we are optimistic. we see consolidation as bringing stability, of course, and just four years ago, this was an industry that lost $10 billion. we get to high fuel price here in 2012 for most of the industry makes money and that is great. >> on your side of the business , bill, what would you predict for this coming year? >> we are very optimistic about 2013 as well. if you look back a couple of years, 2010 was the peak year in terms of international air freight flows of. the rest in a modest contraction -- there has been a

modest contraction in 2011 over 2012. freight remains at a relatively high level of demand. 46 or 47 million tons. there was some fairly dire predictions, particularly about the durability of the new product introduction coming into market, consumer electronics. it has been some acceptance of one over another product, but maybe not so much. the first quarter has been pretty good. there has been some capacity discipline in major freight markets, yields have improved a bit. i think everyone is thinking about, what is supposed lunar new year environment look like? -- thestarting to see other positive story about air is aht, the transpacific

huge trade lane. ,alking by european industry but the north south trade link between south and north america and europe and asia, middle east, africa, north south again with europe and asia as well i think are great growth opportunities. that is where we are seeing double-digit growth. i think that will continue, particularly -- most of us are looking for a nice ramp up the second half of 2013. not so much a volume issue as a yield issue in your business. what do you see coming up this year? >> the economy this year is stronger than last year. it could be stronger. there are some headwinds we are still facing goo.

i don't know if we can fix with debt, but we can certainly get on with fixing the debt. if we can build a road to stability, we can take better advantage of the opportunities out there. , u.s., we look at import-export, you really have to zero in on each one of those. europe is a strong exporter and strong consumer. we are the same. we have great product flow out of asia. even though it may shift from china to vietnam to korea within , when we talkter about yields what you are seeing is our customers are getting very smart with their logistics durin. .t is a challenge for me we can give you any speed you need, we can get you from point a to point the and achieve your

objectives -- point a to point you will do that. when you look at our financials from last quarter, you will see that our next day volume was up. they were struggling with revenue per piece, because people might differ to an afternoon product. you see a smarter consumer taking advantage of a mode of transportation. >> it's a problem of your own making. the groundg on certainty that the delivery -- the inventory in transit, the warehouse in transit become so protectable that people can manage their logistics better -- predictable that people can imagine their logistics better. >> i don't think is going to change.

this is the new reality we are faced with and we have embraced it. we are also very competitive in that environment. >> we are delighted to have with us another ceo. see the industry through maybe a slightly different lens than some of these operators. what do you see coming up in this year? >> we have customers all over the world. we are only doing as well as these people are doing. i am cautiously optimistic. i think also we got used to the bad times. we are hoping that the early signs of improvement trend towards more sustainable situation. we remain also very aware that there are some events all over

the world that could threaten this recovery that has nothing to do with our business. you mentioned the cyprus crisis. everyone is keeping an i on north korea. we are given the opportunity to execute, because this is what we are all doing. we are blessed with great management teams. enjoying 5% growth in the business in average. torything is there for us execute properly if we have the opportunity to do so. are being backed by a very strong financing market. we have been very successful as of late. there is money willing to be deployed in the aviation business and aircraft financing. >> let's build on that.

some huge orders are coming out of emerging markets, big orders .ut of india in these emerging markets, henry, how are those airplanes going to get financed? ,hat's the risk of those orders particularly in emerging markets? >> today we finance just about 50% of every aircraft carrier. think we should confuse orders with deliveries. there is no way you're going to deliver everything.

as smart as we all are in this industry, it's hard enough to predict what were going to need next year or this year. aen you really have to place bet from airline standpoint is, what will be the status of my network, who am i going to continue with, what is the general economy, and what is the fuel price in 2019? if you can figure that out, you should be in the stock market, because you would make a lot more money. something has got to give. there are more and more people who want to travel more and more often and visit more and more places. that is the saving grace. these aircraft, if they are not delivered to the people who you thought you sold the airplane to, will deliver it to somebody else who will step in and take the same network.

we will support our fair share of deliveries. i am not sure at this point that we will be able to finance it -- it would be healthy for us to finance everything manufactured. >> there's always a risk to giving you the microphone too henry, but with the fresh money in your market space, is that going to be concentrated in mideast financing or leasing, or do you see that is growing into a bigger business? .> i don't know yet i think the world is full of opportunities. when you operate against the ,ackdrop of growth and traffic the size of the pie is getting bigger every year. more and more aircraft is delivered.

there is room for new entrants. there is room for fresh money to come into the business. we can have a very competitive financing business out there while not growing at the expense of somebody else. withs very much in line what we have heard from capacity discipline. , we will maintain that be fine. there is 17 aircraft leasing companies in china. they won't all be successful. it is not the first time that we see aircraft financing company emerging out of middle eastern money. they have unmitigated success. we welcome them. every time you have an investor willing to deploy capital, that's good news for us. >> let's shift to some themes

that jeff's my sick -- jeff smi sek addressed. , he nick was on squawk box was talking about national airline policy and made the point that we collectively lose $31 billion to inefficient air traffic management. 10% of the fuel we burn could be saved. let's stay on the nexgen theme for just a minute. we have been pounding this strong for so long. -- drum for so long. there is a bit of nexgen fatigue. let's talk for just a second about your confidence in nexgen and how do we solve this ,mbalance between certain areas

the lack of modernization on the ground? there is an imbalance as we go across the country. ed and i were just talking about this. you would have to go back maybe 25 years. when i was with the tomorrow company, we were working with .he faa at that time, we were convinced we could develop a system. , but it wassimple low cost. it was a new wave of air traffic control. wender stood it would be difficult to implement. -- we understood it would be

difficult to implement. it wasn't the technology or concept behind it. when eventually i sold the tomorrow company to garment, it wasn't because of the content we had developed here at it was because of the g-8 content -- ga content. .here were no standards an economic driver to put this on a flight deck. i was very naïve at the time. now i understand how expensive it is to take an airplane and park it and modify it and install the equipment. you have to have some level of certainty. are we going to do it? slowly. -- absolutely. i'm convinced. but you ask a very good question, how do we get to that final state? it's very logical.

everyone appreciates and understands it. there is fuel savings, air traffic, concrete pouring, a number of things -- that is why the faa has been supportive of it. but we have not been able to get over the hill in terms of making it move on an economic basis. >> the wasted money, if you will, $2.6 billion of that occurs in new york airspace. you were chairman of the next and advisory council -- nexgen advisory council. from what i read, this is not a technology challenge, it is a political will challenge. how do we do that? my glasses weigh more than half full on this issue not just because i have the opportunity

to chair the nexgen advisory committee for the last two years. now that it is in the hands of science that is proving its way into airspace. greener skies over seattle. a lot of positives are taking place. this is not room, someone who is just chairing a meeting as a deck the -- designated federal official. steve dixon from delta, there are a lot of talented people working on this issue. as we start using the language with decision-makers to talk about -- whether it is international airline policy or

hill decision-maker meetings, talking about things like metroplex, prioritization, equipmente metrics, not harming somebody who is not equipped to advantage inc. someone who makes the decision. advantagize someone who makes the decision. we just have to keep painting the battleship, that here is what is happening with alaska airlines footprint, with greener skies over seattle, with pioneering we are doing in the atlantic. .'m optimistic the baton needs to be passed for the leadership of nexgen. will that be whoever he picks as deputy? >> that would be my sense.

michael was in that position right but we had the previous administration. when we had the previous administration. he has been terrific. my sense is the baton may be but michael would be very close to it. he is a subject matter expert on this topic. >> his leadership is essential. we haveuropean side, nexgen in europe. again, talking about political will. they have what is called a european functional airspace block, which is a great oxymoron all the time. [laughter]

it's dysfunctional airspace blocks, the way it is working right now. in europeer states had obligations they were supposed to do that they are two or three years late on to prepare themselves for a single sky. how do we get europe to accelerate their participation in a modernization of airspace? >> the situation in europe is even worse than it is here. everybody agrees that with fuel byrovement, we could achieve 15%. we are talking about the subject since 25 years.

it's not a technology problem. ,t's a political will problem especially difficult in europe with the different countries and no one wants to give up one of .is 50 control centers that is a very difficult situation. the focus we're making'tis -- is we're making is too slow. put common pressure repeatedly on the political side in brussels but also on individual countries. it's a very sad story. contrasts is that here on the one anend you have europe who is going to save the planet with the trading system

and is solidly behind that, and i talk to member states and leadership in the european parliament and say, did you know there does exist a way to reduce aircraft emissions on a global basis by 10%? their eyes light up. i tell them, it's an air traffic management system. how can you tell me how committed you are to emission if you don't at the same time do that, which is the highest leverage improvement we can make? it's beyond me. ira member walt love see at the , we had walt at the faa to lock his office and put a

safe and it because it was so threatening to the airway .acilities .ou have some experience here what's your feeling on your airline as far as taking advantage of or equipping aircraft to take advantage of a ?sp -- adsbk >> we try to drive the lowest price point. the inefficiency in the air traffic system drives costs up. we are very supportive of the ideas. we're also all about utilization, we want to fire planes more hours per day, spend less time on the ground. the inefficiencies when you fly to areas like new york make that

difficult to do. we have longer turns than we would like to have. we knowairplanes that you price price very well but are still quite expensive and have them sitting on the ground longer than they need to be. invest in good technology, new, modern airplanes. it would be foolish to stop at that point. henry, on your aircraft purchases and looking at residual values, how do you view or equipment issue for adsb nexgen technologies in the cockpit? >> we have an industry issue to address once we understand the landscape.

if you picture 50% of the itcraft being financed, changes what happens to an aircraft throughout its life. we are moving away from an airline buying an aircraft, flight for 25 years, and then throw it away, replace it with a new one. we are moving to a world where aircraft financiers invest in an aircraft, take that aircraft back after 10 or 12 years, move it to the next customer which will look -- most likely be in a different region of the world. we need to upgrade that aircraft ,o it does not become obsolete otherwise we're going to have to pass these costs for the next operator and that will diminish the impact of the savings associated with the new technology. >> we are paying farmers not to

grow crops. we share much of the same kinds of observation. if you look at our fleet, we briefly did a large part of the fleet. .ur 747 fleet is new and young we haven't got the full investment in eight est -- ads b. if you think of the logic of where freight flies, these are they are sites and typically flying into congested airports. .ong kong, shanghai, frankfurt l.a., chicago. clearly, nexgen, whatever developments come to floor are going to improve the economics for our customers and are going

.o improve cargo if i could pivot for a second, i'm hearing several common themes today. we heard from jeff during his talk with us at lunch time. it is about, how do we accelerate flow. that can be the physical flow of passengers. and flowbe the flight of the aircraft over the united states or within the european systems and the kind of benefits that occurred to many stakeholders. i think there is a parallel insecurity. as we think about the secure supply chain and we think about the flow of goods, international --w of goods >> i'm glad you introduce that.

as he looked backwards and now -- we look backwards and now forwards, the confidence , what is our collective confidence? >> over the past several years from the cargo point of view, we have seen solid developments. it is certainly german by the , a, -- driven by the tsa risk-based approach, thinking about risk in the cargo system, known shippers, the exchange of information between the carriers and our regulatory and he's -- entities.

the operators are exchanging information about the shipment with the authorities prior to departure, and then prior to arrival, depending on the , have made real progress in securing the supply chain further than it has been, but for improving philosophy the secure shipments that all of --handle -- philosophy velocity for the secure shipments that all of us handle. we can focus on those areas that are less safe, that cargo that may be more risky and continue to improve security.

>> do you think that creative thinking will transfer over to the passenger side of the business anytime soon? well, you think about our terminals here, our airports 6% or 7ey can't absorb % growth without expansion of payrolls in the tsa during a. -- period of sequester. if were going to double enplanements over the next 15 years, how are we going to manage this stuff? >> i'm going to take the train back.

[laughter]efficient use of resources here. 1.2ink the faa is talking billion enplanements in our country. when you start to take a look, how are we going to get there from here today -- it's political willpower. the technology is there. it's there with nexgen. some of the taxation and fees is going to modernize what is above us, fine. let's not add the two more taxes being talked about recently to reduce our deficit. that's the kind of stuff that doesn't make any sense of all. this is a big issue, the resources. when wet too long ago

talked about thinking outside the box, having resources on the airplane. mr. pistol, we recently hosted ,p in new york the conference pre-check is going to 20%. let's take those resources being saved and then reinvest them into the system. there's all kinds of efficiencies we believe that can be driven out of things like tsa, cvp, faa. >> let's stay on that theme. taxes, 20% ofout a ticket. i know you are as passionate about this is anybody -- as anybody.

nobody is more creative than our government and figuring out how to squeeze taxes. >> in fall 2011 we had an experiment where the faa was not funded for a couple of weeks. we could not collect excise taxes. tax back toat 7.5% the consumer. we saw higher volumes than we had ever seen in september. we ended up seeing 28% increase in unit revenue year over year all driven on higher volume. as soon as the tax came back, it dried up again. it was the perfect experiment to show that when we reduce the tax burden on consumers, the fares go down. when the fares go down, more people travel. jeff was a hundred percent right in what he said. took a $19rnment

billion tax from airlines, they could have taken three times that amount in taxes if it did not come directly from the airline. when they are -- when airline gets a dollar, the government gets a dollar in taxes. tois shortsighted policies tax the airline industry at .igher than alcohol and tobacco >> there you go, letting logic creep into your argument again. , there is a europe comment about increase of .ending fees, servicing fees there is a great deal of hidden taxation on european carriers that makes it even worse. >> i'm sure the percentage is

higher than here. , our government, let's say had a deficit of 60 billion. airline industry, they have to bring us one billion. within one year. a beautiful name, ticket tax. it is a german invention. something like this nowhere else in the world is existing. we worked very hard to avoid it, no chance. they needed some money. it has nothing to do with the airline, nothing with infrastructure, but we have to pay. we all wonder that our margin

is so bad, 1% or less. we also have the money to invest in the future, to invest in more modern, more fuel airplanes.reduced we have to bear such a burden. the problem is, how can we change. you have had your own experiences with super regulation and taxes from your side of the business. ?ny comment >> if you put your money in taxes, you don't have it for other things. if i wasn't paying taxes, i would put the money back in capital, put it back in jobs. i can't just sit on that money. i have to make it work.

it quickly turns into a process where we start creating jobs in the private sector, we start putting it back into the system, and its immediate. that is our position on that. i don't know how we can sit here and say we want more taxes. artainly we stand behind them a4a position on this. where is the value proposition associated with the taxes versus what we can do with it in .he private sector ,> when i was listening to jeff as we watch u.s. airways and american airlines come together,

which now has cleared the bankruptcy court for approval, still needs justice department -- there are some spinoff effects of that. reaganked about national, among other things. i want the audience to know that been charged me for this chargedat, to -- ben me for this aisle seat, two. [laughter] for reagan national airport, there is such a special situation. with the recent delta u.s. airways swap, invested $72 million, including $40 million for access to this airport. ,s you talk about m&a activity

66% of the slots being held by one brand, assuming that goes through, is not in the public's interest. we are very adamant about, we want to have access to airports like reagan national, not unlike laguardia, newark, kennedy airport. we want to have access into these airports. this is good for the consumer. i look forward to hearing doug's comments. mergers,lk about alliances, partnerships. toind it rather stimulating watch capital move in the markets. you have a project going on right now to attract private capital. tell us a little bit about that,

how you see these mergers and partnerships going. >> we have to remember that we are a global business and we have to live by it. we can't be sometimes global and sometimes exclusive on it is convenient. we are in the approval stages of our transaction that would lead to the departure from an aig a groupp to ownership of private chinese investors. no big deal, but suddenly people are paying attention to it because it's aviation. we remind everyone that we .inance the very same airplanes there is no issue there. we look forward to the completion. the amazing factor in this

acquisition is attracting -- we all need money. it's amazing how much capital it takes for these guys to make $.21 per passenger. if we don't have a big trap that attracts money and capital from wherever it is coming from -- and we know there is a lot of that in china -- it is of strategic importance to aviation, but we find a way to direct some of those funds available in china into would be at formidable outcome for all of us. it makes us more powerful. therefore we can buy more airplanes, lease more airplanes . support balance sheets this is all good news. i think china is already a formidable country.

they may be the ones shaming us into doing what is right. when you talk about air traffic control, you are starting from nothing durin. china isic control in managed by the chair air force. they're going to leapfrog what is happening in europe, what is happening here. a little bit the same way. great business plan, you start to execute, you buy the best airplane you can find, you offer a great service, and suddenly you're very competitive. china, we all know they need more airplanes. we may find ourselves in a position where they show us the

we will finally have to make the right political decision because we will not accept that we are not as advanced as china is. this is going to be an exciting time. four 919'suld build and never fly them outside of china. this is a great panel. does anybody have a question at ?his time . bet you do benefit from foreign investments in one of our subsidiary lines.

it may not be going anywhere. it's thinking, about regulation emerging in other markets. .e are global we operate global and compete globally. ofneed to be equally aware emerging legislation that could restrict, inhibit, or constrain. they are out there. from our point of view as in a -- operator, restrictions

david and ben, you certainly have awareness of what is going on in these other restrictions. ?> closing comments, anyone touched the main problems of our industry coming out of the past. i'm crossing my fingers. after 46 years, i am one month from going out of this industry. 50% of the problems have been our own problems, overcapacity, we still have to cope with the governmental

influences, regulatory problems we are facing. hope that this important industry in many countries, especially our country, germany -- even the politicians at the top, they don't know how important this industry is for the country for export, infrastructure. this is a little bit our problem, we were not able to make this known to the public, to the politicians. i would hope that we would have today, event like this where i am attending just by chance, and that we start something like this in europe in order to put another pressure on the politicians. >> that's a great way to close. >> i think that is the most wonderful statement to and the

panel on. you really set it all. -- said it all. your time is only one minute short of being up. what he said?top thank you all so very much. [applause] i told you this was a crowd pleaser. it was a great panel. we are getting them unhooked. i am assuming that our afternoon keynote speaker is on hand. there he is. shake hands with -- thank you so much.

thank you. we are now ready for some more excitement. i think it is worth saying that many influential people throughout history have never been around to really appreciate or realize the impact they had on the world. it is clearly not until much later oftentimes when we look back and we see what these movers of mountains have been able to accomplish. in the case of doug parker, he will have many opportunities over the coming years to see not only his achievements, but the success that he has created in his industry. doug has worked hard.

he has clearly had to work hard to mastermind a merger of two of our industries'greatest icons. he is creating the world's largest airline. it is no small feat. it is exciting to know you have passed one major hurdle yesterday with the bankruptcy court, getting you one step closer. peoplethere are a lot of who come into this industry and they are here for a short time. doug parker has spent his entire career in this industry. he knows about mergers. he knows about how the experience born from what you go through over the many years can bring you much success. we know that doug parker is not only going to be a great success this afternoon, but a

great success in the new airline that he is creating. this is another crowd pleaser. we have had dug every time he has been here consistently rate at the top. i am building a high platform for you, doug. i hope you will all recognize and cheer on the chairman and ceo of not only u.s. airways, but yet to come, american airlines. [applause] >> thank you. thank you, carol. little more up a than my remarks weren't -- weren't -- warrant. . am pleased to be here a lot of familiar faces throughout the room, as well as a number of new ones.

it's always a pleasure to get together as an industry. 2012 was one of the best years yet for u.s. carriers in terms of safety and operational performance. it's something we can and should be proud of. our industry has transformed, placing a sharper focus on enhancing service and expanding choice for passengers, establishing stable and prosperous careers for our employees, and partnering with airports and communities. it is an exciting time in this business. i want to talk to you about the history of u.s. airways that has gotten us here, our merger with american airlines, and talk about some industry issues and then after that i would be happy to take questions eri. i have been fortunate enough to address this chamber of aviation summit on several occasions over many years. reasonably well- known by this group. i first spoke here in number of

years ago as ceo of america west airlines, a small phoenix-based carrier. we were able to navigate through the industry upheaval that took place in the years following 9/11, but we found that the bankruptcies at the other airlines were eliminating our largest competitive advantage. then what wen -- needed to do. we merged with u.s. airways in 2005. maintaining a cost advantage over some of our larger competitors. that merger worked extremely well. we were able to combine two carriers that likely could not have independently survived the enormous industry losses of 2008 at 2009 into a stronger competitor that eventually ended up reporting record profits in 2012. we were doing all that, the

industry continued to evolve in response to customer demand for bigger and better networks. d merged with northwest. -- delta merged with northwest. we at u.s. airways were cognizant of that trend. we were unable to participate in that series of mergers, and tell now. last month we announced we had signed a merger with to build the largest airline in the world. we are very excited about what that means for the customers, employees, investors, and communities we serve. business depends on being able to meet our customer's needs. with the merger of us airways and american airlines, we are confident we can do that. job our demand in 2005 decisions to combine. -- drove our decisions to combine. compelling isso

that u.s. airways, american airlines networks are so complementarity. out of the more than 900 domestic nonstop routes, we only overlap on 12 nonstop flights. that means we are going to need all of the aircraft, all of the , and will retain service to all the communities we serve independently after the merger. the merged airline which will retain the american name will provide thousands of passengers better alternatives including more than 1300 new connecting opportunities and access to numerous cities worldwide. we will create a truly global carrier with the ability to compete in markets and against airlines around the world. the new american airlines will enhance global commission -- competition.

the new american will enhance one world's competitiveness and expand international choices for millions of consumers in all regions of the country, but in particular the eastern united states. the addition of us airways to oneworld will result in three roughly equal sized alliances competing head to head for traffic. when the merger closes, more than 100 million frequent fliers between our two companies will be able to combine their miles into one program and redeem them on flights to many more markets around the world. we expect the transition to close in the third quarter of this year. , we have a playbook to draw on. at u.s. airways, we have lessons learned from the operational improvements we realized in recent years.

across the industry, we can draw upon the examples of the other mergers that have recently taken place. one of the biggest items on integration planning checklist is taking care of the contracts and unions with both companies. this merger would not have been possible without the support of the unions. american's pilots, flight attendants and ground employees and u.s. airways cost pilot pilot have -- airways' union have come to agreement. this is a historic level of management labor cooperation. we continue to be extremely grateful for their leadership and support of our employees and

their representatives. we are excited about the merger and the benefit it creates for our customers, employees, investors and communities we serve. i look forward to coming back to future summits to tell you about the success of the new american airlines. did notbe remiss if i use this opportunity to discuss the needs of our industry here in washington, d.c. we are doing a better job of speaking with one voice as an industry, especially here in , communicating the value of our industry and the need to have the ability to find more places to benefit our customers. nick and his team are doing a fantastic job. our initiative calling for a national airline policy is a straightforward call to action to help ensure global competitiveness of the u.s. airline industry.

are, the key priorities reducing taxes, reforming regulatory burdens, modernizing the air traffic system, ensuring we can compete globally, and stabilizing energy prices. reducing the taxes and fees would ensure that prices remain affordable for consumers and businesses. we need to eliminate inefficient and costly regulation that does not improve safety or better the customer experience. a modernized air traffic control system would modernize our air travel experience. foreign governments are investing significantly in their airlines, allowing them to acquire newer aircraft and expand deeper into the united states. until we are allowed to compete more effectively, domestic service to smaller and rural communities will suffer. it's just a matter of time.

the advantages to stabilizing energy prices would be profound for the airline industry. we need a copperheads of energy policy that will keep fuel costs in check and encourage -- comprehensive energy policy that will keep fuel costs in check. i believe brighter days are emerging for our industry overall. i miss -- i am proud to be part of it. those are my comments. i'm happy to take any questions. [applause] there's one way in the back. .peak loudly >> l scott from reuters. -- al scott from reuters.

frome a few days away sequestration cuts starting to hit the faa. this will affect air traffic controllers. do you have any concerns about how they'll affect your flight schedule schedule, your ability to put planes in the air? >> we do, of course. we are hopeful that there won't be material delays as a result of any changes to air traffic control. we don't believe there should be. we are trying to work closely with the faa to make sure that while sequestration cuts are coming away, they don't impact the flying public, and hopefully we can make that happen. , iwith a room this large can't believe there aren't more questions. >> hello. mobile flight national -- global flight national.

how does yesterday's bankruptcy court ruling have an impact on the merging, especially the judges decision to not rule on the payout? was a required stop in getting this done. agreement required approval from the bankruptcy court. it had unanimous support for the agreement, and the judge .pproved it or i we have other approvals that need to occur, not the least of which is the department of justice approval of the merger itself. we expect we will be able to close sometime in the third quarter of this year after we received approval from the department of justice. we are working with them now. this is extremely complement three merging -- koppelman three merger.

-- complementary merger. we hope to have it done by the court -- by the third quarter. but not the final step. >> let's have one more two more. john hughes from bloomberg. >> do you expect to have to surrender spots at the airport to get that doj approval. >> absolutely not. nor should we. what are you laughing about? he will not be laughing -- you will not be laughing when i get through with this. the fact of the matter is, if you look at the reagan slots, as i like to do, in a vacuum, what people report, including my onetime friend dave barger -- [laughter]

>> the number they like to highlight is the combined entities will of two-thirds of the slots of reagan national. i am just not disputing that number, which is not the right number. two-thirds of these lots are at reagan, because we adds u.s. airways, we've fly hagen as a hub, fly d.c. as a hub. we fly smaller aircraft, so the reality of the combined entity would have about half of the seats. so, two-thirds of the slots, more like half of the seeds, nothing remotely resembling anything that violates antitrust law. this is not a legal antitrust issue. anyone i have talked to will tell you that this is not something the department of justice should rule on as a matter of law. and you know, they might rule on

it as a matter of policy, which tends to be the case. let me give you a couple more numbers. the fact of the matter is, well we are talking about reagan, all of you who live here know there are other airports near beit that serve a similar market like dulles and baltimore. if you look at the total market, 50% of the seats at reagan becomes 25% of the seats of the total market. smaller then united actually and about the size of southwest. so, incredibly, incredibly competitive markets in washington, d.c. area, which we are just a quarter of the seats when everything is done. even if people ignore the facts and decide that we should divest for policy, that would be really bad policy, because the result would be we would be

asked to divest slots. we, of course, would divest those that provide the least facility to the airline, which means the smallest communities, which means a reduction in service, and those airlines would not serve those communities. with full assurance. and if they tried, they would not be able to do it profitably, because you can only serve those markets with connecting service over the hub like we do. so, the net result of this for consumers would be a reduction in nonstop service to small and mid-sized communities from reagan. it would only be able to fly to places with a lot of service in competition and demand, of course, but there are a lot of seats in the region to serve those cities. i do not think this is a legal issue that should be addressed,

but people want to make this a policy issue, it is going to be really bad policy. >> here we go. right down here. >> hi. >> bon jour. >> thank you, you have been a champion of consolidation. congratulations. you got what he wanted. now what? you need approvals. but what is the first order of business when that happens? what is the first thing you want to tackle to make that work? what we have to get through integration. first of, -- >> we have to get through integration. first off, it is not as though we are sitting around doing nothing. we cannot do real integration work through the company's. we are planning integration. we are doing that. the two companies are working extremely well together.

the management teams of both companies are extremely strong. we are working through that now. we will need between now and the time we close to combine our senior management teams. we are working through that process. we will need to have that done by the time we close. when we close, we will hit the ground running, ready to go doing everything we promised we were going to deliver. that is an airline serving more people in more places. very quickly, you will see an airline that indeed can look at scheduling and pricing as one product. even though we are two separate airlines, we will be able to schedule and price as one. and then we will get through the harder it implementation things such as processes, etc., and as i noted in my speech, we feel really good about our ability to do that of humility as far as

how to do that. we learned a lot from our past. we have seen what would be the right way to do things. i feel confident about our ability to integrate well. that will take some time. it takes about a year and a half. if we do this right, customers will not see any of this. >> there is a question down here -- >> henry was not done. >> are you going to -- [indiscernible] >> what is the next question? [laughter] >> i do not want to be facetious about that. reality is that american has broader delivery. i think they have done a fantastic job. we have a lot of details we want to work out. it makes sense. i do not know if that makes sense or not. we have not gotten to that the

tell. it may -- it might make sense to keep exact same line in place. i do not know. >> [indiscernible] >> i am definitely not taking out one. hi. >> is it on? gavin schweitzer from jetblue. >> you seriously work for jetblue? >> yes. >> good god. >> i am curious about the top three teams that you learned it from completing the merger and being indirectly involved in the subsequent mergers. i travel through the america west merger and i was curious as to what you will carry forward from this one over the years? >> i can tell you, the most important thing we learned in terms of integration is to -- there is a tendency, to look get

it as a management team, we were the smaller airline coming into a larger airline, and there is a tendency amongst the management team to think, the system processes, the ones we know, the ones we are most comfortable with, the ones we are attached to are the ones we want to put in place. the right thing to do, the better way to do it is to think whatever the larger airline has in place, our goal is to keep all of that in place overlaid over the smaller airline. been you only have to disrupt one-third instead of -- and then you only have to disrupt one- third instead of two-thirds in this example. and then you do not see too much disruption at all. you go to a disintegration, and everyone sees some disruption. we learned that. -- you go through this integration, and everyone sees some disruption. we learned that. richard anderson joined me to talk about lessons that he had

learned, and richard had this phrase called "adopt and go," which i have adopted and am going with. just get in place. there may be a better system with the smaller airline, but once you get the integration done, you can always go back and compromise. that is the biggest integration lesson. there are other things i did ramble on about. but i will stop now. desk? it is carol's turn to turn me -- yes? ask. carroll's turn to last question unless you are jetblue. >> [indiscernible] >> i will give you one and have answers. >> i am wondering if you live seen benefits from doing the next to gen technology, and

also the sequestration -- what kind of concern is that have as you look at the exit investments, and could you share that with us, please? >> we have seen some product from the next gen technology. philadelphia is a good example. as an industry, i do not think we've seen the amount of improvement from the amount of capital we have invested. we would like to see more. everything that we say about next gen, we believe is true. there is a concern about the lack of progress we have seen with the capital invested. we should see more progress. we are trying to work with the faa to get it in place. it is not easy. it takes a lot of work. it has to do with the way the people do things. in the case of a big system like

this, were you only have that certain places, it is more complicated. you have to do certain things different in certain areas. all that is work. it takes time. we have not seen the results we should see from the capital investment. as a result, i am not particularly concerned about the lack of investment from sequestration, because we do not need the investment until we get what we have in place working. adding more investment -- i do not think it will give us any benefit. we need to focus on getting the benefits of the capital investment. those are my answers to your questions. that was not one and a half. but i am done. thank you. i appreciate it. [applause] >> doug, thank you so much.

that was just terrific. we appreciate the effort you made to be here today. this is the last keynote speaker of the day. now we have a very interesting presentation. the next presentation is that of award andb. hallett the interview with bret bair of fox news. i am very pleased to introduce it -- introduce the person who will be entered using this year's recipient fred smith. last summer fred was unanimously elected to receive the award, and he was also elected today, march 28, to receive a. that was all fine and dandy until fred came to a dinner here at the chamber in mid december

and it sat next to the vice premier of china who said to fred, why don't you come to see me? and the vice premier said, because you have not asked to come and see me. he said, i am now asking to come and see you. and the vice premier said, fine, i would like you to come and see me on march 28. and so, i get this phone call from fred saying, we have got a problem. and i said, yes we have got a problem. so, what to do? well, what do you do when you have a problem? you find a solution. and the solution was to do it all by video. and so, we got busy and we put together a program that i think you are going to love. we all love spreads met. we know that fred could be here if he could, but he does have certain business priorities and he is in china today to meet

with the vice premier. -- we all love fred smith. it is my delight to introduce craig fuller to make the presentation. >> thank you. participatingo be in the u.s. aviation summit for the fourth year. we are especially proud to be presenting veeps carol hallett award. i have known her for 12 years. shoe gets us together in aviation. it only seemed fitting five years ago to launch the award to recognize excellence in leadership inc aviation leadershiparol is the -- excellence in aviation leadership. ofrol is the first recipient that award. today, we're giving the award to someone who was not only changed our lives. he changed our lives with a

concept that not everyone thought would work. today, 10 million packages will be sorted and delivered around the world. i am speaking of course of fed ex and its chairman,, a founder, and ceo, fred smith. award the carol hallett winner. thank you some much. >> thank you so much. i am very flattered to receive this award. and you particularly gratified to get an award from the united states chamber of commerce, one of the nation's great institutions, and an award named -- my friend, carol hallett with whom i have worked for many years.

importantly, i am very happy to receive this award on behalf of aviation professionals company who built our over many years and every day provide the great service that has made fedex famous. thank you very much. i'm sorry i could not be there in person. event i hada for an to attend for our company. we appreciate this recognition very much. >> thank you very much. please congratulate fred smith and fedex. congratulations. >> hear, hear! [applause] >> with a very warm spot to but to crag and fred. now i would like to likegina to

join me on stage -- i would like stage.gina to join me on she is going to receive the commemorative plaque in addition to saving a few words. gina? this is not a black and you can just carry around. this is quite -- this is not a plaque you can just carry around. this is quite heavy. fred isu can see, i -- so pleased to receive this special honor. he could not be with us today. i know he would have been very pleased to be here with all his friends to join in on the conversation and certainly celebrate this award. you have heard a lot today. i would like to add that the u.s. aviation industry alone contributes a moribund 1

trillion dollars -- $1 trillion in total activity to our economy, and as you also hurt, supports more than 10 million -- as you also hurt the, supports more than 10 million u.s. jobs. fed ex connects 220 countries with 300,000 employees, and so, we are a national leader creating jobs come up spreading economic opportunity, at increasing trade, and being at the forefront of innovation. together, we will continue to do that, and so much more in the years to come. again, on behalf of fred smith, and all of us at fedex, thank you so much for this special recognition. [applause]

>> well, we really appreciate accept this.re to i think that now, you are truly going to enjoy the next part of the program, because i am happy to introduce the commentator at fox news network, bret, to introduce fred smith. you are on. >> it is a pleasure to be here at the u.s. aviation summit. congratulations on your award. >> thank you. i was very honored to receive it. >> i want to ask you about, first of the economy. american success

story. would you be able to create this same company in this economy? realu know, one of the untold stories about fedex is it is a creature of the government getting out of the way of this. the we first started in aviation business and the surface transportation business, it was heavily regulated. beginning in 1973 and then with acts in 1978, 1980, 1994, and then in the 21st century in the international arena, governments have steadily gotten out of the transportation business. we may be the exception to the rule, but i think the thrust of the question is, is it harder to start a business today? and i do not think there is any question about the fact that it

is much more difficult to start an industrial company today. maybe it is easier to start a software company. but the regulatory environment is very tough today. >> along those lines, a lot of what we hear is about companies talking about uncertainty, and really uncertainty coming from this place, washington. where to put it in those terms? >> no question about it. i think the biggest issue, not just for america, but for the world is whether the united states system of government can continue to operate in the way it has in years past. we have been the anger of the worldwide trading system, the -- we have been the anchor of the worldwide trading system, the international system. people are concerned. >> do you sense it is changing? you have your finger on the pulse of how things are going.

do you sense a change? >> there is a change, but it has happened in the most convoluted way. i think anyone who is an objective observer of our situation in the united states understands that our spending is unsustainable, and that our tax system is not very efficient. got to close at those numbers. you have got to get them closer in balance. we have done that. january 1, the government's revenues went up -- not a very efficient way to do it -- and then the sequester came in and government expenditures are going down. at the state and local level where they have to run a balanced budget, they have been going down. i do not think it is an accident the stock market is going up and gdp numbers are going up because of that. in a very inefficient way, we

are making some progress. >> in real numbers, how far do you think investments in infrastructure spending goes to fedex? >> is vitally important to fedex and it is vitally important to the country. if you track investments, it correlates almost perfectly with job creation. the reason the united states has such high levels of unemployment and such high levels of nonparticipation in the workforce is because we have not been creating the jobs. and the reason we have not been creating the jobs as we have not had the level of capital investment in equipment and software necessary to create those jobs. you have residential investment as well, investment in business structures. you have government investment, which is infrastructure.

the u.s., government and infrastructure was about 4% of gdp in 1960 for all. we are living off those investments. when you use dulles airport, that is the capital investment in infrastructure made four and five decades ago. we are now down to 1%, and congress cannot agree on a mechanism to fund infrastructure improvements because of the fight over the taxes, and so that is a very, very bad thing for this country. >> what can government do to jump-start the economy, and what can the business community do to jump-start the economy? >> the business community has jump-start the economy in a very spectacular fashion. just incredible technological development that we are now producing more oil and gas. that was the result of on to

--ng nor's -- on to burn or revolutionizing the situation. the most important thing that the government could do would be to produce as much natural gas and oil as possible, open up the federal waters. the second thing is to rationalize our corporate tax system. we are the highest corporate tax in the world now, of all the industrial countries. we are one of two countries, chile is the other, that has a worldwide tax system rather than a so-called territorial system or the earnings in china or europe are not taxed when they're brought back into the united states. it is not taxed. we have $1 trillion dollars

sitting offshore that could be invested in america. so, if the u.s. government would do those two things, i think business would increase its level of investment in many different sectors, and i think that the job creation increase in incomes would follow. >> there's a lot of synergy between companies. earlier, we heard from jetblue -- jim mcnerney, the president and ceo of boeing. that is a big part of your business. >> no question. they are the largest customer for the triple-7 freighter. we have orders for the 767 freighter that is being built along the u.s. tanker. and that is a good investment correlating to gdp. when we buy a triple-7 from

boeing, i think it something like 20,000 suppliers and -- those are people making the equipment used for services, the machinist in cincinnati building the ge-90 engines, and it all comes from our investment. our investment in buying the plane and boeing for building it in the first place. >> is there a place where you see the greatest opportunity for u.s. businesses in the world? where do you see the greatest opportunity? where do you see the greatest challenge? >> i think the reality is that the greatest opportunity for american business is a north america, if we cannot solve a few of our problems like the fiscal stalemate and getting a more competitive corporate tax

structure. the energy resources in north america, canada, united states, mexico are getting better. arechanges in mexico astounding, including for the first time since 1938, the president of mexico who is suggesting they'd pass laws barring foreign investment in their energy sector, which is not been permitted for half a century. the challenge is around the world, i think it is well known -- europe and the problems that they have with their fiscal situation. and i think that there are issues in china, given the policy traces that china has made. brazil is an attractive market. >> this is a long list of needs for the aviation industry for

the federal government. if you were to name a couple of them, for the federal government, for your industry in particular, while with the top three paid? >> for aviation in particular, it is the next generation air traffic management system that goes to a satellite-based system. it has extraordinary effects on national productivity. it saves millions and millions of gallons of fuel. it saves passengers and shippers all sorts of time. there is an incredible national pay off for next-generation air traffic system. second, the airport, and for that matter, the transportation infrastructure. highways, ports, and airports.

we have now built a new runway in this country for a long, long time. and third, we need to make sure that our investment base in the aviation business remains strong. we are down now to building one tactical fighter -- the evolution of our commercial airplanes, the gestation period is longer and longer. those are the three things i would say are important. >> there is a panel here on uav's. unmanned aerial vehicles. is there a cargo application? >> there is no question of plane can be flown autonomously and controlled from the ground without a pilot. the military has been doing it for a number of years.

system,predator fantastic pieces of machinery. you could make an all-cargo airplane that was operated without people on board. i do not think it is a technological issue. i think is a sociological issue. i think it is potentially a security issue. i think what you will see is the use of automation going incrementally, just as we started putting autopilots in airplanes to help pilots, you know, during long flights, when you are busy in the cockpit. i think what you'll see is a hybrid system where you still least manned pilots, at one, but you may have supernumeraries, the co-pilot, so to speak, and that way you

get the best of both worlds. and that way, i do not think there is much question about the fact that this is applicable to surface transportation. it is relatively easy to have a drone tractor pull a truck across the interstate highway system. google is operating a car autonomously as we speak. it would be relatively simple to have a drone emergent truck on the state interstate highway system. it would be safer. it would not go to sleep. it would stop if there were an obstacle. i am not so sure that that would proceed a fully automated airplane. >> interesting. one more question. passenger carriers have come full circle in the u.s.. what do you forecast for cargo airlines? >> well, we have been there.

-- you havesked asked -- the cargo system is really down to four major players, the two giants, fedex, the largest international cargo system that is u.s.-based, ups, and then we have atlas, which is a subcontractor that has a large fleet that they fly for other people. and the same is true for the fourth company. that is our industry. there are a lot of specialists down there that do things -- there is a carrier in alaska, for example. they have a carrier for the oil friends, but those beryl loading capabilities. b .rrell loading capabilities >> finally, you have a big

family. >> yes, i do. >> you have one daughter who is -- one daughter who was a hollywood producer? >> yes, i do. >> molly? >> yes. >> what is she doing? >> she is working on ""the good " with reese witherspoon. -- she is working on "the good read rigid with ries brother spent. >> do you have a future in hollywood? >> i think tom hanks would be the first to tell you that i had an enjoyable role -- integral role in "castaway." >> carol, back to you on the stage. [applause]

>> he cannot hear your applause, but i know he would enjoy it. the only thing i can say about that interview was i gave bret about mali and his acting -- molly interview. i just wanted to be your story. with that, this has been a goodness.h, my we are a little ahead of schedule. you get 20 minutes instead of 15 for really good break. do not forget, if you go outside that door and leave, it is locked, and you cannot get back to the drawing. and you do not want to miss that. particularly as you can fly

around the world free on some of these airline tickets. i will see you back in your seats please at 3:00. thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013]

>> so, this will be about a 20- minute break in the u.s. chamber of commerce u.s. aviation at summit. when we come back, a discussion on aviation and climate change. that will start at 3:00 p.m. eastern. during this break, we will hear remarks from earlier today from the ceo of bowling. -- boeing. >> thanks to everyone joining us today, particularly those kind

enough to sponsor our activities. we are particularly pleased to have jim th us -- to with us today. as you know, he is one of those guys in town who does not need an introduction. he played baseball with george bush. he worked that procter and gamble. he became the chairman and ceo took, and in 2005, he over bling. he serves on the president's role council, with all sorts of organizations put together to look at everything to do what trade. he has been an outstanding leader and innovator, an advocate for business. we are glad to have you here. now, we are going to pick some questions, but not so targeted. broad enough butjim to uncover a

couple -- broad enough that jim can cover a couple of subjects. here is a man who runs a couple of companies in one. so, really, that is two companies in one. a huge defense operation and a massive global aviation issue. so, from that perspective, and the perspective of being chairman of the round table, tell me how you think the american economy is doing, what about the recovery, and how is your company? >> yes. thank you to you, carol, and your team for doing this every year. this is a great year for our industry. i know that everyone that carroll named is delighted to support this. thanks. the economy is what it is.

it is sort of bumping along, very slow growth in the united states. not growing fast enough to really generate job growth, as you can see in the unemployment numbers. outit is not running -- running nearly productivity in most industries. the housing sector is beginning to kick in a little bit, which .ould give us over that 2% rate a lot of people think it will. but it is still a pretty anemic recovery. there is lots of reasons for it. everybody has got their own favorite reason for it. i have heard your speech on the subject. i tend to line up with you. i think a lot of the issues are country faces on the fiscal side, regulatory side, tax is having an impact. that is slowing some things

down. certainty is a word that is thrown around, but it is a meaningful word when you look at long-term investment at this stage of the economy. it is significantly lower than long-term investment in analogous stages of other recoveries. and that means something to see if people are willing to put money behind that, yes or no? i think this is a challenge. we face of banking and sovereign bankingue -- we face a and sovereign debt issue in europe. the developing markets are growing. they are where the real action as on a global basis. as i think everyone knows. i think that boeing is doing better than that description implies, and largely because

we're in the business that innovates. and we're in an innovation replacement cycle in our industry. e are not bounded by the gnp growth i described because people are replacing old technology with new technology. us and airbus and others. much more fuel-efficient planes, much more responsive to the environment. i think that we are to end at three times the gdp growth we are seeing around the world. more than half of that is driven by innovation. i think that the aerospace industry in and of itself, not just blowing. the aerospace industry really is by many measures the most globally competitive industry united states has. -- i think that the aerospace

industry and an of itself, not just boeing. is importedn half from other places, which is a measure of competitiveness. i am tempted to say the country is lucky to have the aerospace industry, because probably there is too much pride in the industry that a lot of us have. it does represent in many cases, i think, sort of the best of our country. and i am very proud to be part of it. >> great. that was the softball, wake up question. [laughter] now, not from a political point of view, but from an operations point of view for your company and others, give us your quick view on sequestration. >> ah. [laughter] sequestration.

look, i think we all know why we are where we are. i think that the administration and the legislative process put in place something that we all assumed would be so scary it would never be implemented. that assumption was wrong. that assumption underestimated the lack of bipartisan capability in this country, and so, here we are. --uestration -- on its face, excuse me. it is a silly way to go after -- >> [indiscernible] >> cutting. >> you are not getting that from me. that is a good way to cover up a question. there would be great celebration in this building if i could not

talk at all. go ahead. >> i think it is obviously a silly way to go after cutting the budget, which is an otherwise laudable objective, and it is going to have a disproportionate impact in places that would not be completed. take defense. take the faa. aviation. by the letter of the law, the defense cuts will be very debilitating and will impact readiness. this is one man's opinion. that is not a good thing in a world that is more full of threats and not full of threats. the faa is struggling with how to deal with everything from airport towers to supportive programs, and there are many, many other examples, and i remain hopeful.

i am an optimist. i remain hopeful that we will go through some of the salinas for a few months and the sort of blueprint put in it -- this silliness for a few months, and these sort of blueprint put in place for the more choiceful, thoughtful way to go about it will become the force of law. i remain an optimist. >> good. building on your optimistic position, why don't you tell me the latest on the 787 dreamliner. -- dreamliner? >> be 787 is a battery issue. we are very close. we have high confidence in the technical solution we are testing right now. with the faa. and i think that's it will be sooner, rather than later, days, andooner, seven

we will all look at data, and i have a high degree of confidence that data will tell us and tell the faa, who are the decision makers here, that the fixes are what we needed to be, and we will have this airplane back in service in due time. but, you know, this is a difficult time for us. we have tested this fabulous airplane that can -- and none of the problems -- none of the promise of this airplane really has been diminished. there is something about it that needs to be fixed. that does not take away from the other things that make this a special plane. it is a 20%, 30% improvement in operating cost of the airplane, a raise in the customer comfort

with the airplane. and we have taken this time to tighten some things and make sure you're in good shape as we get this back into service. michael,y the faa, have been chance here, they put us through our paces -- have been champs here. they put us through our paces. they have the safety of the american public in mind. >> i think the interesting point that you make is innovation. recently i was talking to very good competitors, and they seriously and vigorously want that plane in the air, because they do not want this continued questioning -- i mean, you have had this problem with every new plane. whatever it happens debate.

there are a lot of people that want to get this thing going. let me ask you a related question. you have heard from people here that make other airplanes. the chinese are talking about going into business making airplanes. what do you think about that? >> i think the chinese will be competitors in large commercial airplanes. they have the technology. they have the money. they have the defense infrastructure that enables this kind of thing, and they have a market big enough to absorb, to absorb the products. how long will that take? who knows? but they will get there. i think that really speaks to the global competitiveness issue. i think we will -- i think it is win by strategy to

innovation. i do not think we will win by having the lowest cost airplane. i think when you have zero global competition -- when you have global competition and different banking practices. so, back to your point that we are cheering for each other. this may sound a little strange come up boeing and airbus cheering for each other, but our strategies are to innovate, and through innovation, win. and i think that needs to be the strategy for technology. technologically advanced countries, and particularly this industry. you will see more of that. >> speaking of your competition, it seems that in the overall company to be getting out from under the day-to-day political influence of a number of countries, that should be helpful to them, shouldn't it?

>> are you talking about who, the chinese? >> oh, no. the restructuring -- >> i think that airbus can figure out by themselves who they want to be. the model does move closer to -- usesink the word that todd is "on normal company." i think that word has a special meaning in germany. i think that will create a stronger competitor, which i think is good for the industry. >> talking about competition, one of the things you hear all the time in our country -- people say, when is america going to start making things again? which, as you know, because of all the work you've done not only in real terms, but in public policy, we are a huge manufacturer, a real driver of technology. and by the way, let's have a big

respect for the 45% of the jobs -- that innovation has taken out of the manufacturing process. but what role do you think it will play in getting this economy going again, and where will we find people needed to work in it? >> that is a great question. i think the quick answer is, we never stopped believing in american manufacturing. we have 150,000 folks who work in plants around this country and we have made a lot of long- term investments recently. so, that is speaking for boeing. but for the country, i think we're on the verge of an american manufacturing renaissance, quite frankly. as rates are around the world began to adjust, and americans asse rates, not as much

coming out of the recession -- one good thing about a long recession is there is a lot of focus on productivity, and as you implied, a lot of use of technology to support that focus on productivity. i think that is strengthening our country's manufacturing base, and i think there is also our realization as people think about tax and fiscal policy that the value of manufacturing in terms of its broader impact on the economy is huge. i forget exactly what the numbers are, but it is like double or triple the impact of unemployment as compared to other sectors of the economy because of the follow-on services, because of the supply chain, because of the engineering you need to design it. from the public policy, the public policy debate, as people talk about tax and fiscal, a lot

is shared by people like yourself, getting to realize -- shaped by people like yourself, getting to realize the huge potential here. we are not going to ignore global capability. we are not. but i think some supply chains are a little too horizontal over the last couple of decades. the 787 of the story of and earlier developmental issues was we lost control of some of the designing and engineering of the plane come in an effort to create a very horizontal business -- engineering of the plane, in an effort to create a very horizontal business. we do have a disproportionate amount of investment vertically in the united states because of the capability we need. the longer-term question, you implied, it is really about

education and immigration. i know you are a champion on immigration. i know currently you are at the center of the debate, and everyone in this room should be glad about this gentleman being between john mccain and chuck schumer trying to get a deal done. i think a lot of like-minded people want to see this happen, including you. but immigration, solving that problem, addressing some of the educational shortfalls we have in this country will probably have more to do with the long- term competitiveness of the united states manufacturing than anything else. so, keep those efforts going. tape supporting this guy. this guy. supporting >> [laughter] sotalk a little bit about -- you manufacture these great

products. and the help of the xm bank others, exporting not only products, but exporting u.s. engagement and influence and so on, let me ask you a couple questions about that. we got a three-year extension on the xm bank. so many people do not understand that the u.s. government makes a ton of money on this. gives us the real life story -- give us the real life story. xm has always been important for companies that import. it has been important for small and medium-sized businesses that frankly find it even more

difficult to export without some financial help. the bottle components to our competitiveness -- yes, xm b ank, a think i have the numbers generally correct. i do not think it has ever lost any money. if you add the money that they have made on fees and credit support, it is well into the billions of dollars. this is a money maker, not a money loser in the name of corporate welfare at all. it is just the opposite. operationa business we would all be proud to run, quite frankly. i know some voices tend to be from the far right or the far left that question the subsidy of the exim bank. but i think if you stop doing it, it would be unilaterally

disarmed. there is support for the manufacturers, and there are trees that guide the behavior and guide the practices, but -- andties that bad behavior died the practices that can be used. atlly, i shake my head people when they say we ought to do away with the ex-im bank. >> ok, we have great products. we have a bank that helps. we are going to trade them around the world. there are two new things on the horizon. tradehing is an eu-us agreement, and the second is the agreement we're trying to do in the pacific region. what does that do to american

companies exporting abroad? what would it do for your company? >> i think that you mentioned my chairmanship of the president's counsel. we have been actively engaged as industry as well as the nation for a largest exporter in this issue. i think that these agreements are difficult to get done, but it is always worth the effort in my view. ultimately, we have been out run over the last two or three decades. other parts of the world of cut free trade agreements, and we are catching up. >> up portion of remarks from boeing ceo jim mcnerney. coverage, go to our website, c-span.org. we are going back to the

conference for a panel on aviation and climate change. >> we are so fortunate to have nancy young, the vice president for environmental affairs at airlines for america to lead this very important panel with a panel of real stellar stars, when it comes to their knowledge and their ability to discuss this issue, and they were all recommended by nancy. so, i know you are going to find this to be a very valuable and interesting panel. >> thank you very much. you have heard so much today about aviation and airlines being engines of the economy. what we would like to continue to pursue is that there is a green engine of the economy as well. a little theme setting and then

i will introduce the panel. in 2010, the assembly came up with a provisional agreement on how to go forward globally of an aviation greenhouse gas emissions. they came up with some emissions targets. they came up with a focus on technology, operations, and infrastructure. they said we need to do more work on market-based measures. taxes, a euphemism for charges, emissions trading and that kind of thing. so here we are, three years later. industries have been working on it, governments have been working on it, and we are coming into an assembly in 2013 where all parties hope there will be progress made on implementing or getting an agreement going forward. it is a messy process, and i

think we will hear some of that today. we have experts on our panel have been involved with that work. we're going to get into some of the inside discussions that have been going on. a group of 17 countries focusing on trying to hammer out key elements. that said, those are international negotiations. some parts are confidential. 10 not going to do my usual to get all of the details, but we will still have a robust discussion and i hope you will help me honor the limits of what can be said about ongoing international negotiations. a quick introduction to our panel because they can cover a range of issues, including my personal favorite, the european emissions trading scheme. the executive director of the air transport action group,

which is an umbrella representing the broader global aviation industry. the transport counselor for the delegation of the european union to the united states. the vice president of public affairs and corporate . sponsibility for lombardi a kudos to you. the vice president of european union affairs from lufthansa who can give is a good insight to its be like -- to what is like on the regulated side of the european union. and the administrator of policy, international affairs, and the u.s. faa. thank you for joining us. let's start with a question for paul.

they agreed to some elements provisionally and the industry was cited as having done a lot to help countries go forward with the elements that they did. here we are in 2013. is that industry is promoting the types of promotions they were -- the types of things they were looking at in 2010? what do we see going ford? >> thank you. that afternoon, everybody. when you talk about this issue, it's important to put it into the context of what this industry is. it's not a collection of independent industries trying to provide services, it is really a global network that bides the world together and is a key driver of the world economy. we represent about 3.5% of global gdp and contribute about 2.2 trillion dollars to the economy. we employ directly and

indirectly about 57 million people around world. if the industry was estate, we would be no. 19 in size, we would be a member of the g 20. all of that does come with environmental responsibility, and we estimate last year that this industry produced 676 million tons of carbon, roughly 2% of the global bedmate carbon emissions. if our industry continues to operate in the way it does today, we could see those emissions of grow at about 3% per annum. our industry has come together around this issue in a way i don't think any other industry has. it has come together around this issue in a way only our industry has been able to do around something like safety. is an issue that affects everybody and there's been a

huge commitment to moving this forward. that is why back in 2009, we came together to set three very ambitious targets. we were the first industry at the global level to set targets like this. you heard those targets this morning of 1.5% fuel efficiency improvement between 2010 and 2020. trying to stabilize our emissions to what we call carbon-neutral growth and with that objective in the longer term by 2015 to bring those emissions down to half the level they were in 2005. as far as i know, no other global industry has made commitments on that scale. , but fine setting targets it's also about have you reached those targets? we agree to what we call a fourth pillar strategy and it

has very much merit be approached the industry has taken. we are right technology-driven industry. we heard a lot on the panel talking about technology, about all the things happening in that area. there's a huge commitment to making sure we reach that target and hopefully go beyond that. the second area is operational improvement. many airlines have taken magazines of the aircraft, anything to reduce weight. the third area is air-traffic management and we've heard about the need for renewed vigor in implementing improvements around the world. something the industry itself cannot deliver on. basedourth one is market- measures. we see that as a way to facilitate meeting the carbon-

neutral growth goal. another is a gap filler where the infrastructure will move forward. we put these on the table in 2009 and they were picked up to some extent in 2010. nothing has changed since them. in direct answer to your question, the industry remains committed. if i go back over the last 12 years, this industry has purchased 25,000 new aircraft at a cost of $3 trillion u.s. dollars. if you look at the time frame from 2005 to 2010, we saw the rate of purchase of aircraft increase. that was at a time our industry was going through some of the biggest shock it's ever experienced. volcanoes, and the financial crisis.

why is that purchase of aircraft accelerated? you heard it this morning -- the cost of fuel. the average cost of fuel in 2003 was about 14%. today, it's in excess of 33%. there is no better incentive for our industry to continue to invest. the commitment there, you heard it from the manufacturers, we are working together with the air traffic management committee to make improvements as far as we can and on the ground at the airports. the commitment is still there and that's where we want to keep it. >> let's pick up on that before we get into the market-based measures. it has been weaved through the conversation all day. perhaps from your perspective, are we making progress on those measures? what is there and what more

needs to be done from a european union perspective? it would be interesting to see if there are differences across the globe. >> thank you. what we are after is our license to grow. they're so many opportunities to keep connecting to people who trade in countries. we want to do it responsibly and to achieve that goal relative to 2005, we need to make some progress on the pillars and we are making progress. we heard it this morning on the manufacturing panel, but as you replace older generation aircraft, we are making significant progress. to replace older generation aircraft out of production, there is going to be 50% to 70% reduction in co2, which is

significant. getting that? with the 7872 or with the new technology, i think all of these technologies are important and the incentive is there. we know 60% to 80% of the environmental impact of an aircraft is defined at the design stage. that is why it's important to keep that in mind the early stage and that's why we design for environments. that is making a difference. then you have the claims. claimsre more and more on that front, but you will never get as much reduction as a completely new technology. reduction andthe waste from materials and the

improved aerodynamics, by it is going to make progress. we were the first one to put winglets on the jets. these things are done and it makes a difference, but when you do it with technology, it is one plane at a time and it takes time. technology is making a difference but it will take time before we see these improvements. that is why we need the biofuels. could impact all generation and new word generation. we know we would make progress, but there is a lot. we are making progress where we need more progress. >> we will come back to that.

lufthansa has been a leader in a number of these areas. are you getting the recognition you should for those types of measures where they fit into that package? >> as many of you know here, the focus was on the market-based measures. of thethe focus environmental discussion but it has diverted from the fact that the operational measures are not getting done. implementing. he that's a big issue that we heard this morning. we have given up on the implementation from a carriers point of view because what we want is improvement. we're trying to focus and get that done. we useny other airlines,

biofuels. we heard this morning that the technology is there and is safe. big question is how do we get to our goal, which is to use 10% of biofuels in 2020 in a sustainable way. how much do we get involved in securing supply and the necessary quality is a very important strategic discussion we're having with in the company. at the same time, as we probably will come to later, we are using too much energy dealing with the fourth pillar, which is market- based measures. throughout theen the a few punches landed on next generation progress and single european sky.

it isms of progress, obviously an operational issues and a big issue for governments and an environmental issue. do you have an answer to some of the criticism? where does that fit within the package of measures we are talking about to address environmental issues? >> let me take a step back before going to that. definitelystates is addressing the issue of the impact on climate. we have been focused on developing and implementing a robust system of policies and measures and goals within the u.s. environment as well as working very seriously to try to make it serious. with respect to that u.s. side, we have a pretty ambitious goal

in 2020, the 2005 baseline is more ambitious than the industry. it is an aspiration for us, but we're not going to make progress unless we put ourselves hard. we have an approach similar to what paul described which focuses on development and implementation of advanced deployogy to advance and alternative fuels and work on air traffic management operations, developing and improving our scientific towledge and our ability analyze and understand the situation and policies and measures. we don't currently have market- based measures, but you could

pose that in theory. we have a pretty ambitious approach within the united states. the question of operations, i was here not for the whole day but i heard a number of comments about it. pretty much of what i described as the u.s. plan program, this is very difficult to say this is a government responsibility, this is an industry responsibility. this is a collaborative effort, and one that is not going to make significant progress without focus on partnership and working together. the next generation efforts we have is something where there is government responsibility, but it is not something we can do on our own. most recently, we have been extremely focused not just on developing and applying operationalbut on

technology to make sure we are producing benefits for the users of the system. even among the complaints throughout the day, i heard be grudging acknowledgment that there are improvements being made. it's not a yes or no thing, it is a process and we have been making progress. we have been engaging much more collaborative lee with industry to understand what they're seeing, what their needs are in terms of benefits and what changes do we need both on the government and industry site to produce those sorts of benefits? you heard reference to the need to change procedures and focus on training, that is both for the controllers in faa as well as on the industry side. are currently -- the next gen

advisory committee, that a committee in which we're engaged at very high levels, focused on how we are moving forward and how that is impacting that industry, where we can make improvements, how we prioritize. we do hear what folks are saying and we are committed to trying to make those improvements and generate benefits that really make a difference. >> there is a lot of focus on industry. if government doesn't meet its targets, are you going to change the goals for carbon neutral growth or other things? as i said, these are

ambitious goals. i would not stand here today and say i'm going to guarantee we will meet growth with a 2005 baseline. we are pushing ourselves to identify a target that is ambitious and pushing ourselves to meet that. are there reasons why it might be tough to meet that? sure. are there things that could help us succeed that? sure. , ande much further along you would appreciate this -- we are much further along than people thought we would be with alternative fuels or the promise of fuels. we have proven alternative fuels, we certified them, we develop them, and we have proven they work.

what will it take to prove we the feels that generates a large portion or comprise a large portion of the fuel usage? we have a ways to go, but we have made a lot of progress in the last several years. there are reasons why -- could be budget environment keep us asm making progress as fast much as we would like to make in other areas? probably. we reevaluate the goal if necessary -- we don't reevaluate the goal, but we are keeping track. >> i like your other answer better. >> there are a lot of uncertainties. you have to roll with the

punches. skies, therean were punches as far as aspiration being there. where do they fit in to the scheme and what are your answers? >> a lot of focus was on the ets. we don't call it four pillars or five pillars. covers many different areas, including air traffic control. investing billions in aviation research where we are trying to develop biofuels and technology and aeronautics. said, your question was

about european sky. on what'sking happening with the next generation and it is that way on two fronts at the same time. on one hand, we need to bring together 27 different air traffic management systems from are different member states. is where the european union has taken the approach of trying to bring first couple air spaces together and there is so-called functional airspace blocks and trying to bring them into line with performance measures. there, the member states which it put these blocks together have not met the targets that they had committed to. was december last year and the european commission is going to oppose another measure to do it more

top down and really force member states into complying with the targets they have set. legislationequire and we need to push that through the council of ministers for the european parliament. it is something that will be coming hopefully this year. >> if it doesn't catch back up, a similar question on air traffic management improvements. for you discount the cost that lost efficiency? >> you are speaking up the next generation or? >> we will get to the next generation. is there scope within the current scheme to credit the airlines or at least reduce the impact per the government not doing its part? we are doing our best in

trying to bring these aspects together. we're working on the technology front, moving into deployment from just research oriented approach. but i don't think it's going to have an influence on the target. there iscurrently. >> you can't fault me for asking. it looks like you are getting twitchy. >> i find this debate fascinating. from an industry perspective, we have gone further than any other industry i know of in laying out a plan, laying out clear targets of what we need to do, say we're only going to do that if we work in partnerships with the government. the feeling in the moment is we are doing all these things and there's a huge amount of activity. look at where we have come on alternative fuels in five or six years. it is unprecedented we have made

the process -- we of the progress we're able to make. is no longer technical issues. we know we can use this stuff. inton put these things existing aircraft without any problems and all. we need the support of governments to put the right policy for a marketplace because of the moment, the available biomass is going into by a diesel and bio ethanol for road transport that have alternatives in terms of electrification. there is no joined up thinking in terms of transport energy that would bring these bits together, and that is one of the things we're constantly trying to get. they talk about a basket of measures that it recognizes all these things. it is in all our interests to push that process for because that will guide what individual states try to build into their own policies.

in that industry, we are running at work factor 12 and way behind us, there are governments trundling along thinking we ought to do something. let's just put taxes or put a price of carbon and that would solve everything. i totally disagree with that. we need to do it in partnership. we know what we need to do that we need to do it now. >> julie noted that the u.s. has been a leader in this area and you mentioned biofuels and the importance of bringing together different agencies. the faa has been a leader in the u.s.. >> full credit on that one. other parts of the world are not quite as advanced in their integrated thinking as you are here in the united states. >> maybe we should move to the bigger picture so we're focusing on the measures.

there is a clear agreement that all of those things have a role. how do you capture those in a global industry with a set of rules that honor the four pillars or five pillars or the comprehensive approach? we are facing efforts to try to get an agreement, and i'm going to come to you again. felix, the european union has pursued it fairly relentless in, but last fall, and of state policy where the flights to and for europe would be stayed 2012. it is called the stop the clock a initiative. the parliament and council are working to finalize that anti it off. part of the stated reasons given for doing that was to give more

breathing room to the international civil aviation negotiations. as i had testified, the analyst was an obstacle to being able to have those negotiations and a wholesome way. there's a lot of appreciation and 41-year stay, but it is a conditional state. if not enough is done, what is it the european union is looking for that would cause the european union to stay the application for air national aviation? >> i'm not going to give you our negotiation line here. that would be totally detrimental to whatever is negotiating.

the global aviation community, to come to a framework that ofld allow the introduction regional or national market- based measures or to come to a might measure and what we would from the assembly agree to such a framework. at the same time be able to write down some sort of road map how they might come to an agreement on a global market based measure. looks and fits into the objectives would have to be assessed once we're there. we would then need to convince our legislators that this is a than the position

we have faced in the past. do you hear the european union wants a free-market leading to a single measure? what does that u.s. want to see out of the assembly and do you agree with the from work toward a single market-based measure? >> i recall a year ago sitting on a panel here where we were talking about the european union and the opposition the united states and other countries have. i am pleased about where we are today compared to where we are -- where we were a year ago. we are now in a much better place of working with the european states and others to

try to advance the issues in the which isral context in inherently international issue belongs. we are participating actively in that effort. the high-level group in which i have participated is trying to make progress in three areas and put forward recommendations to the assembly on steps to take in each of these areas. one has to do with not market- based areas. for a range of things in the 2010 resolution that are being carried forward and some new things in that area. or second one is a framework market-based measures where we are trying to set the what are the rules and criteria that should govern decisions by

individual states or regions should they choose to have a market-based measure if it is to apply to airlines of other countries, is that ok, and how should that work? third is to look at a possibility of a global market measure, be it the 2010 assembly resolution which called to study the feasibility of a global measure, so part of what we are looking at is where are we in terms of the value and what happens after that, and we are active in all three of those very interested tohaving recommendations advance the work in that context. >> we should not forget market- based measures in that framework is a gas killer. it's to help us stabilize and

get to carbon neutral growth until the other pillars kick in. the technology, biofuels and management measures where we get to half by 2015. we are having this debate about these market-based measures and we hope it is going to be a temporary measure. we all know putting together a temporary measure is a tricky because once the government put something in place, it's very difficult to move back. happy ishing we are that hopefully stop the clock will remain stopped. we need to be realistic on what an international negotiation could deliver. we don't want to go back to a patchwork of various systems and i think the industry is demonstrating more than a good will in demonstrating

significant results. i just want to say iko is delivering on a number of things. is something new that was mentioned in the resolution as one element we wanted to make progress on. there has been some certification metric on ways for years and over time, there is more stringency and the industry has decreased the noise of aircraft. even if there is no certification effort, we would continue improving the emissions, but all of us in the industry were able to agree on the metric that's good for all types of aircraft, including business aviation, general aviation, small, large, medium size aircraft.

we agreed on a way to measure that. we are not there yet on what is the baseline and how stringent is going to be over time, but we have made significant progress, a lot faster than when we identified the first noise metric 30 years ago. can actually deliver on some of these and theental measures framework is one element and we should keep in mind to stabilize the emissions and we should give , but we mightance need a bit more time. >> that see is to standard is expected to be finalized in 2016 to apply to new aircraft at that time. that's a step in that direction.

issue, thereve the is a stop the clock for to and from, but as an airline within the european union, your airline are solidly hit even though they may be safe for a time, the european union did not register they don't have an exemption for business jets for the minimus flights, so they are still covered. where do you see things? does the stop the clock resolve things? there may be some litigation in europe criticizing the european union for stopping the clock. >> at the global level, things have calmed down for a certain time. have therope, we still

problems. it's a bitter pill to swallow wasus that the initial aim to avoid distorting competition, and now we have the situation and the politicians told us would not happen, that we end up -- for international routes, all of the flights are still subject to that and a bed european airlines, it gives us the figures. we are now last in competitiveness and economic strength. the last thing we needed was another factor for repairing our competitiveness. it is difficult to live without legal certainty. from the local sector say they will challenge illegally and we say that may be

a wise decision to look at it because we have the european court of justice who has set out all are the parameters and of the seven part of that reasoning is certainly done. in the live tons a group, we have swiss airline and all of the saddam, although switzerland is not part of the european it is part of the european union. we have heard from some officials to be quiet and be happy we solved it and shut out. >> what this underscores is the need to have an agreement. effort has gone

into trying to sort out this mess and it's not the only one. if we look around world today, there are a whole series of voluntary,rging both domestic and international. we have airlines like qantas having to deal with three different schemes and different reporting requirements in each one. aroundents are raising $7 billion a year on direct environmental charges, of which the biggest is the u.k. apb which raises $4 billion a year. the patchwork that was mentioned is going to be a nightmare scenario for our industry. we really do need to get a situation that will help regulate it. the market based measure is not just a political hot potato, but it goes to the core of the commercial viability of the

industry at the end of the day. into thets to get commercial workings of the industry and that's why it's so important we get this resolved as soon as we can. >> with the stop the clock legislation, the european union has shown it can revise the ets. businessthe fact that jets don't get any at all. is the scope to make revisions to address those types of things that have been raised by the united states government as potential inequities? >> how to start? to ae assembly comes meaningful resolution in the fall, that european commission

revisensider how to best in that context in whatever context has come out of it. there will be a need to look at cutting justat and one element out of the system bet was supposed to not impairing the industry. if and when such a proposal comes, there is plenty of scope for looking at the whole thing again. the question is how many boxes do you want to open or how many spirits do you want to free when it comes to that point? >> we want to free all the spirits. >> there is a strong environmental policy in the

european union. there's a certain logic. this morning, we heard airlines are a business and should be considered as a business and more than half of european businesses are participating with stationary sources it is a difference context. but there is a certain logic why europe is doing this. it is part climate action and the part against climate change at the european level. there is a strong push from that side. you want the spirit, free the spirit. >> maybe that leads to a question for julie. and then maybe we will have time for the audience to ask a question. you sit on a touchy subject there. things like emissions trading -- how far can the administration and state department who are leading these discussions, how far can you go in showing a

little leg on market-based measures when you year from congress some ambivalence about that? some people want market-based measures. many of them do not want them. >> i would make a distinction between the ets and market-based measures. you don't want to confuse the united states government as about to be implemented in this case of aviation. we have always been open-minded about the role of market-based measures and open to the idea that market-based measures should be one of the tools in the tool box in a basket of measures. of loudcongress sort and clear made its concerns

about the european union butets known, it called upon the u.s. government to engage in negotiations with a view to anding the right way ford engaging in the right forum to figure out what is the right way ford? i don't think there's a distinction between the european and anadets appropriately designed marketplace measure. >> we could talk about this all day and i did not leave time for questions for you all. you are going to have to catch these guys later. i always listen to my former ceo. i want to thank the panel for a good discussion. we could have ball on a lot longer. thank you for your thoughtful remarks. let's have a big round of applause. [applause]

>> thank you. we could have listened much longer. thank you to the wall. i would ask the next panel to come up and trade microphones with those who are departing. thank you again and let me say while everyone is getting organized that this has really been a great day so far. this panel is yet another fascinating panel. they have a very interesting story to tell. the think it is a panel that will become another reoccurring panel. we have assembled a crew that has dedicated their lives to aviation. theirh, because experience and career has been in aviation, we asked them one question -- where is our industry headed?

we have all asked that question over the years and we ask that one year and it changes the next and sometimes it stays the same period when edible and came up with this group and the suggestion, we said absolutely. we also need to benchmark this issue and see where it is going from here. who else could be a good moderator for this issue but the president and ceo of nbaa who is going to get that answer out of this panel. thank you for taking on this project. we will want you to come back again next year to see how what is going. while everyone else is getting their microphones, i'm going to turn it over to you to lead this panel discussion. >> thank you. it is a great pleasure for all

of us to be here and to have an opportunity to talk about future trends in aviation. i've been here for the balance of the day and have our love comments already and there seems to be a strong focus, appropriately so, on next generation. what we have heard from a number of people is a belief in the potential for next generation in terms of reducing our environmental footprints. we have heard talk about increasing capacity and it may be reducing delays. inevitably, because it improves situational awareness, next generation has a chance to improve safety and enhance safety as we go forward. there has generally been a lot andxcitement about next gen it was particularly encouraging

to hear so many airlines talk about 2012 being a good year and 2013 having the potential to be even better. there was a very famous washington redskins coaches at one time that the future is now. about future trends in aviation, we are talking about future trends in aviation at a time when the we have begun to experience some of the impact of sequester but the full impact. i thought what i would do is begin with you, paul. theeems like a lot of ways, most direct impact of sequestration is coming at the tower level. it gives you an opportunity to discuss what you see as our ability to move forward as a country and promote our aviation industry and build an industry for the future at a time when we are making decisions today that

are certainly uncomfortable with where we want to go. >> thank you. is beyondion frustrating when we talk about growing the national airspace system, a system which is an economic engine. we heard everyone talk about that today. it contributes over 10 million jobs and $3 by trillion to our gross domestic product. the conventional wisdom is that sequestration will have little impact on that which is the furthest thing from the truth. the faa came out with their lists of 149 towers that are going to start to be phased out from april 7 all the way to may 5. that will severely impact the capacity of the system and it will inject concerns about the safety of the system which is the safest, much -- most diverse

system and the world. we have a recipe for success and we are messing with that recipe terribly. when you talk about the impact on towers, it's not just ours. we're talking about facilities across the country. we're looking at the capacity of our metroplex's, and it's going to have severe impacts. every controller is going to have to be furloughed one day for the remainder of the year. if that was just the tip of the spear, we don't know what 2014 has for us. we have the greatest air space system and the world running at peak capacity of safety and efficiency and we are messing with it because of congressional nonsense going on. there are a lot of things to be blamed and not the way to point

the finger at anybody, but they have to stop the impact of sequestration. have to find out how they want to make their budget cuts and make their budget cuts. the most absurd thing is if the that sinfulthing waste and abuse, they would only cut that a little because that was the mandate under sequestration. i have a very bleak picture of what next gen could be if we're talking about the increase in capacity. at the same time, we are decreasing the air space through sequestration. bothnd of talking out of sides of our mouth. everybody in this room depends on a vibrant, growing, national airspace system. it serves our country well. we should not mess with it.

>> i was struck earlier -- that parker talked a little bit about next gen and there has been significant capital investment going on. not necessarily all of those benefits have been recognized. whichad a task force largely said we should realize the benefits of technologies we have on the plane currently and we ought to set forth a road map as we go forward. has been some time since you delivered that recommendation. i would be interested in your view on how we are doing moving forward, going to the future trend of maximizing the current systems and what you see? paul is exactly right. need to keep operating the system at its current capabilities and there are some opportunities to do that.

it remains to be seen how the sequestration will be implemented. you heard the ceos talk about how we are not expecting to see any material impact and we hope that won't happen. we are prepared for those eventuality is if we have to operate under those circumstances and there are impact in other areas that are concerning to us as well. 5, irespect to taskforce real -- i us a byc . uld give us a c + a lot of good people in the industry and a sustained effort i believeed a lot and 19 recommendations were made back to the industry. if we go back and look at the task force report and the

timeline we had set for cells, we are not meeting as milestones. sometimes there is a tendency to look at certain issues in isolation like certain members of the communities it feel performance based navigation is next generation and it's not. those are tools of the tool box, but they are not the full capability. what we are struggling with is how to take those tools and that capability which has existed for more than a decade and scale them to operations in complex air space. on the technology side, we have most of what we need on the airplanes. hundredscarriers have of narrow body aircraft, which is the backbone of our domestic system on order. those airplanes have the latest

technology and they are gps- equipped. my carrier, delta air lines, we made a decision to retrofit 182 additional air pit -- additional airplanes with new cockpits, and that should be done by the summer of 2015. we are making the steps. we bet on the faa to deliver. there has been a good bit of progress. it has been spotty and we need to put some stakes in the ground as a country and industry and live up to those commitments. a has been a great forum for bringing together the different parts of our aviation community. we have had pilots, airlines and airports, it has done a good job serving as a forum to bring what dave said was the aviation ecosystem.

that we are all part of an ecosystem and we need to move forward together, i think it has been a good forum for that but we are in a situation where we are facing sequestration at a time the knack seems to be moving forward. how do we get the most out of the next gen system we have all envisioned at a time when the faa has been shrinking budgets? >> that the great question. rtca hase reasons been successful as it has people like david and all you sitting on the committees making all of this work. over 300 people came together, over 141 organizations, and their answer was that we prioritize and focus on delivering benefits to what is in the airplane and set

ourselves up to get more quickly to using the technologies. it is the same answer today. we have budget woes, but that means you need to prioritize even more. the report is still a blueprint of how to move forward. they named the priorities and there is this question that is often out there and there are people on both sides of this one -- 1 says if you do that and deliver thai men -- and spend time and resources delivering capabilities, you are taking away from getting to the farther term. gen advisorye next committee are saying something different. altogether. that's the you risk mitigation for getting to that next level.

if we can deal with the devil , that is whats we're dealing with. we can't figure out and find a way to work together and do the procedures to do policies, moving away from first come first serve to best capable, best serve, it's not a trivial task. we are all ready to work on those things and i think it is prioritizing and leveraging across programs to the extent they can to help us move forward. >> transitions are never easy. it's always the initial vision by next gen for 2025 was like we are going to have a light switch and everyone knew that was not going to happen. aboutarker talked earlier richard anderson and a belt of

merger and adopt and go. during task force five. one of the reasons that merger was so successful was our boss what everyone's timelines were and what we had to deliver. i think what we're really missing on the agency side is what we call a single neck to choke. project t a single anage management office -- there is so so much that has to happen at the a.t.o., it has to safety.ithin aviation i have not seen the same level across the agency and frankly,

across the entire industry, we have k.p.i.'s, metrics, and deliverables that we have to deliver these capabilities. >> despite all of our plans for next year, i think we all recognize that the work force is a big part going forward. one of the things that we often see in washington, we see where we want to go and we see our policies and practices of the day taking us in the opposite direction. i think boeing did a good study saying that we need pilots, the world needs lots of pilots. but now we're at a time where the military is turning out fewer pilots. e see students are going down, yet, we see requirements for hours flown going up. you're looking at where the future pilots come from, how are we going to -- what the future

needs we we meet the have in getting people in the cockpit. >> i want to thank you for not having me on the e.t.s. panel. i world say drop and go and fly direct and we'll work through the problems. a lot of people talk a pilot shortage. the reality is we don't have a pilot shortage now. we're looking forward and they are projecting out and how it might affect the pilot pool going forward. i would say what we have now and for the near term is really a pay commence rid with a education and training with pie locals coming on. to get your licenses and get qualified and certified, to participate in the safest

airspace in the world takings time but it is very expensive. we can't expect any longer that you're going to go through that track and occur $100,000 in student loans and then go to work for a smaller carrier for $25,000 a year. that doesn't work, especially in light of foreign carriers, particularly in china and the middle east who are coming in and offering better pay and better benefits and our pilots are going overseas. they are doing that and also, there's a choke point now. in two to three years, maybe four, a set of retirements are going to take place and the regional carriers, those pilots will come up to the main line carriers. and the furloughs they had and there could be a problem there.

there is not a problem now but there could be a problem there. but the answer to that problem, i think rests in the entire industry trying to address the training issue and how do grow from a to b. you can't do it on $25,000 a year. especially when there is competition for the best pilots in the world. that is what is going on here. i understand people sounding the alarm but i think the solution is right in front of us. ok, again, you can't have an entry level position in an airline that requires you to spend $1 hub,000-plus, two physicals a year, and i could go .n and on that is the solution and that rests in the entire industry.

>> you brought up something important and it is not a technology program. it is about technology but it is also about policies, procedures. ic, we saw that a little bit when we had an opportunity to go to seattle and look at the exceptions in the hand book to make that work. ow do you think we're doing? in making the changes, in order to move towards the goal? >> i think we're making progress. it's slower than any of us would like. i think including many of the f.a.a.. we have a similar project to what is going on in seattle, we have a different runway configuration in atlanta.

we're working with the agency to collect data that will allow us to have simultaneous approach, to have a rier the curved path for the file. it is pains staking work. you're trying to to do this while running the existing system and not getting a lot of loss of capacity. what we're seeing, from my perspective, we have a great facility that we work with in atlanta. it is an outstanding group. they need some spacing management tools, some predictive tools to help the controllers do their job. we got most of what we need on the aircraft already. we need to have the rules rewritten, the criteria

developed, and that takes time. >> what do you say in terms of that? >> it is lower than what anybody wants. when we were out in seattle nine months ago, to see the work done on greener skies, which reduces the carbon footprint on the environment. we took that lead and we worked well with integrating nonequipped and equipped airplanes and it was a nice formula. the agency said they would do a rule change that would allow us to use this procedure. we modeled it, we tested it, we ran it in live traffic and we tested it again. the rule changes takes longer than anybody wants so we have a waiver for alaska airlines. the problem is the mixture of equipment and nonequipment

elevates the operation and equipped airplanes will not use it as much because of the mixture. when we talked about getting the rule change, we would have 70% of the airplanes would be equipped to do it and we could accommodate the other 30% of the airplanes. when you reverse that and you only have 30% can do it and the other 70% can't because they don't have the waiver then it is almost null in void. that is frustrating because we did some really good work there. i understand we run a safety system. we run the safest system in the world. any injection or any change will create uncertainty. we're aware of that. when you test, you analyze, you live test, and you tweak, and then you do it live, we should be able to do streamline the process once we get to that

point. >> why don't you follow-up a little bit? you have to fly what are the new procedures are, you have to work through away we knew, what we understand, and what we're trying to change to and how much we question it. it will be interesting to get your views on this. >> i have a different view. pilots are trained. controllers are trained to execute on the approaches. so we have pilots, we have controllers. we have airplanes that are equiped to fly these routes. so you take all of that and say what is the problem and why are we talking 2015, 2020, anden inle earlier panel someone was planning something for 2050. 2007. one came in at we're on iphone now.

airlines are complicated. look at what a kiosk is able to do in this day and change. it gives you ticket, you can pay the fees. it lets you do all kinds of things seats, fly, rebook, a kiosk can do that. they are on many different versions now. deployed, working, i know working with the f.a.a., they would like it to be a reality. physical you have the government want it to be a reality, pilots, airlines, controllers, all trained. you have to get back to why aren't we executing quicker? because it was in seattle it will be in 2050 and then there will be new technology then. a little responsibility is on the shoulders of people in this

room because we don't all come together and prioritize. we're each executing on our different version of what we want out of the f.a. an creates an incredible noise level. take unmanned vehicles this morning. they are going to be in the airspace with us. we have to plan for that and we're talking about doubling the airspace. let's make sure we're talking about remote powered aircraft also in that airspace. i think if this group could come together and prioritize, bring the noise level down and work some initiatives, very precise initiatives, it would let the f.a.a. execute better. f.a.a.f beating up the we are all trained and we have the equipment we should be doing better than we are. >> it was the first time i understood and got excited that

it could mean. what i saw with the best equipped, best served does not mean not equipped, not served. hat we saw in seattle that flights were unimpeded but the better equipped planes got better service. it gave us an excitement. i guess the question is, how do you take what is working in the seattle and go nation? what you would focus on to make this a reality? >> the priorities are really important. both your task force 5 and the other program has looked at this separately and both have said that the p.p.n., the service

traffic management and the tools needed to help set up the flights to get those more fuel efficient routes are the top priorities that have the highest benefits and have the lowest risk and use what we're all trying to head to get to that next level of operations. i think working through -- we've been asked a number of times on our committees, what is the best answer to best capable best served? in every case we come back and say it depends on what you're implementing and where you're implementing it. if you have multiple runways you can accommodate anyone who is equipped. in other cases, you have to have before the pped controlers can work it. so in those cases you probably

have to look at other financial incentives to bridge that gap. what i think we would like to see is to take the next step. the f.a.a. as well wants to see how we take what we learned in atlanta and seattle and take it to a more complex environment that ripples further into the airspace system. is it is not just what the f.a.a. can do for us but what can we do together and tackle that. as long as the f.a.a. has the courage to come and work with us and ask for this kind of advice, then we all have to step up and decide on a couple of those locations and capabilities and pool our resources and work through it. then it will start to snowball and it will build on itself and we'll start to move much faster toward what we always thought of

as that program. the issue it brings up is the merging markets and places like china and brazil, and organizations that are coming in clamoring for our standards. these are organizations that do not have an aging infrastructure. i think it was mentioned once this morning, they can leapfrog. so we have a lot of incentive to figure this out and get to that use of technology as quick as we can. >> lee's point about pilots are trained, we have the equipment on the aircraft, controllers are trained, i would come back to the point that we talked about a few minutes ago, in terms of project management. this is a giant chain of

management exercise when you think about it. keeping up the stakeholders moving forward in the same time in formation, we're not held hostage by the least common denominator, if it is a rule change or a criteria that we're missing, some part of the problem is not solved and we're waiting for that to country. we've been doing performance based navigation to airports for years. that is where the alaska process that delta and other carriers have been doing these for years. the challenge is to take that capability scale it into complex airspace and still maybe today the same margin of safety and capacity while you're doing all of that. that is why we need that single minded focus and collaboration

between all the stakeholders and the agency. >> let me take an opportunity to see if anybody in our audience has any questions they would like to raise at this point. all right. if you have a question stand up and they will come over with a microphone. let me go back to the control tower issue. certainly business aviation is a lifeline to a lot of small communities throughout the united states. it provides economic development, it allows companies to be located there and they engage in international operations. i think there is a concern within our segment of the industry about the number of control towers that are being closed and some of the criteria that is a blunt instrument that did it. what are you saying in terms of work force as you look forward?

where is the growth going to be? you can't just take someone and put them in o'hair, they have to come from smr. >> in the group world you can come out of the academy and go to a previous -- perspective program and they don't have that structure. so usually you develop the skills and you move up to the atlantas of the world or there is probably a mild and you move up to a greensboro then to next step up then move up to atlanta or chicago. by shutting down these facility, and the 149 facilities they are shutting down, there's another list they that is going to be

shut down in the coming years. this has a rippling effect throughout the whole country, for the airline people in here, you have regional jets that are flying in and out of there and passengers coming to your hubs and flying overseas or across the united states. you now shut off that passenger's avenue to get to that hub. as far as interstate commerce or international commerce, it is like shutting down a lane on a highway and closing all the on and off ramps from large city to large city. these people won't have service. when we talk about where a pilot is going to come from, most of these towers have flight schools. those flight schools will not be able to stay open and run a robust flight program if they don't have controllers in those towers. it is a one in, one out

operation. if you told me a year ago that i would be on stage trying to defend the contract program i would tell everyone in this room that they are crazy. can't believe the turn of events because this is a vital asset. we should all be up in arms that hey are closing 149 towers other than that fact they want $32 million. i they look for more cuts and head some officials saying we're looking at a leaner, more meaner aviation system. i said that is not what i stand for. i stand for a growing, prospering and reaching out to

rural communities. it is a deep concern. we are the world leader but we won't be the world leader if we continue to do what we're doing. >> one disconnect that is evident here in washington. if you remember when the f.a.a. shut down for a couple of weeks a year of or two ago. they furloughed some people then they did not pay them when they came back. the point on that was everything stopped and if you were in that world i bet you were looking for another job. we were lucky they stayed there. now we're in sequestration and some of the same cuts are taking place and we're talking about -- not in this room but a national transportation policy, a national airline policy. we need this to work. the people we have working on in

the government, i have concerns -- they have concerns if they are going to have jobs tomorrow. we need them functioning. we need them there will to make this happen. again, it is tough when they get furloughed and then they are not working on these projects. let's be clear. it might be until 2020 when we get these done. >> you brought up national airline policy and it makes us -- the national aviation policy we're all in that together, what would you hope for in a national airline policy? >> i support the efforts on a national airline policy. we need it at this precise moment. here we are profitable as an industry and the challenges to be profitable going forward. that's the challenge. how do we keep it profitable and not relax right now while it is. if you look at it, it is

everywhere, it is global competition. it is easy to say, but we need a fair and level playing field and u.s. companies can compete anywhere in the world. but if you're competing when it is not on the same level itological affect the way for us to compete and therefore, the airline industry to stay profitable. think the right plan is what a.4a. is putting out. they have a policy on leveling the playing field and we have a policy and other groups in this room have similar policies. again, we need the government to help us compete globally, not by subsidies but by ensuring its level. openaway a point today was

skies. fly anywhere in the u.s. or fly to due buy. is. a great thing that >> i see a question in there. >> you talk about domestic policy and now you mentioned the international side. does anyone want to comment on the growth of the middle east ?arriers and the hub operations we're talk future and the future is now, i guess. >> i think that was a big thrust in what lee was talking about. when you look at a good number of entities around the world, are they private businesses or are they subsidized or operated by instruments of national

policy? you know, if you want to use the entire ample, conomic development is focused largely on diversifying the economy for the financial sector the aviation sector easterns, travel as well. that's what u.s. carriers are dealing with. it is not so much an entity that is operating as a private business trying to turn a profit but going after more market share. so, you know, when we talk about an open playing field our policy is to that i can into account. >> from my perspective, one of the things that that has happened to everyone involved in avings since the economic down turn is there is a clearer

indication we are living in a global marketplace. we are living in a global marketplace. we used to sell 70% of the business, aircrafts to the united states and 30% of abroad. during the downturn that flipped. there was more female sis on business airplanes that have long range and that could go to brazil, russia, india, and china, and all of these places. the theme that i understand today is there is a couple of things that came across today. mergers are part of the environment we're living in. activity is important if you're on an airplane and international plays a big role. we have to make sure we have policies that supports the realities of that and also, help the u.s. to find a way to stay e world's largest, safest,

most diverse transportation system of the world. there's a lot of pressure on that right now. i suspect that you're going cut us off. >> i have a question and a statement to make. i talked to people in a government agency and they had come up with a plan because their agency is going to have a significant number of furloughs. they come up with a plan that would literally eliminate the need for furloughs because they were able to show where there were reductions that could be made in training, travel, eastern things that were not that necessary. they were told forget it. we won't listen to you. this is not going to happen. we're going forward with the furloughs. we've been told this is a requirement. i'm just curious, are any of you hearing that? >> well, i think certainly we've

eard there is not a lot of flexibility. i think our reaction was are you kidding me? you're going to close 150 towers in the united states and save $33 million. that's a lot of impact to jobs and impact to economic development. there's got to be a better way. but i think what we heard at that time is there is not flexibility and i think that is one of the things as we go forward we have to understand about sequestration is whether or not we can make targeted and informed choices so we don't ve across the bored mindless 5% out of waste fraud and abuse and 5% of the necessary, we got to have it. >> it was designed so it was not supposed to happen. i'm hearing the same things. there is little flexibility to do it in kind of prioritized

way. >> i think it puts all of our friends in government in an awkward position because they are not in a position to fight this. but for the rest of us, it is an opportunity to raise it with our elected officials and they are the ones that will make the final decision. i think it is our responsibility to ask them take a look. are there other ways that this could be done so we won't close 149 contract towers. anyone not familiar with contract towers those are privately operated towers. it is just -- we have a lot of questions that have been asked today. we've gotten tremendous answers. this panel, we want you back next year. allot is going to happen between now and then. when we talk about where is our sister headed, you have given us a lot of food for thought and

now we need to see if you're right. are we on the right track? let's all make sure we make sure the elected officials hear from us. let's make sure we do this again and again. this is a great panel. i thank you all. i thank you for organizing this and let's give them a big round of applause. [applause] now if our final panel of the day would come forward while this panel is leaving. i don't mean to have this taken the wrong way but this is the last panel that is standing between you and the drawing for the ipads in the airlines. know it is going to an enlightening panel that will give us a lot of good information and the time will be gone before you know it.

while they are getting their microphones on, i wanted to take this opportunity to say a couple of thank yous. first of all, thank you to this phenomenal audience. here it is 4:30 in the afternoon and there is probably still 150 or more people here. i think that is a great tribute to all of our participants and i thank you all for staying and being here to participate in this program. secondly, i also want to give a very special thank you to all of our phenomenal speakers and all hardose who have worked so to put this program together. i think it shows that everyone eally worked hard to prepare and that in and of itself takes a lot of time and effort. we thank our speakers,

particularly our moderators. i want to tell you a story about our moderator. for the last three years i've tried to get susan to be a moderator. every time i was too late. this year we started really early. we finally been successful. susan has such a remarkable career and she is really one of the top people in the country and we're so fortunate to have her here. i think most of you know and ave read her bio she's the director of the aviation department, which is no small under taking. we felt so fortunately to get her here today. susan i will turn the panel over to you and we'll leave the

introductions to you. >> thanks so much carol. it is great to be here and finally make it here. we thank you for having prizes after us so everybody stays. i think there is another reason for you to stay, which is this terrific group of people that -- hamber has aseemed assembled for me. today we heard quite a bit from the airline partners about the economic impact of the airline business. what is sometimes left off and left out of this discussion is that the airports are very large part of that impact on the economy. it is a little bit of chicken and egg here. you need both to have a successful national aviation policy. we would argue not airline policy. today we're going to go right

into our discussion. i will start with dave on this. our economists produced an economic impact of the airport system and the numbers are asounding. our airports support 450,000 jobs and generate more than $63 billion in sales. at is just in the new york metropolitan area. and they have rs few drivers and sometimes it gets lost in the discussion is the importance of airports. can you talk a little bit about how much airports mean to the economy? and your role, your role that you're doing a terrific job at, talk a little bit about how

a.c.i. is starting to frame that discussion. >> i will try to wrap my arms around this for a little bit. thank you for having me here today. i don't think there is any question that about the economic impact of the aviation. we live in a global environment today. road you two miles of go two miles but you build two miles of runway and you go around the world. that is important. we've reached out and done our own surveys and we've look at the 490 commercial airport services around the u.s. there is about 10.5 jobs associated with those airports and the activity that surrounds them. $365 billion a year in payroll and $1.2 trillion in economic

impact. just huge numbers. 8% of g.d.p. that it respects. so when we -- represents. so when we talk about tim pacts of aviation, i think it is important as we hear a lot of airlines we need to talk about aviation. we are partners in this, we need to be partners going forward. we can't solve any of the issues in front of us unless we come together. bring it closer to home for me, to give you an idea of the economic impact in my own community. when i first came to the airport in 2009, we conducted an economic impact study. it showed roughly $377 million in annual economic impact. the importance with the relationship with the airlines and what we do with aviation we were fortunate enough to secure

service with a noon carrier. grew 43% the following year. the next two years we grew even more. our economic impact went up to $817 million annually. i think that shows the significant impacts of aviation, airport, airlines. all working together to meet the needs of individual communities around the country and global what we need to do. i have a project going on right now. it is about $115 million and it is going to generate 1,400 jobs and have an economic output around $60 million. when we look at the things going around and the impact that airlines have in providing service to and from our

communities, i think people don't understand the overall impact that aviation has on our g.d.p. and, if we're going to be successful in the future we have to make sure we can compete. >> thank you. how about you taking the spotlight for a second. andare the queen of airport airline data. ur company studies data from 72,000 worldwide flights a day putting in contacts of weather, passenger demand, etc. this information comes in handy in taking a look at what was discussed in the last panel the effect of furloughs beginning to take efoverbingt next few weeks. -- taking effect over the next few weeks. we can only imagine how bad it

could get as delays escalate. based on what we've learned on how the industry reacts today what are you predicting if these furloughs are materialized? >> thank you for that question. based on putting this panel together, we've released a study today on the quantity if i case of sequestration. there's lots of concepts being kicked around as to staffing levels and towers closings. it is clear that sequestration has an impact on airports of all sizes and all levels in the united states. there are three impacts. the first one is the 149 airports we've been talking about. the second one is the custom and

border patrol to cut back on overtime, which could impact overnight flights. the third that is soft out there the t.s.a. is saying they won't be replacing positions and they are looking at different options for their cutbacks that could potentially lead to looking at overnight flights being impacted by not having t.s.a. there for the departures. our analysis and paul was a perfect segway. looking at the 149 airports, those 149 airports, 55 of them receive scheduled passenger transportation now from 16 airlines. those airlines and airports of areas. are essential it does not mean that the service goes away or the airport goes away, it means there are

additional procedures for the pilots to follow as they were saying one in, one out for takeoff. that is the scheduled side of the business. on the business aviation side that ed was talking about, those same 149 airports have more than 10,000 departures every week. -- 4,100 are 121 departures. that's a lot of traffic. some of these airports have it n their peak times have very high peak hours of 20-plus flights going and coming. so while it will be safe and it can be handled and it will be addressed. the facts are it will slow down.

it is not an insignificant volume. also, it was arbitraryly decided. it was pulled out of the air. the second point on impacting aviation from sequestration is looking at border patrol. here are 27 airports that have international arrivals between 10:00 p.m. and 6:00 a.m. and j.f.k. is going to be impacted. at those 27 airports there are 10,000 international flights that arrive in the u.s. that will arrive between those hours of 10:00 to 6:00 a.m. of those flights coming in it is 1.8 million seats quarterly. you can make the assumption that it is 1.5 million passengers quarterly that will be impacted if customs and border patrol decide to cut overtime and reduce services in the overnight hours. what it will mean is that these

flights will have to be rescheduled or passengers will ve to wait until customs and border patrol opens. the third is with t.s.a. if the t.s.a. looks at cutting back services and overnight flights and what is viewed as the slow period of the time between 10:00 p.m. and 6:00 a.m. based on january flight schedules there was 6,000 passenger flights in january in the united states that arrived overnight. 12,000 cargo flights and 6,000 business aviation flights. so closing downtowners, absolutely will have an impact. it will slow down the system. cutting back on custom and border patrol will impact the international arrivals. and cutbacks with the t.s.a. increase the delays at the

airports. so sequestration we can quantity fie the numbers of impacted flights and passenger but how it will play out will be interesting to say the least. this is just bring us, also said at the last pam, that brings us if we look quarterly to tend of this year. sequestration is set up to be a nine year exercise. so look to us to revise the report until this is decided. >> thank you. thank you. well, let's turn to jeff who gets a two-part question because he comes from the bronx and he can handle it. two, he ran the postal service for 10 years so we know you can

handle it. last year at our airports we missed an all-time record with almost 110 million passengers. i know you had an incredible year as well with more than 40 million customers. he mentioned the southwest ffect with a 38% growth. with more people flying than ever and the demands on the facilities are greater than ever, and the capital constraints limits what we can do rerisk falling behind airports around the world. many of whom, unlike us, have the benefit of receiving significant funding from the government. part one, what is the biggest need for airports today in the face of increasing demand both here and international passengers while we have capital

constraint? and how do we compete with airports around the world in this same scenario? >> thank you for that question. i hope you don't have too much confidence in me. first of all, let me say that we're all aware of the fact that i was surprised when i came into this industry to find out how highly legislativeaged our airports prospect when i talk about that, folks have made investments in facilities in the last decade or so and you look at one of the sources of revenue for funds to pay for investments and infrastructure is passenger facility charges. the bottom line is those p.f.c.'s at least in my airport, they are promised out for 20-30 years. when you look at the airport there is little flexibility in terms of something we can use other than to go to our partners, the airlines to seek

funding to pay for infrastructure changes. i think earlier today you heard some comments, i think jeff said don't build concreted airport. the fact is we heard the president talk about his experience overseas and when he came back which is the third world country is it us or them when we looked a the quality of the airports we have. there is a myth that domestic passenger traffic is flat. we heard earlier today it is going to grow in the next 15 years. the question is -- we know that international travel has grown and put a lot of pressure on the 27 airports that you talked about. international traffic is concentrated in a few airports around the country, those global entry points. there are demands and we know

those demands you just have to travel to different airports around the country. the real question is who is going to pay for it going forward? we are looking at that and obviously, the demands are there. the airlines are going to -- they are focused on their business and their bottom line right now. they are going to run airlines as businesses. well, who makes the decisions going forward about the investment and infrastructure? i think it is something that will needs to be addressed. the large are airports around the country as well as a.c.i. are supporting the fact that we revisited the passenger facility charges. why, because they since they were reinstituted at $4.50, the cap, they lost 50% of their buying power. that is not going to buy the type of infrastructure we need going forward. we're talking about looking and revisiting that similar to what folks are doing with gasoline taxes. how do you create and pay for the infrastructure that we need

going forward? that is a big issue. the fact is the demand is there you go to different airports around the united states and you recognize there is a need for investment. at the end of the day we want to attract people to this country. i think it is great that the state department is looking to accelerate the number of visas that are given out and they have concentrated on a few countries, brazil and china. it's working. we're getting additional passengers. what is not working is how we react to it. we just heard about the customs and border protection. the fact of the matter is we're cutting personnel there. how long it is going take you to get through the airport when arriving in the united states and you can't predict the staffing on any given day. likewise on infrastructure, there is a need that we're going

to grow over the next 15 years and we're growing right now out of our capacity and there's a need to step up and make an investment. one of the concepts is, user pays. the beautiful part about passengers facility charges, you will pay at the airport that you use not at an airport that you don't use. we can make decisions going forward on a local basis. that is what we're advocating for. so we can make an investment and lagging int has been terms of going forward. it is a complicated issue but i believe if we're going to grow, you know, the economy through visitors from foreign countries, the only way we're going to do it is make the experience a good one. so we have to have, you know, ustoms and border patrol aagents and be able to

accommodate the growth. >> sherry you and i are fellow travelers on the committee and we talked about next january. maybe you can talk a little bit from the airline perspective -- sorry from -- not from the airline perspective but from the aircraft manufacturer perspective. what you are doing to meet the needs for next -- that will come in our future that is not quite determined. the other thing that was talked about was greener sky and the project in seattle. i know boeing is involved in that so maybe you can give us a perspective on that as well. >> sure. i would like to build on what jack said on a macro perspective at boeing. to set the stage the world's fleet today for commercial

airplanes there is 20,000 airplanes and we at boeing are forecasting that fleet is going to grow -- it is going to double to 40,000 airplanes. you bring that to the united states, 20,000 airplanes flying today, in the united states 30% are here. 6,600 airplanes, this is the largest in-service fleet in the united states. by comparison we talk about china. it is the second largest in-service fleet with 9% of the total fleet. you look at the united states 6,600 airplanes that the airports are dealing with today. we're forecasting that number is going to grow to 8,800 airplanes over the next 20 years. so you have to be able to accommodate 2,200 new airplanes over the next 20 years. that is just one piece of the puzzle.

what is more important is we're forecasting 7,300 new airplanes to be delivered into the u.s. airspace. what does that mean? it mean there is a huge replacement cycle under way where the airlines are replacing fuel efficientss airplanes are being replaced with these new airplanes. the new airplanes that have advanced technology, they are sophisticated, they are smart, and they have innovative operating procedures to go with them. om an airport previous perspective the airports have to be as smart as the airplanes we're delivering. the 87 is a very intelligent airplane and it is continuing to

provide updates on its positioning and how it's doing. they are able to make efficient decisions on when the airplane is going to arrive and what does the gate capacity have to be. from a grounds perspective, when the fuel trucks have to be there and catering. as i talked about, it has health monitoring, sensors on the airplane that tell the airline how it's doing. so in flight if a part looks like it is going to fail or need to be replaced, it will pass that information to the center on the ground so the mechanic or engineer can get that part and have it ready for when the airplane lands. we need to have the capabilities at the airports. i was pleased today on two different occasions we talked about the aviation ecosystem. it is an ecosystem. we have to have the airline, the

airplane, the airspace, and the airports providing seemless integrated service so we can have that u.s. airspace that has economic growth and prosperity and not have to worry about the rest of the world leapfrogging and getting there sooner than we are. >> talk about greener skies a little bit? >> i would love to. we talked about it earlier today, which is wonderful. for those not familiar with greener skies, alaska ails implemented a project and they partnered with the port of seattle, the f.a.a., and boeing. it goes back to 100% of alaska airplanes are fully r.n.p. capable. they were trying to utilized the capabilities they paid for in the airplane, try to find a way to improve carbon emissions and better serve their passengers.

they have been implementing these operations in the state of alaska for years. what they found going into the difficult airports that we heard about that have weather issues or that are terrain challenged, alaska has seen significant -- ovement on the number of there's a word like deviation but the number of cancellations they have seen and it saves them money and provides better service for that customers. we're trying to bring that same level of service to seattle. we've been working hard on these procedures and we talked about them today where an airline can go into a glide mode down into the runway threshold. area navigation takes advantage of these capabilities to provide

better approach capability and a higher level of precision and saving time and money and better serving the airlines and the passengers. that's what we're after. i heard the frustration because it is not moving fast. we need to celebrate the little successes. we're making progress progress. the state of alaska is doing ll, we're making progress in seattle. denver airport was approved for procedures, public procedures to be use by airlines and airplanes that are approved to fly using those procedures. i think that is a step in the right direction. we at boeing, would love to see the procedures eye proved at the top of 30 airports in the united states. low hanging fruit, which allows us to take advantage of the equip in the airport.

>> thank you. for every one of you, suppose there is a magic way to get the funding to make improvements at the airports. it happened. what would you spend a large windfall on capital on at your airport? the rest of you what would you suggest the airports do? >> personally, i think one of the big problems is when i'm with a mix group within the industry, i think there is some suspicion that airports, if they were given total latitude would squander what money came their way. it is almost as if build it they will come. i think when it comes to investment in infrastructure it should be demand driven. where are the needs?

i think you can look at every airport around the country and say there are certain specific areas where there are needs. look at ronald reagan national airport, we have a great terminal at b, c, we have a terminal at a that is really third world and needs replacement. we have a recent development between delta and u.s. air where we've seen demand for services at reagan jump over 10% in the last year and a half. there are infrastructure demands. you heard earlier, u.s. air is using our airport as a hub. we have peers on our terminal that don't allow people to move between them. suddenly, there is a need base on the way the airlines use our airport, to invest for people to

move between