeks ago the high-tech air traffic control system command center was dedicated. it's an infrastructure element that drives increased productivity and greater mobility for passengers, freight, and business aviators and reenforces our commitment to safety. the command center is a true success story, but we can't stop there. we'll never achieve the full benefits of nextgen if we don't equip the planes with the technology necessary to make the whole system work together. let's be frank. the equipment required here represents a large investment, perhaps as much as $5 billion. although, you know, $5 billion doesn't sound like quite so much money as it did some years ago. i mean, we're moving $5 billion around like