at the national press club

at washington, d.c. if you missed any of the remarks or want to watch them again it will be up on our website shortly. an update on democratic candidate for president hillary clinton. the share of the senate select committee says the state department has released 300 self-selected e-mails from the former secretary. one of those e-mails the associated press reports she received classified information on benghazi on her private e-mail server. that was classified today at the fbi's request. the e-mail in question relates to reports of arrested in libya of possible suspects in the attack. it was not classified at the time the e-mail was sent but was upgraded from unclassified to secret. 23 words of the november 2012 e-mail were redaktcted. you can read more at yahoo news from the associated press.

this weekend join c span for some of this year's commencement speeches including va secretary robert mcdonald. and back in 1983 when i was graduating from high school, the song that has stuck with me for the last 32 years is a song called hold onto your dreams. y'all too young to know that. anyways, i'll go back to y'all. all right. would you go ahead and start the music, president? oh, he said he forgot the music. never mind. i'm going to sing it. will y'all just help me out here? thank you very much. ♪ hold onto your dreams ♪ y'all don't know good music.

i'm going to just tell you the words. the song simply says, hold onto your dreams. believe in love and let love be the light to show you the way. >> saturday commencement speeches from around the country at noon eastern on cspan. this sunday night at 8:00 eastern on first lady, influence and image. we'll look into the personal lives of three first ladies. her husband william henry

harrison dies after a month in office. leticia tyler becomes first lady but she passes away just year and a half later. the president remarries julia tyler who is the first photographed first lady. this sunday night at 8:00 p.m. eastern. examining the public and private lives of women who fill the position of first lady. from martha washington to michelle obama. sunday at 8:00 p.m. eastern on c-span. it's available as a hard cover or ebook.

senators heard from faa add administrator. on the next generation or nex gen system. the hearing ran just over two hours.

this hearing will come to order. good morning. with an examination of the air traffic control system. let me begin by thanking aviation sub committee chair and ranking member cantwell for taking us on several hearings on the way to this full hearing. it's been a busy work period and great deal of progress has been made. at the same time increasing demand, the need to improve efficiency and changes in technology all underscore the need to modernize a system radar based using concepts and procedures developed decades

ago. we have stacks of reports from the dot's office of inspector general and accountability office detailing implementation delays and cost overruns plaguing the efforts for decades and stymied leaderships for multiple administrations. the reasonable initiative in the area is the next generation air transportation system or nextgen. before this was begin a name, the original goal was something called free flight. this was expected to resolve in the transformation of the system away from air traffic control to air traffic management. taking advantage of gps for knave gags and surveillance at the heart of the idea. faa would save money eliminating radars and save time, money, and fuel by choosing direct routes. more than 15 years after the faa talked about free flight, we still seem to be more than a decade away from anything

resembling it. in fact, a recent study by the national research counsel concluded that nextgen seems to be more about incremental programs and improvements rather than a transformational change. airlines and other operates in the system feel burdened with the expense and burden of implementing changes not yielding benefits to them for many years to come. this led stake holders and policymakers to question whether the current structure is best suited for the task at hand. long standing difficulties with modernization are a reason to consider reform. the systems reliance on annual transportation appropriations and the vagaries of the political process makes long term management footprint difficult and probably more costly. and the faa will face challenges attracting and retaining the talent needed to drive major

technology change when it must compete with cutting edge businesses in the private sector. to address the challenges, we have to carefully consider a way to better deliver services for the traveling public and air space users. i'm open to considering all ideas. faa has a great record as a safety regulator, something to continue if air traffic control services we removed. many countries around the world have had transitions with success, and i look forward to hearing from the witnesses today what reform looks like and how reform can serve the needs of all air space users. to be sure, the matters we discuss today are just part of the larger effort on faa reauthorization to address a host of other important issues. i'm looking forward to working with ranking member nelson and other members of the committee to advance such legislation. lastly, i want to stress that our interests about atc modernization are not focused just on the leadership team at faa.

as i mentioned before, it is clear that there are structural limitations that impeded success over the years. the question is whether we were to build a system from scratch today, would we necessarily conform to the old structures or strike a better path? i look forward to the discussion and turn to the colleague, senator nelson, ranking member for his opening remarks. >> thank you, mr. chairman, and, senator thune joins me to acknowledge the families of those lost on colgen air flight 3407. your presence here is a reminder of how much is at stake with the safe operation of the aviation system, so, thank you for being here.

obviously, we have the busiest, the most complex air space in the world. thanks to the hard work and dedication, faa employees, we have an agency that is providing the safest, most efficient air space in the world. yet, the negative impacts of the uncertainty of the funding and the sequesteration, have led to widespread concern about the funding of federal programs and federal operations. if you take a meat cleaver approach instead of the scalpel approach, the sequester forces irresponsible budget decisions in our domestic and defense programs. now some of you will suggest that the answer is to privatize the faa and air traffic control. this senator feels like we ought

to get budget certainty and repeal sequestering. if we do not, the situation will worsen when additional budget cuttings return in 2016. the faa has faced unpredictability for so long. the last faa bill took four years and involved 23 extensions and a partial faa shutdown. now, the good news is that we are working together to do everything possible to get this faa reauthorization going. in the past, because of that uncertainty, because of that sequester, the faa has had to furlough employees, implement a hiring freeze, temporarily close their academy and halt the work i've had the privilege of seeing on the programs.

this has set the faa back in its progress to advance air traffic control modernization. so the conversation about moving air traffic control into private not for profit entities has impact far beyond you witnesses here today. take, for example, the department of defense, they take responsibility in controlling air space with the faa, and they have for more than 65 years. today, the department of defense controls about 20% of our air space for civilians as well as the military. faa and dod coordinate activities to ensure our

military can train war fighters, test new concepts, equipment, and defend the nation. air defense, right here in the continental u.s. no other country in the world has the defense assets of the u.s., and we have to ensure our defense interests are not harmed by removing the government from air traffic control, and i can tell you that the department of defense has visited me and they don't want any of this privatization. well, look at the airlines, even the airlines are not in agreement. let me quote from delta, quote, rather than wasting collective months of energy only to find

ourselves with a less efficient, less responsive, more bureaucratic like, costlier, monopoly service provider, we should instead focus efforts on achieving real reform in the next authorization that brings about tangible benefits for operators and more importantly for the traveling public. end of quote. that's delta. so since aviation is the backbone of our u.s. economy, we must prioritize air traffic control investments for the good of this country. >> thank you, mr. chairman. >> thank you, senator nelson. we have a great panel today, led off by the administrator, he'll be followed by the honorable

john, the president, business round able, and, of course, former governor, the honorable byron dorgan, former colleague of ours from the other dakota. and a former member of the committee, and the chairman and president and ceo of united airlines, mr. paul renadli, president of the air traffic association. a great panel. we look forward to hearing from all of you, and we'll start on my left, your right, with the administrator. please proceed. >> thank you, senator, ranking members members of the committee. thank you for inviting me to speak today about the reauthorization of the faa. the upcoming authorizations provides us with the opportunity to propel our system to the next level of safety and to foster the kinds of innovative climate that's long been the hallmark of our proud aviation heritage. this reauthorization provided a

forum for many an industry and government to openly discuss possible changes in the government structure of the faa to help us create the aviation system that will sustain our nation's economic growth well into the future. we're open to have the discussion. we must all agree on the most important problems reauthorization should fix. in our view, the budget instability and lack of flexibility to execute priorities. these challenges exist in the entire agency, not just the air traffic control system and nextgen. we have to agree on finding ways to avoid unintended consequences. deploying these technologies depends on relationships within the agency. it's more than installing technology in the air traffic facilities and on aircraft, but involving close participation of the safety organization to ensure that the technology is safe and controllers and pilots

know how to use it safely. we believe that any discussion about governance takes into account the issues so that we may best serve our nation and flying public. some say the faa has not delivered on modernization. i argue that the faa already made progress in modernizing the system through nextgen. we completed the installation of the powerful technology platform with the air traffic control system. this system accommodates the applications of nextgen and allows controllers to handle expected increase in air traffic efficiently. we finished the ntsb network as well. on a parallel track, through our collaboration with industry, we identified key priorities in implementing next gen air traffic procedures. we have more satellite based procedures in the skies than traditional radar based procedures.

we have created new nextgen roots in the busiest areas saving millions of dollars in fuel, decreasing carbon emissions, and cutting down on delays in each city. in addition to the improvements, we have set clear priorities in delivering more benefits in the next three years ranging from improved separation standards for heavy aircraft, better coordination, and streamlined departure clearances using data communications. we have yielded $1.6 billion in benefits to the traveling public. in the next 15 years, changes already made produce $11.5 billion in benefits. we recognize, however, it's not enough to rely on projected benefits, that's why we go back to study benefits that certain improvements provided to users. for example, in atlanta, we safely reduced standards to improve efficiency at the airport. this reduces the number of planes that can land. delta airlines is saving up to two minutes of taxi time per flight, and this saves them between 13 million and $18 million in operating costs annually.

we're aware of the criticisms of the faa's implementation, and i would like to explain the approach. there are different theories how to deploy technology in a complex operating environment. some take the position that you should start from a wide ranging vision and work back from there on developing a range of scenarios. others suggest that mapping out the entire picture and only proceeding when you are sure of the end game. others say to take a more pragmatic approach, and this is the path the faa has chosen based on close consultation with industry. this approach used by the office of management and budget matches investments with tangible benefits with airlines and passengers. we acknowledge it requires investment, but we're careful not to strand programs in the middle of implementation.

when dealing with change in the system, there's no margin for error. the system has to transport $750 million passengers every year with the highest level of safety. any technology we implement has to be reliable and safe from the outset. to achieve the high standard, we have to remain nimble and have flexibilities. our aviation system is a valuable asset for the american public. we should use the upcoming reauthorization to provide the faa with the tools necessary to meet the demands of the future and to minimize disruption to the progress already made with nextgen and implementing new users into the system. i thank you for the opportunity to appear before the committee today, and i'm happy to take your questions. >> thank you, administrator. >> good morning. thank you for the opportunity to

receive this morning. the business round table members include leaders companies and every member relies on air traffic transportation. as the 20th century drawing to a close, u.s. aviation set the standard for the world's largest, safest, technology advanced system. we have lost our position and future leadership is in douse. the u.s. air traffic system remains the world's largest, safest, but not the most advance ed this relies on the same technology, ground based radar and voice radio transfer as it did in the 1960s. all the technology is still analog. like many other stake holders, we are concerned about the halting pace of the modernization represented by the next gen program. the national academy's report the committee has released this month clearly stated the

problems. the original vision is not implemented today, they are not motivated to spend on equipment and a training, and a modern traffic system offers tremendous benefits to the users of the air space. more efficient flight paths, reduced fuel consumption and crew time, lower emissions, less noise pollution, leadership, and increased services to community airports. what's the obstacles? last year, my seat mate here, faa administrator, offered one explanation in a speech at the aeroclub of washington. i quote, there's no way the faa

can implement nextgen, recapitalize the ageing infrastructure, and continue to provide current level of services without making serious tradeoffs. senator nelson referred to that in the opening comments. we agree that i believe on this critical point that the current funding system does not provide the needed resources. a deeper problem is the broken process itself, preventing the faa to pursue the step-by-step improvement that is standard elsewhere, certainly in the business world. for example of what works, look at at&t and verizon. in the years the government has been talking about this, four generations of cell technology from flip phone to streaming videos have been adopted. the faa is trying to fund a doctor 20 -- $20 billion effort with unpredictable cash flow. others issue long term revenue bonds to finance modernization. bonding is something the faa can want do. states do it. private sector does it. the federal government does not. i convened a group to study the issue, including former faa transportation department officials and knowledgeable

policy advisers. their conclusion? this is too costly and inefficient. they identified elements of an alternative system. separation of the air traffic control operator from the regulator, to improved transparency and accountability and further increase safety. organizational structure that accounts for multiple objectives so safety and access are valued along with cost efficiency. governance of the air traffic control by a board appointed by stake holders. this structure allows those to be fully self-supporting without government financial support and completely free of the federal budgetary process. the capability to accelerate modernization, and wage and benefit structures protect

employees, prevent career expectations, and preserve a collaborative culture. over the last two decades, most other western countries restructured the way air traffic control is funded and governed, determining it's a high-tech service business, part of critical infrastructure funded directly by users and customers, use an entity independent from the rest of the faa. that's a manageable process. tools and precedence exist for addressing the risks that come with this, and thorough planning is, of course, necessary. in the end i hope you, as the senators responsible for the oversight of the faa, use the reauthorization process to put america on a trajectory to a modern system that's, again, the gold standard for the world. now is the time for decisive bipartisan action to restore america's global leadership. this is round table that looks

forward to working with you to achieve important goals. thank you. >> thank you. >> mr. chairman, thank you for the invitation, and i badgered witnesses, and we'll see. for the past two years, former transportation secretary have cochaired a project at the transportation institute looking at the subject of air traffic control and the structure of air traffic control. i was the chairman of the aviation panel the last time that we worked on reauthorizing the faa, and there was a headline from the moment where we succeeded, and it said after five years of debate, 23 short term extensions and a partial shutdown, congress approved the final version of the faa bill. my hope this time around is that

your headline is shorter and conclusions bolder for this reason. aviation is one of the major arteries of the american economy. the fact is the issue of effective air traffic control is essential to the industry. i think we've come to an intersection where we have to decide, can we retain our leadership and develop the new technology and the next generation air traffic control system? can we retain leadership with the current structure? i say we can want. the conclusion was after two years of work with stake holders from around the system, if we want to retain america's leadership with the most advanced technology with ground based radar to next generation satellite guidance, safer, faster, and more efficient, if

we want to retain that, we're going to restructure the air traffic control function. a couple facts. no question we have an impressive record of aviation with more to do. i know that the families of the crash victims are in the room. get to know them. over the years, they played a very important role in continuing those safety improvement issues with the faa. number two, the air traffic controllers do a terrific job every day, steering 30,000 flights, 2 million people as they fly across the country. number three, the people of the faa work hard on the issues, including air traffic control and nextgen, but they necessarily work in the thick glue of the bureaucracy, and, frankly, that is hard to do with these kinds of challenges.

here's the key point. the key point is that in order to create a new modern air traffic control system, you have to have stable funding. that's nearly impossible for the faa at this point. in a time of congressional spending constraint, they can't count on stable funding, and, in fact, they can't count on level funding. look at the budget just passed and the facilities and equipment account. that's going to be 355 million dollars below that which was requested and the lowest in 15 years. that's the account for the faa. as much as we wish it would, the budget picture will not change. they're going to be more spending restraint, see the impact of sequestering, the impact of layoffs, on and off again stutter start stop funding for continuing resolutions, and that's what the faa is confronted with. no one would or could build a major new technology project with those kinds of challenges. now, here's the headline from last week in the post, and i

know it causes hard ache in the agency. is says, quote, faa is not delivering what was promised in a $40 billion project, unquote. it refers to the modernization of the atc system. that what change is needed. in our work at the institute, the consensus of the stake holders was we need to restructure to a government corporation or a nonprofit organization with bonding capability, stable funding, and the ability to plan and to control and finance the march to modernization. we've reached the tipping point that requires, in my judgment, action by congress. i'm not the typical spokesperson that comes to the table and suggests that be the case. i'm someone who normally would weigh in on the side of having the agencies do it. in this case, there is not going to be stable funding to move

this country towards the leadership necessary in the nextgen opportunity for air traffic control. now, let me -- i understand this is not easy. i understand it's a big lift. it's been discussed before, but it needs to be done now. other countries, a number of other countries have done this very successfully, and so can we. finally, mr. chairman, we know the history, december 17th, 1903, the first flight. we learned to fly. then we flew to bonfires for guidance at night. then we flew to light stamps pointing in the sky for guidance, then ground based radar, and for 50 to 60 years, we have not changed. now we need to change. we need to do it quickly and effectively, and in my judgment, the only way that's going to happen is if we create some different structure, and i suggest a government corporation or nonprofit organization to accomplish what we all want to accomplish for the country. one final point. i know the word privatization has been used. i did not use it. there are other structural approaches including, as i say, government corporations and nonprofit organizations that

solve the problem for this country and allow and insist the government retain and be a stake holder in a new organization. mr. chairman, again, thank you for the invite. it's really a pleasure to be here and see all of you. >> thank you, senator, and nice to have you back, and i'll turn to you. >> thank you, chairman, ranking member nelson, and members of the committee for the opportunity to be here. the reform of the air traffic control system is a critical issue for the users of the national air space, for our passengers, employees, and for the many stake holders across the country that benefit from the healthy aviation system. aviation for america dedicated a tremendous amount of resources, time, and attention developing a rigorous, fact-based study of air traffic control reform including a global survey of best practices for operation of error navigation service providesers. the work points to one conclusion, the air traffic

control system needs complete transformation to meet demands of the future and time of the transformation is now. we cannot continue with the status quo. today, all users of the atc system are beholding to a world war ii era radar based system that while world class and safety is inefficient and delay-ridden. for decades policymakers and stake holder unanimously recognize the these for modernization. a long string of reports from presidentially appointed aviation commissions, the department of transportation inspector general, accountability office, and independent experts have found the progress delivering capabilities has not met expectations. calling into serious question the agency's ability to deliver on its mission under the existing funding and governance

structure. the problem is not the leadership or the work force of the faa. it's the funding and governance structure that we must fix. there are many countries around the world that have already successfully transformed their own air traffic control systems. a 4 a has done extensive benchmarking of the success of the models. our analysis suggests the following six basic principles for success of a transformed air navigation service provider. number one, the atc operations and safety regulation functions. two, a nonprofit corporation operating the atc system with independent multistake holder board of government free of decision making. three, an effective management team of the atc provider incentivized to pursue efficiencies without constraints imposed on government agencies. four, a fair self-funding user fee model based on the cost of atc services, allowing access to capital markets and a steady predictable, reliable stream of funding not subject to government budgetary

constraints. five, the ability to manage assets and capital investments in a way that allowings far greater speed to market for technology innovation, and, six, transparency in user fees so user and customers alike know what they are paying allowing users full ability to recover costs. under a transformed atc system, the total of new user fees for airlines to pay for the new entity plus new fees fund the remaining faa do not exceed the burden on airlines and passengers today. with independent government, oerms, and transformed atc system, the faa could turn its attention to safety regulation and oversight. a transformed atc system could continue to maintain safety as the utmost priority while creating efficiencies, delay reductions, and environmental benefits from reduced feel burn. the inefficiencies, delays, and costs of the current atc system only grows over time so there's

no better time to transform the system than now. we are capable of rising to the challenge as have many other countries before us. if we conduct the transformation methodically and thoughtfully while giving proper consideration to transition issues and risk mitigation. the result of the transformation is a modernized service provider that better delivers the benefits that the users of the system, our employees, our passengers, and this great nation expect and deserve. thank you. >> thank you. >> thank you for the opportunity to testify today at this important hearing to discuss the future of the aviation system. we all have a stake in the national air space system. it's an economic engine for the

country, contributes 1.5 billion to the gross product and provides 12 million american jobs. we invented aviation in the country, an american tradition, and over the last 100 years, we dreamed, innovated, implemented the unbelievable in aviation. currently, we run the largest, safest, most efficient, most complex, most diverse system in the world. our system is incomparable and unrivalled by any other country. for example, the next largest air space to the united states it canada, running 12 million operations a year. on average, the united states air space system runs over 132 million operations a year. the united states air space system and the faa's considered the gold standard in the world of aviation community.

yet, the reality is that in order to keep the honor, change is needsed. currently, there's many challenges in responding to the given problems of an unstable, unpredictable funding stream including, but not limited to the the inability to finance long term projects, and the inability to grow the system for new users, community, and commercial space, inability to modernize our ageing infrastructure. currently, our 20 en route centers throughout the country are over 50 years old with no plan of replacing them. we are struggling to maintain the proper resources and staffing facilities. our certified controllers are at an all time low. the upcoming reauthorization bill must address the lack of a predictable stable funding stream for our continuation hypercritical safety aviation. we understand that addressing the stop-and-go funding problems

will lead to an examination of a potential structure change for the faa. we believe it's time for change. the current system is not dynamic enough to address needs of control operations in the future. any such change or reform must be carefully examined to prevent unintended consequences of negatively affecting the safety and efficiency of our national air space system. every stake holder in the national air space system should work together to make sure that the united states continues to be the global leader in aviation. any reform must address the safety and efficiency of the national air space system. it must be mission driven. it must have a process that provides a stable, predictable funding system to adequately support air traffic control services, staffing, hiring, training, long term projects such as next gen, and any change has to allow for continued growth in the aviation system. any change must be dynamic. the aviation system must continue to provide all services to all segments of the aviation community. any change we make needs to be precision-like so we do not interrupt the day-to-day

operation of the national air space system. our system is an american treasure. aviation is uniquely an american tradition. it cannot continue to be shortchanged. we are still currently recovering from a sequester cut of 2013. another round of cuts that are set to take place this year will shrink our country's aviation footprint forever. we need to make appropriation changes to secure a stable funding stream for aviation, establish a government structure for the air space system, a structure not laden with bureaucratic lines of business or burdened or marred with bureaucratic processes. we need a dynamic structure that's nimble. we need a structure that allows

us to grow aviation, not shrink it, grow facilities, equipment, procedures, technology, in a realistic time frame. we have to have a competitive edge to insure future leadership in the country. i thank you for the opportunity to testify today and look forward to the questions and any questions the senators may have. thank you. >> thank you. >> thank you. general aviation is an important american industry representing over $200 billion to the economy. this employs over a million workers. the united states fosters economic development in small towns and rural community. this helps companies of all sizes be efficient and productive. it helps with our humanitarian

efforts whether it's responding to forest fires, flooding, or getting transplanted organs to treatment. nbaa is hop norred to be here today. we represent over 10,000 member companies, companies of all sizes. companies in all types of industry. we also represent hospitals, universities, nonfederal government profits. 85% of the members are small and mid sized companies. they generally are operating out of small towns and markets and flying either from or two an airport with snow commercial service. business aviation is fundamental to the economy, small towns, and mid sized communities in the united states. typical of the membership is engineering from washington, a high-tech engineering community located in a community with very little commercial service, but it's able to compete effectively in the international market because it has access to business aviation.

mr. chairman, every member of the committee has a company like that in a community like pullman. just as a matter of perspective, there are fewer than 500 communities in the united states with any type of scheduled airline service, there are 5,000 communities in the united states that rely on business aviation for economic support. this reauthorization bill has a load to do with communities like pullman and companies like others. why do i say that? because the air space above our heads belongs to the american public. it does not belong to any one stake holder or any industry

segment, and our nation's air transportation system serves and has to continue to serve all americans across this vast country of ours. the question on the table, the fundamental question of reauthorization is who is going to ensure that our public air space serves the public's benefit? will it be the public's dually elected officials? will it be some combination of self-interested parties? for decades, suggestions have been made to make congress wash its hands of the air traffic control system. give over to other parties taxing authority and the authority determines who can access airports and air space. this is something pushed long before this was a concept, and long before sequestering. these interests have been wanting to sweep authority to determine who gets taxed what and who flies where and when.

mr. chairman, the power to tax is power. who is the power to ensure nondiscriminatory access to airports and air space. congress should not advocate, relegate, delegate, or outsource its authority over taxes and access. congressional research service said to do so may be uninstitutional. currently, the united states has, by all measures, the largest, safest, most efficient, most complex, and the most diverse air traffic system in the world. the business aviation community is not content with the status quo. no american should be.

being the best today does not mean we're the best tomorrow. in fact, complacency is our enemy. that's why the business aviation community has been active and outspoken in the support for next gen. in fact, no industry segment has done more. our members have invested in technology, and we urge congress to do the same. serious problems do exist with the program. to date, programs have been delayed. implementation has been slow. we still have a lot of work to do in terms of certifying technologies. it's time to focus like a laser on the problems. it's time for us to not be distracted by what we need to do. we need to use this faa reauthorization bill to make sure that we are making this program a reality, to make sure

we're improving the certifications and approval process, to make sure we protect our nation's system of airports, to make sure that we are certifying and implementing, integrating in a safe way uavs. there's a lot of work to be done. nbaa and member companies look forward to working closely with you to do it. let's just never forget that the public air space should serve the public's benefit. >> thank you, mr. bowling. you were very first time. everyone was close to the five minute rule. even our former colleague managed to adhere closely to that. [ laughter ] i have a couple questions, a little off topic, but i have to ask because over the weekend there were media reports indicating a security researcher claimed to have temporarily taken control of an engine on a

passenger aircraft hacking into the inflight intertapement system. if true, this would be a very disturbing incident. what's been the faa's response to the specific incident, we're cooperating with the fbi in their investigation of what actually they're finding as they're working in that. as it relates to the larger question of cyber, this is something that is an ever-evolving threat and something we're looking at carefully and taking very seriously. not only in the operation of our system but in the manufacture of aircraft. that means we're working closely with the manufacturers to understand how the threat morphs, how it evolves and changes, and how do we stay ahead of it. by having, as we always have many layers of security and control over access to critical systems within the aircraft. i will say that i think cyber is and will continue to be a very

significant challenge not just in aviation, but in any technology-based sector. it is something we have to work cooperatively across government and industry to be sure we're staying ahead of it. >> the incident over the weekend is still being investigated? >> yes. >> nothing to report at this point? >> that's correct. >> there is a recent report by the national academies that noted it will require a significant effort for the faa to attract develop and retain the work force talent to deal with cyber security challenges going forward. when you talk about that issue, and the agency's efforts how do you deal with the limitations the government faces in competing against private sector employers in some of these fields? >> a factor we always need to consider is do we offer a competitive job and competitive compensation for that. for us, that is a combination of ensuring that we are casting the broadest possible net. i think it's also important to point out that while we do

operate within the government environment, there is a significant portion of our applicant pool and work force generally interested in coming to work for the faa because of their belief in the mission and public service. yes, it is a competitive environment out there. we're never going to pay the top salaries that top technology companies pay. so our focus is on how can we ensure we have an orderly process for promoting and sell the job itself. >> this committee of course, is very interested in concerned with, the cyber security as it relates to atc and nextgen. we'll continue to i'm sure be in touch with you on that subject. i want to turn back to the subject at hand today and ask you, mr. rinaldi, you have spoken about how the status quo with regards to fundings is not an acceptable situation. can you assess among the options that have been put forward how

some of those reform options provide for more stable funding for the atc system and the government model? >> thank you, mr. chairman. we have been studying probably for the last 18 months some of the other countries and. when they broke off the air traffic control services from the government entity. some of them have done very well, and some are still struggling. what we are looking at is to make sure we have a stable predictable funding stream. if we're going to change the structure, the one thing we know for sure we don't want is a system that is for profit. put another barrier and hurdle in front of us to provide the safest safest most efficient system in the world. >> there has been a lot of discussion about what's happening in canada as a model for comparison. understanding there's going to be reluck canstance to copy the model

i'm interested in knowing what aspects you find most appealing. >> i was up there last week visiting in ottawa looking at their technical center. i think the unique thing that they do is they have a true collaboration from position out in developing their nextgen technology. they have the air traffic controller and the engineer and manufacturer working together from conceptual stage all the way through to training, implementation and deployment within their facilities. what that does is save time and money. they actually are developing probably the best equipment out there and selling it around the world. they're doing it in a 30-month to three-year time frame. when we have to look longer down the road because of our procurement process in this country. >> this is for governor engler, in the context of an atc

services provider some of you referenced a preference one way or the other or suggested several different models. can you speak to the differences between a federal corporation, federally chartered non-profit corporation and what might be the pros and cons of each approach? >> i'll start. we've convened this group of experts to look at this. their consensus was a non-profit corporation was outside the government and allowed for maximizing your shareholder participation. some of the benefits that mr. rinaldi just spoke of speeding it up. one of the things that also would happen is the ability to get the bonding authority. really, we're talking about next again's gen's capital project.

we would have done it in a short period of time. then you would be continuously improving. the nimbleness of the corporation, the entity -- we haven't endorsed a specific approach, but i would say the people we consult with tend to rely on the non-profit corporation, with the shareholder management, if you will. we think that gets you the most -- the bang for your buck. also, i think over time, it gets us on the innovation leading edge, where we're simply not today. >> mr. chairman, we have submitted to you a very substantial research document, that myself and other folks involved, have produced. it describes a series of different approaches with strengths and weaknesses of each. it describes in some detail what other countries have done. i think what governor engler

indicated is the most important part. the stability of funding for a project of this type is essential essential. i served in congress 30 years, and there's a lot i don't know. but i do know this, in a time of spending restraint sequestration and a time of multiple continuing resolutions all the things that are coming at us there will not be stable funding for this type of project in the future unless it comes through bonding capability and another type of organization. it is important to note that i don't support something that doesn't have the government as a stakeholder. i support and believe that this project will not get done for the country the way we want to see it getting done, to regain our leadership unless we decide to do it in a different structure. to do that allows us a stable funding through bonding capability and so on. with the input of the key stakeholders stakeholders, including the

government. >> thank you mr. chairman. airlines for america supports a non-profit corporation for a number of reasons. first of all, a user fee structure, as senator dorgan and governor engler mentioned. there can be insurance of funding and stability. secondly, this would be governed by a board of directors comprised of stakeholders. representative from the department of defense, the u.s. government, general aviation, commercial air carriers, air cargo carriers union represent representitives. so the stakeholders would be present and govern but would have fiduciary duties. they would be dedicated to the safety of the air traffic control system.

also, the efficiencies that would be driven from a non-profit corporation, we have good evidence from canada. it would provide funding as well for excellent and stable and professional management. you mentioned the ability, as was mentioned to retract and maintain excellent work force, including cyber security experts, which are important in any enterprise. and the enterprise would be free of the political influence that bedevils the faa and its ability to modernize today. >> thank you, mr. smisek. >> thank you, mr. chairman. i want to follow up your introduction of the question of cyber attack. part of what we're looking to do in this next generation is we're

going to do air traffic control off of satellites. you can be a lot more efficient. you can have awareness right from the cockpit of the other airlines around. there is not only the cost of transition from the ground-based radar. there is the question of the backup of the ground-based radar. what happens if there were a cyber attack on the gps that shut it down with mr. smisek, the arrangement that you're talking about, who would bear the cost of that backup of the ground-based radar, since that's

the less efficient operation? >> senator i'm certainly not an expert on cyber security but it is necessary in any enterprise the enterprise we're talking about or an enterprise, to have very expert investments in cyber security. it is a risk, and it is, no doubt, a growing risk as we become the internet of all things. certainly an attack on the gps system would not simply affect the air traffic control system. it would affect the department of defense. it would affect everything. >> right. in the private corporation -- >> in terms of who would. >> who would bear the cost? >> as a result of concerns that were sufficiently material concerns, of the ability of someone to bring down the gps system of which i have certainly no knowledge at all

and if it were determined there would be a required backup, then that would be the responsibility of the non-profit corporation. it would be responsible for operating the system. as would for everyone else. i'm not familiar with whether canada has retained a backup radar system. perhaps mr. rinaldi would know that. >> you're saying the private corporation would, in fact, retain the ground-based radar as a backup system? >> i'm not saying that, sir, because i don't know whether that would be necessary based upon the robustness of the technology itself. >> that's one of the costs that we're having to look for the future. mr. administrator, why is dod weighing in on this so heavily, that they are concerned about this privatization?

can you speculate how privatization would impact the relationship with dod and would you be able to interact with a private entity or non-profit corporation in the same way that you have existing opportunities to interact with dod? >> senator nelson i can certainly speak about the relationship and the working procedures we have with the department of defense, as they exist today. we are an important partner in the provision of air traffic control services. they control certain air space in the country. we control certain air space in the country. we have a shared responsibility for an efficient and effective management of the safety of the air traffic control system. we often take advantage of the

air space that they use exclusively during peak travel periods to accommodate additional traffic loads. we work collaboratively with them to ensure they have access to air space that they need for their mission requirements for training. >> i understand you work collaboratively with them. why do you think they are weighing in so vigorously? >> i can't speak to why they are weighing in, but i think what it ultimately depends on is what would be the structure in an alternative model under which they would interact with their partners in the air traffic system. it would strike me that there would be a way to build protocols. it is entirely dependent on what structure would be selected. >> mr. bolen, why are the general aviation business manufacturers so concerned about this? you represent folks like --

well, go through all of them. gulf stream on the g5. cessna et cetera. why are they concerned about this? >> the business aviation community, 85% are small and mid-sized companies. they're flying into and out of airports with little or no commercial airline service. so they're concerned about their access to airports and air space, and they're concerned about ensuring that their access is safe it's predictable and it's affordable. i think one of the questions that came up earlier was financing the system and what we heard is that one of the plans for the future is to have bonding authority. which is a euphemism for borrowing. the reality is, what we have today is our system generates through taxes a largely but not entirely self-sufficient system. we have a combination of

user-funded taxes plus a general fund contribution that currently funds the faa. the question on the table is if we pull it out then we're going to have a situation where all of those industry charges don't equal the amount we have today. so we can either raise the taxes to get to that amount, we can cut the system to get to the amount, or as you've heard we can borrow the money. borrowing money comes at a cost. that's got to be serviced. prolonged borrowing ends up createing an interest nightmare. there are issues here that need to be addressed. what we want to do is be sure all of the small towns, the rural communities, the secondary and tertiary markets around the united states are able to have business aviation located in their communities. being able to access the airports and air space in the major markets where those companies need to go as well. >> thank you senator nelson.

senator wicker? >> thank you. senator dorgan let me begin. is every witness here part of the working group? >> no. >> okay. i'll tell you what -- >> had to think about that. >> i think this is an excellent report. kudos to the authors. would you do this for me? in reading through, i think at some point, there needs to be a page where the owners take ownership of this. i don't see that. when you check the website, you find a number of people. would you spread that "on the record" for us? >> i'd be happy to do that. >> mr. bolen, are you part of this working group? >> we were part of the working group, but we didn't feel our concerns were being reflected so we are no longer part of that. >> i think that's probably accurate to say.

there are three options that involve a major structural change. 100% government-owned federal corporation. the second being an independent non-profit organization. the third option being private for-profit corporation. the fourth option sort of basically tells congress that we ought to do our job. get the funding straight and make sure that it's reliable and steady. the fourth option in the section would reform the system's funding stream while maintaining the system's current government structure. it goes on to say that this option could alleviate transition issues that are concerned with completely new government structure. would it be fair to say that your organization is more in tune with that fourth option? >> well we have studied various structures around the world. we've looked at australia, new

zealand, england. we've looked at canada. none of these markets do we see a robust business aviation community that is providing economic development in small towns and rural communities. we've seen serious access issues. in australia for example, business aviation is not allowed access to air space in melbourne or sydney on a prioritized basis at all. we end up waiting sometimes three, four and five hours on the tarmac waiting to get access. i was on a panel recently with the head of the irish air traffic control system. he said you just have to understand you're not going to get priority. that's part of the natural selection process. as we've looked at the united kingdom, after an economic downturn, that prooifivateized group

needed a bailout from the public. so what we've seen as we've looked around is a lot of fundamental problems with some of the different structures. we want to make sure that in the united states, we're identifying problems and finding targeted solutions to them. to simply say we're going to pull this out and we're going to give it borrowing authority leaves a lot of concerns about our ability to safely, predictably and affordably access air space and airports. >> so you're saying that the united states is unique in that we have got the 5,000 communities that rely on business aviation that you mentioned in your prepared remarks, and that access will not be the safe if we go to one of these three structural changes. is that basically a part of your

concern? >> yeah. our study of the systems around the world that have taken this action have raised serious access and affordability concerns. >> senator dorgan sounds like he has a good point there. >> well, it depends on who is listening. i -- look, as ed bolen knows, i spoke on the floor of the senate about general aviation, and it's important to this country. very important. but the question i think before this committee is are we in fact going to have the latest technology, next generation system built and completed in this country to allow us to fly more safely and efficiently? the answer in my judgment is without a change in structure we are not going to get there. i understand there are lots of interests that are opposed to this. i'm going to give you a list of everyone who participated, the

stakeholders from around the country. you can't reach everyone because everyone has their own set of interests that they bring to the issues. i mentioned to you, this is a heavy lift, which i understand. we didn't put before you a pattern with all the specifics. for very important reasons. we wouldn't have gotten agreement on a specific pattern with all the specifics in it. but mark twain was asked if he would engage in a debate and said, yes, if i can take the negative side. they told him, you have not heard the question. he said, the negative side takes no preparation. look, i understand that this is big and controversial. i'll make one more point if i might. >> then i want to make one more. >> mr. huerta came to our organization as well. he wasn't a participate. we invited him, and i have great respect for him. i've been here, and you have as well, through a lot of folks who run the faa. i have great respect for him, and that's why we invited him, to hear his vision as well.

all of us should want the same thing. the question isn't the end point. the question is what's the route to get to the end point? there will not be stable funding in time of spending restraint for the next ten years, which will probably include sequester furloughs and probably a budget as we saw this year that cuts $365 million out of the facilities and equipment account of this organization, even as they're trying to climb this hill of modernization. that does not work and will not work. >> a stunning indictment, which very well may be correct. one quick point, mr. chairman. mr. huerta, several weeks ago i guess it was april 14th -- time flies -- april 14th you appeared before the full committee on a similar topic, faa reauthorization. a number of us asked questions for the record. particularly with regard to the

contract tower program. we're still awaiting those details. i look forward to receiving answers to those qfrs sooner rather than later. >> absolutely, sir. we're trying to schedule a staff briefing to go over the methodology that we discussed at that hearing. >> if we could have squeezed those questions in in time you could have answered them right on the spot. but do your best, and see if you can get those answers to us. thank you. >> thank you. senator peters followed by senator manchin. >> thank you chairman. thank you to the panel for your testimony today. governor engler good to see you. governor engler and i served together in the state. governor was the governor, and i was the state senator. i recall you coming to me on the finance committee then in testimony. here we are again in a different capacity. great to see you again.

i'd like to pick up on briefly on senator wicker's comments. it's interesting as i heard the testimony from the panelists, concerns about funding and sequester. the fourth option he mentioned it seems it falls back on congress. we're not doing our job here in providing the resources necessary to implement nextgen and other types of reforms. the proposals that are put before us to privateize is because we're not doing our job here. perhaps that should be our focus, to ensure the faa has the resources to continue to go forward. having said that, mr. smisek i have a question for you. i understand that the second largest air carrier in the united states, delta airlines which has a major presence in my state of michigan. it's a major hub for them, as well as a large employer in the state of michigan. they have declined to endorse the position that you have been

advocating for today. delta airlines suggests the current system can become more efficient and deliver substantial benefits through improved collaboration efforts between the faa and aviation stakeholders. delta fears that separating the atc system from the faa would lead to certain operational risks and pitfalls that they outline. such as organizational disruption, structural separation, bureaucratic silos between the atc system and faa safety experts, unforeseen costs that will accompany the transition to a new organization and the loss of expert personnel and institutional knowledge. a long list of concerns that delta airlines has expressed. could you please comment on some of those concerns, and do you agree the risks are ones we need to consider as a panel? >> i would be happy to, senator. as you can imagine, airlines for

america, like congress, we don't always get unanimity. in this issue, we do have unanimity, except one member. that member expressed its concerns. i will say that i think that our colleagues at delta that have no evidence that the faa can become more efficient or can deliver effective services compared to a non-profit enterprise. canada is a perfect example. they have the best technology probably in the world. i think mr. rinaldi would agree with me. they brought down the cost of the system to the users by 30%. they are a model of safety. they are selling their technology to third parties because they are so adept at working collaboratively with the unions, with experts attracting retaining experts. that lacks evidence. in terms of risks of transition of course there are risks of

transition. there are risks in anything large. as senator dorgan said, this is a heavy lift, but it's something that needs to be done. what we know is what we have today does not work. we have candidly little to no confidence that there will be a stream of stable funding for modernization of the air traffic control system, or the ability of the faa to attract and retain qualified people to implement it, or a change in how the faa operates with respect to stakeholders in terms of collaboration. i think we have -- i think this nation should reach for greatness, and this is an opportunity to do so. what we know is it doesn't work and i believe that if we just keep doing the same thing we've been doing for all these years and expect a different result, we'll get what we deserve. >> administrator huerta, under the proposal, atc is spin off as we've heard into a new, independent entity outside of

government. they say, quote, the government must maintain a role in governance of the system since the faa is ultimately the grantor of the public interest. it is the role of the faa to put safety of the traveling public first. are you concerned this priority might be diminished if the faa only plays a small part in a multi-stakeholder model of governance, as envisioned by other members? >> i would envision there would be a put different roles. first and foremost, there is the question of who oversees the safety of the air traffic system. under the current structure today, we have an independent safety organization within the aviation safety structure that provides oversight of the air traffic control system. with respect to some of the other questions that have been raised by the panel, relating to access to the system or ensuring the public interest, i think those are all questions that would need to be carefully

confidence by the considered by the committee and reflected should there be a change in the governance model, in whatever structure is put in place, to ensure the perspectives are reflected. >> governor engler? >> i think that it's very clear and certainly in the expanded testimony i've submitted, it's very clear that the faa remains the safety -- they're the regulator. in fact i think you would get better regulation by separating. right now, we have an inherent conflict. they're the rule maker and the regulator. they're judge and jury, make the rules and then they assess theirettetheirm. i think the separation allows them to do their job very, very effectively. as they do in a lot of areas. i think there's a benefit in many respects to that, and i don't think there's ever been a suggestion that somehow, safety -- we're talking about the air traffic control system itself. the operation of it the vision

for it the leadership and all that has to come back. the other thing the faa can contribute which i think smisek might be better to comment than i, but we need a more effective way for the faa to modernize its own procedures. they'd be able to focus on that and get up to date on things. it does help improve the way we fly, the way airlines can manage operations. in some cases i think there are examples of literally rules being months if not years behind. the ability to have a separation division of labor, i think actually is one of what i believe to be the benefits of this idea. i would suggest also that, as i think you pointed out in your questioning, these structures, it really isn't a -- it's moving to a -- somebody said government corporation. we've suggested a non-profit

corporation. but it's far different than a private enterprise set up and becomingeing a stock company for example. >> first of all, i want to thank all of you for your attendance today and everything. we need to look at the size of what we're dealing with here. i've heard all of you and all your statements and your thoughts and believes in what we should be doing. i've heard that basically, we have the safest system in the world. then i heard it doesn't work. conflicting statements coming from you all. it doesn't work, but it's the safest in the world. when you look at the size, let's look at canada. 42 towers and seven centers. france 86 towers and five centers. germany, 16 towers and four centers. mexico, 58 towers and four centers. united kingdom, 16 towers and two centers. united states of america, 512

towers, 21 centers. they don't come close. you can put everybody in the world and they don't come close to us. how are we saying that the system doesn't work and we're not able to maintain a system that's the safest in the world? and it's the most used in the world. let me just go in a few and give you my little state of west virginia. they told us, if you deregulate, it is going to improve air service in rural west virginia. we were told that. i remember that back in the '70s and '80s. randolph was a pioneer at the time. we have 122 airports in west virginia. 86 of them are little private strips here and there. 36 are public. only seven have commercial flights and seven have towers. our ability to move people in west virginia has been tremendously diminished because of the ruralness of what's going on. i'm just looking at the situation to where we're supposed to be improving a system by prooifivatizing it.

i'm for public private partnerships, too, and we have towers that come under the purview of the faa but in a private stream. that seems to have worked. in west virginia it worked or our towers would have been eliminated. we'd only had two towers and five would have been gone. i'm looking at how i'm going to explain that we're making the system better. then we charge. if it wasn't for private aviation, wasn't for the business aviation that's going on today, we'd be out of communication completely. some of our little towns would not have any industry whatsoever. because they couldn't go back and forth. so with that i would just say, senator dorgan if we take congress out of the equation, spin to a non-government organization, how will that speak for rural america? >> senator, no one is augustsuggesting

the government not be a stakeholder in what is proposed. i don't support privatization. i told you what i support and why. i've spent a lot of time on the committee, holding up signs talking about how you can fly twice as far for half the price or half as far for twice the price under deregulation. you're talking about a different subject. that subject has nothing to do -- you and i agree on that subject. it has nothing to do with the question of how you move airplanes from one part of the world to another, how they fly from one parptairport to another, and whether we're going to use a world war ii ground-based radar system, or move to a different system using modern technology. this is not a question of what is. it's a question of what will be. there is no conflict at all by saying this is the safest -- this is an unbelievably safe system, but there's no conflict in saying that and also observing that we are not moving as rapidly as some others are

and as rapidly as we need to move in order to embrace the new technology and retain america's leadership in an area that's very important. i met with the europeans and others on this subject. the world is moving in this direction. the question is how fast will we move, and will we retain our leadership? in my judgment, there will not be funding to do it in the public sector. i believe, therefore, we have to find a new structure. not one in which the government is not a stakeholder. >> sooner or later, we'll have to get a budget that works for the country and puts our priorities based on the values. we haven't done it because of the political toxicity in this place we call washington. it has to change sooner or later later. we'll hit the wall and have to get into it, and it can't be picking and choosing which side of the fence we're on. there's been reports and poen potential constitutional concerns. delegation of taxing authority to an unauthorized board of

directors that can levy taxes. one of the strongest arguments for privatizing is it would allow it to be financially self-sustaining, free from the political forces that often drive federal appropriations. i would ask, maybe, any of you all here in the business arena do you think it is legal and appropriate for congress to relinquish our constitutional authority to levy taxes? >> if i could jump in sir, i don't purport to be an expert on constitutional law but i believe it's difficult to judge the constitutionality of a structure that doesn't exist and the legislation has not been drafted. the user fee structure that we have been talking about is designed to cover the costs of the system. only the costs of the system. and to have an appropriate reserve, fund, for example, if there were reductions in traffic

caused by an economic -- >> my only problem with that quickly -- >> in terms of the issues of general aviation for example, in canada, and it could be done here, general aviation is charged an annual fee like the sticker you put on your car, registration fee. there is no intent to use the user fee structure to change the proportion of funding, as amongst piston driven general aviation, for example. the airlines today disproportionately pay and the airlines are certainly not proposing to change that. we see the vast, even though it would be -- philosophically, the right thing to do, we see efficiencyies that would be driven from a non-profit corporation with clear stakeholders of interests involved, particularly the government department of defense, of course we'd have to

have that. >> mr. bolen? >> the amount of money being generated today from industry is less than what the faa costs. so it seems to me, as we go forward, we're going to have to make decisions on whether we're going to raise industry taxes and you can call them user fees, rates, charges, taxes, doesn't matter, it's all the same thing. forced payments from the industry to fund the system have to go up or the size of the system has to come down. or as has been discussed, we can borrow the money. we can give bonding authority. i think if we're going to do that, we'd need to know clearly what we going to borrow? what are we going to get for it? when is it going to be ready? when can we pay it back, and who is going to pay it back? as i said before, this authority to tax was said by the first chief justice of the supreme court, the power to destroy. we're concerned about it. we've heard some of the press announcements about people who suggested that and cost

shifting has been a part of it. it is a concerned. >> the gentleman's time is retired. >> thank you senator blunt. welcome back senator dorgan. i was just at the canadian embassy last night with the premier of ontario talking about their funding. senator blunt and i have been in canada, talking about how they handled transportation. our focus has been more on highways and bridges and how they have been able to have the private sector finance the projects over the long haul and have some stake, but they're still publicly owned in the end. could you tell me, those of you that are experts on how this works with the model with air traffic control, if it's the same model and how they do this in canada with the faa? obviously, there's concerns that some of my colleagues have expressed about the effect this would have on smaller airports,

on public safety and other things. i wonder how it compares to what they've done with their roads and bridges, which i found interesting, the model to look at. mr. rinaldi? >> thank you senator. i won't call myself an expert on this, but i have been researching with canada, along with the uk and the australia system. farce from what i know of the canada system, they haven't reduced services. that would be one of the things i'd be deeply lyly concerned about. they moved out of air transport. moved out of transport canada which was their government structure in the early '90s. they started the transition about 1994. it took five years to go through a full transition. it is a big transition that they actually went through. then stood up their corporation.

they do have, as ed bolen would say, they still did keep their tax, which is to fund the safety and regulatory function that's remained in government and they establish add user fee of all the users in the system. >> then i was just looking at this, someone else has brought this up, that delta letter. they talked about cost increase in the provision of service. cost increases. airports look to make up for lost airport and trust fund money. it's a different model, but in canada. any comments on that, anyone? >> i could speak to the u.s. the amount of money that's raised from the tax structure not only pays for the entire air traffic control system but contributes additional monies to the operation of the faa. we would not propose that would

change. i think the 15-year average of the general fund contribution to the faa today is around $3 billion. with user fees to run the system initially, there would be certainly with the current level of taxation a portion replaced by user fees, portion retained by congress. there would be money that would continue to be contributed to the faa, whether that would go into the aip or the general fund -- i mean the general faa -- would be up to congress. >> in this reform system, would users be willing to pay for then? >> we would, from the u.s. airline industry, as you know, senator, we're one of the most heavily taxed industries today. more than alcohols and tobacco, which are sins and we are not a sin. we would suggest the level of taxes would not be increased. i believe over time, based on

the nav canada model the user fees would go down because of the efficiencies that would be driven in the operation system. for example, in canada, they've gone down by 30%. >> senator i think from a business aviation perspective, the business aviation community looks dramatically different in canada than it does in the united states. they have large companies up there, but they don't have a lot of the small and midsized companies operating out of the small and midsized communities that we do in the united states. as paul mentioned they do have both user fees and a fuel tax up there. it was a double tax situation. it's also fundamentally different because in addition to privatizing air traffic control, they have privatized airports which have their own costs with it. for different reasons, we don't believe it's an apples to apples comparison. >> how would smaller airports fair under this model?

i would ask the same question to engler and dorgan. >> from my perspective, we're very concerned about that access to those airports and air space. today, i received a letter from the fargo jet center, which has a lot of operations. they're concerned we copy that model. what we hear from our members who operate in canada is a lot of concern about the way it works up there with regard to paying the user fees as opposed to the fuel taxes. it's not nearly as efficient. it creates a costly administrative burden. they think it has harmed business aviation. >> governor engler and senator dorg snn dorgan? >> today, we've got technology that would allow for more remote airport access services to the smaller airports that we can't get fully deployed. we're running behind on that and it would be of benefit.

i think the committee, as i look at this, there's the decision, do we like what we've gotten and confident we can make it better if we stay the course? if we want to change, what would it entail? we're getting into what might be in the bill. i think questions that are being asked are able to be responded to, both some of the work that have been done and other reports looked at. >> senator dorgan? >> i think that mr. bolen is concerned about the uncertainty. i understand that. my interest is not in creating a system, and we have offered an approach here that doesn't have a lot of specifics. we said we described why we need restructuring. i have no interest in injuring business aviation general aviation or small airports. one of the principle issues here is every major airport in this country has bonding authority.

every one of your communities, if you have a major airport they're bonding for investment and so on. i think one of the significant issues here is to give a new structure bonding capability to be able to build this system in a robust way. we have explicitly not described a user fee or structure system beyond that. i think mr. bolen, i fully understand his point. i have no interest in seeing a system that's going to injury general aviation, business aviation or small airports or access to armtirports for that matter. >> thank you. >> senator markey? >> thank you, mr. chairman, very much. last month it's good to see the great byron dorgan back in congress. last month, along with ranking member nelson, senators cant cantwell, booker we sent a letter to the department of transportation, asking about airlines ability to engage in

personalized pricing. personal liezized pricing would allow an airline to charge different prices to consumers trying to buy the same seat on the same flight at the same time. it's based on personal information the airline collected on the passenger. i am deeply concerned if airlines are allowed to engaged in personal liezized prices, they could discrimination charging customers different prices based on zip codes income levels, marital status or other characteristics. what if, for example airlines using consumer zip code information offered special fares to consumers who live in more affluent zip codes to entice them to travel more, while failing to provide the same discounts in lower income areas. mr. huerta the faa publicly

refused last year to determine whether price discrimination based on income level, marital status or trip purposes would constitution unreasonable discrimination. i believe that that practice is discrimination. what can you tell the committee today? will the faa revisit that determination? >> first of all, senator, to clarify, the economic regulation and oversight is an authority held in the office of the secretary at dot, not in the faa. we can certainly get you a response for the record though. >> i think that's important for the committee. mr. smisek, your airline, would you discrimination based upon income status or marital status or trip purpose? >> sir, if what you're describing is the new distribution capability, which

is a technological advance for the ability of airlines to offer through third parties additional services that the customers cannot get today, i don't view that as discrimination but it's pro-consumer. >> what i'm asking is are you going to use marital status or are you going to use -- >> we have no desire or intent of doing anything like that. what the new distribution capability allows us to do if you're a premier member at united and buying through a third party site today you're able -- if you bought directly from us, directly on the united ppt com united.com, you could get an economy seat for free. through a third party we don't know your loyalty sattatus and we can't offer the ability to upgrade for free. you'd have to book and come back to united.com to get the upgrade. >> what i'm trying to clarify is you will not be using income

status or marital status, zip code information to -- in any way make any of the decisions? >> senator, united airlines has no desire to discrimination against anyone. >> that's helpful. thank you, sir. we have heard recent reports about cyber security threats that air travelers face. one security researcher claimed to hack into the airlines control systems through the entertainment system changing the direction of the plane. i'm concerned about recent claims that the wi-fi on planes lacks basic security that make it easy for hackers to spy on customers using the network. let me first ask about hacking into airplane controls. i know that chairman thune earlier asked administrator huerta about the faa efforts. so mr. smisek, what is american

airlines doing to prevent hacking into the vital controls of your airlines? >> sir i'm not sure what american airlines is doing but i'll tell you that united airlines is obviously, in form of cyber security issue is of great concern to us, sir. >> i i will say that we are cooperating with the fbi. an allegation with respect to one of our aircraft was involved. we are unaware of whether or not this is possible. the original equipment manufacturers from at least what i understand have stated that this is not possible today. however, i think we need, as an industry, to take any threat seriously. there are clear fire walls between a wi-fi system and control -- >> has united taken efforts to secure your wireless networks? >> absolutely, we have. >> are your customers protected against data breaches while

they're using the united system? >> we provide the most robust protections we can sir, but i will tell you based upon data breaches of corporations worldwide, allegations of the chinese military involvement i don't think anybody can honestly ensure anyone can respect to that. >> i'm only talking about someone in the plane at 30,000 feet riding with the passengers. >> sir we've taken -- >> using your wi-fi system. are those consumers on that plane protected against data hacking? >> we have protected them to the best of our ability, sir. we have a robust protection, particularly with the flight safety of the airport. >> in the data protection of the customers on board as well? >> yes, sir, as best we can. >> as best you can. thank you. >> thank you senator markkey. senator senator? >> it's not clear to me how much of this is money and how much of this is management.

does anybody want to put a percentage on which is which? is 90% of this the lack of stable funding, and 10% management? what do you think? governor engler? >> i'll take a shot because i don't think it's noableknowable. go to the national academy's report, which is objective smart people that congressman date -- mandated. they raised a lot of management questions. the management in the strategic thought leadership. where are we going? what is the architecture? it's that kind of management of process and of design. then money is -- there's no question. i'd say it's 50/50. >> i don't know how we ensure we get better management by changing the structure. look at the u.s. postal service.

look at amtrak. these are all examples of things we've done that are structures where we have tried to do something other than the traditional, this is an inherently government function, and the government is going to do it. >> i'd say look at fedex and some of the -- >> those are all privatized for profit. are we advocating go to for profit? >> no. >> if that's the case my rural airports are totally hosed. >> no. we're not saying that. i think that the private non-profit corporation is in my mind, when i look at some of the decisions, other countries how they've approached it i think they really, to me offer the kind of flexibility. remember, the faa is still a rule setter here. they're still the boss. now, it's basically being in the hands of the private company to move fast. one of the things on the funding

side, mr. bolen tried to say bonding, euphemism for borrowing. of course it is. you bond now, the markets today, i mean you borrow capital at almost no cost. anybody would do this and go build it. you get tremendous savings by making your investment now. you'd probably do the buildout in three years all done? >> i'm listening to you and hearing highways. we're all thinking about highways right now. could we do this for -- >> we don't have a bill. highway funding runs out in ten minutes. we still don't have a hearing or a bill on highway funding. should we do this for the highway system? zbo go for a not for profit system? what about waterways, locks and dams? should we go to a private -- not for-for profit corporation for that? >> some of the port authorities are maybe good analogous to that. indiana did it on highways. ohio has done something similar.

there are aspects that we've done on bridges in some cases. the mackinac bridge is ran by an authority actually. >> it seems to me if we could do better on the funding part if we would all acknowledge that, in fact, bonding is debt. we need to do it for our infra infrastraukinfra infrastructure or do something for the infrastructure. we're shortchanging our country in a dramatic fashion when it comes to infrastructure, and it includes our airways. that is the majority of the problem. i amskeptical and i know senator dorgan shares some of that turning over an inherently government function to private corporations. he did ground breaking hearings on the abuses in iraq with the contracting we did for inherently government functions that went badly awry and wasted billions of dollars. i just don't think that a new

structure is the silver bullet. i'm open to this. i don't mean to sound like this is a terrible idea. but it seems to me that what we're trying to do is put a band aid on a cancer which is the inability of congress to step up to the plate and do the mandated hard job of finding the resources to fund infrastructure. >> i'll tell you. when i got into this looking at how it is that we could persuade the federal government that there is a better way to do capital budgeting. i don't want to get to that track. but absent that, are there ways to think about how you solve big, critical infrastructure questions. this is a discreet one. if we would have funded this when we first started talking nextgen, bonded for it and built it, it would have been done and we'd been using it. we talked to the administration when tarp was being talked about. you could have this done by the time you're running for reelection. it wasn't what they chose. senator of transportation, both parties in the past supported

this. administration, both partyies supported this. there is a lot of history here. this lends itself and i'd like to see the committee consider it and validate a concept which i think you jumped ahead. are there other applications? you bet. >> maybe we'll become irrelevant irrelevant. >> if i can respond briefly -- >> may be already. >> you asked an important question about management versus funding. i will admit that i think there are management issues and have been for some long time. i've been watching as chair of the aviation subcommittee and other venues watching what's happening in nextgen for a long long time. not for the funding issue, we probably -- i probably wouldn't be at this table with this message. i honestly think it is a triumph of hope over experience to believe the funding issue is going to change, and somehow the congress, who this year by the way, is going to cut $365

billion from the facilities and equipment account of mr. huerta. it's unbelievable to me. that will probably be magnified by another sequestration and a couple continuing resolutions. who knows. you but you cannot build what we want to build for this country and retain leadership opportunities in this critical area of technology of air traffic control with this approach. and that's why i have come to the conclusion that we need restructuring of the type that i've described. >> thank you, senator mccaskill. senator blumenthal has returned. so he's up next. >> thanks, mr. chairman. and thanks for having this series of excellent hearings and to all of you who are before us today. the chairman mentioned earlier you were a very efficient panel and you were also a very

distinguished and informative one. i want to thank you for being here. i was interested in as rider of amtrak as well as a flyer in some of the reports last week in the wake of the philadelphia tragedy about potential price gouging among airlines and the derailment was a horrific event. and i know you join me in expressing our sympathies to all the loved ones and all who were affected. but i wonder whether, as an executive for united airlines, can you confirm whether these reports are valid, whether they've been exaggerated, if the ftc were to look at these fares, what would they conclude? i just want to mention that the $2,309 flight from d.c. to laguardia would be an example of potential price gouging. and i want to emphasize i am not asking you because i am pointed to united airlines in in way or form as potentially one responsible or accountable.

i'm just asking for you as an informed airline executive. >> sure. i would be happy to respond. first, let me express my condolences to the families and loved ones of those killed in the terrible tragedy in amtrak. absolutely not, sir. speaking for united air, we would never take advantage of an opportunity like that. if you viewed it as an opportunity. no one would do that. it is true that as people book closer into a flight that ticket prices tend to go up because the inventory, which is of course, as you know, evaporates every time the flight takes off without someone in the seat, that inventory disappears and priced more towards last-minute business travelers who tend to have a willingness to pay more because they're traveling on business. when you have a tragedy such as amtrak, you have a sudden rush

of demand for the very few remaining seats, but we would never raise prices in connection to that. >> you would attribute any any increase in prices to just demand. >> those are last-minute fares in inventory reserve for business travelers for people booking in the last minute. and we saw certainly in a surge in demand for tickets, and the only available inventory was the last-minute business inventory. >> mr. rinaldi, did you have a comment? >> on the ticketing, no. >> well, i would join you in the strong feeling that that kind of price gouging would be utterly reprehensible. and if there is any indication, certainly i will call on the ftc to investigate promptly as perhaps this committee would have a role as well. >> sir, i would join you in that

call. >> thank you. and speaking of that derailment and the aftermath when rail transportation was stopped, i think we saw in the reaction among passengers in rushing to the airlines that the lack of adequate rail transportation has an impact on airlines. these systems are all interconnected and the present air transportation system can become so congested that it simply can't serve all of the riders who are diverted from rail, and so i would ask the panel whether you have any observations on the importance of rail in assuring adequate and efficient airline transportation, simply in providing a necessary link that relieves some of the congestion

in the airline. >> senator, certainly from our standpoint as an agency of the transportation department, we work very closely with our colleagues across all of the modal agencies to ensure we have connections and linkages and that the system is being appropriately managed as a total system. one of the things that we've been very focused on, how do we link modes of transportation together and a lot of that as you well now is rail access to airports to ensure there is a seamless transportation network that spans many modes of transportation. but clearly there is a relationship.

>> and finally, i have one last question for maybe governor and the senator. you know, the need for investment in these systems seems to apparent, even obvious to us and we have a virtually full room here, but the public still doesn't seem to be mobilized. and this congress seems to be divided. do you have any advice based on your political wisdom and your experience on how we do better to raise awareness and generate support? because obviously both have longstanding experience in doing so. >> you know, prioritization is tough, it takes a little sense to try to build railroads in the desert and california when we have a northeast corridor to passenger rail from freight rail on the corridor. maybe reigning in while we fix the corridor that matters the most would be my thought on that. i would also suggest that the sub sidization cost of different modes -- one of the things you've heard from the -- i think everyone in the panel today, air

has been pretty good about paying its own way and heavily taxed. that's not necessarily the case certainly with rail and with transportation while states have been willing to raise fuel taxes, we know that form of tax is probably you know, it's coming to an end at some point. and there is a need for a solution. i'm hoping that we can get to the broader question of tax reform and buy ourselves a few years while we sort out how we're going to fund highways and bridges. that's a big unmet need. >> you know, i don't any i can offer you much advice except to say that we've painted ourselves into a fiscal policy corner. we have so much -- i chaired the appropriations panel in energy and water, we have $60 billion of authorized water projects and $2 billion in appropriations. you know, this stuff doesn't add up. it's true in transportation and

wide range of variouses of infrastructure. i think we have to do better on fiscal policy and make investments in the country if we're going to have the kind of country we want in the future. >> thank you. i want to thank all of you again and mr. rinaldi, the air controllers across the country most especially in connecticut, i dealt with a number of them earlier and they are often the unappreciated and unacclaimed heroes of our air and transportation system. thank you for being here today. >> highly trained and highly skilled professionals who love their job. >> thank you. >> thank you senator blumenthal. >> as questions relate to rural

america, the chairman represents south dakota. i have the privilege to represent montana. and states like ours, connectivity, allowing us to build world class technology companies close to fly fishing streams and mountain ranges, it's a way to attracts and retain best talent in the world but the other part is air service. it's a requirement to build world class companies with accessibility to good air services. so for administrator huerta, i will strongly encourage you to first focus on community interest when considering any changes. we looked at our states not only do we have the ability to throw

great technology companies down because of quality of life but our energy deposits and fut future sources will be in places along ways from urban area. senator dorgan sees that. the contact tower program and airport improvement program are critical to states like montana. we're concerned that the proposed changes will harm the program specifically. i encourage you to undertake consultation with all stake holders. what specific remedies, can the faa provide to rural airports as it considers reforming the air traffic control program? >> you've asked a very important question and it is something