FEDERAL AVIATION ADMINISTRATION

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INTERNATIONAL AVIATION SAFETY FORUM

\"SAFETY FROM TOP TO BOTTOM\"

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GENERAL SESSION

FRIDAY, NOVEMBER 3, 2006

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Westfields Marriott

17450 Conference Center Drive

Chantilly, Virginia 20151

**[Call to Order]{.underline}:**

NICHOLAS A. SABATINI Associate Administrator for

Aviation Safety, Federal

Aviation Administration

**[Plenary Session 2 - Leaders\' Perspective on Setting the Aviation
Safety Culture]{.underline}:**

ROBERT L. SUMWALT Moderator, Vice Chairman,

National Transportation

Safety Board

LUIS VIDELA Senior Vice President,

Strategic

Development, LAN Airlines, S.A.

VERN RABURN President and Chief Executive

Officer, Eclipse Aviation

Corporation

CPT. SILVANO MANERA Director General, Civil Aviation

Authority, Italy

JOSE RENE RODRIGUEZ Director General, Civil Aviation Authority, El
Salvador

CPT.DONALD L.GUNTHER Senior Director, Safety and Regulatory Compliance,
Continental Airlines, Inc.

**[Exciting Times for General Aviation]{.underline}:**

PHIL BOYER President, Aircraft Owners and Pilots Association

**[Plenary Session 3 - Performance-Based Air Transportation
System]{.underline}:**

JAMES C. MAY Moderator, President and Chief Executive Officer, Air
Transport Association

CHARLES A. LEADER Director, Joint Planning and Development Office,
Federal Aviation Administration

CPT.LARRY R. GANSE Senior Vice President,

Operations, COPA Airlines

JAMES J. MORRIS Vice President, Engineering and Manufacturing, Boeing
Commercial Airplanes

ASHLEY SMOUT Chief Executive Officer, Airways New Zealand

CPT. KAREN D. LEE Director of Operations, United Parcel Service

**[Closing]{.underline}:**

MARION C. BLAKEY Administrator, Federal Aviation Administration

A-G-E-N-D-A

**Call to Order, Nicholas A. Sabatini**, Associate Administrator for
Aviation Safety, Federal Aviation Administration 4

**Plenary Session 2**: Leaders\' Perspective on Setting the Aviation
Safety Culture.

**Moderator, Robert Sumwalt**, Vice Chairman, National Transportation
Safety Board 5

**Panel Members**

Luis Videla, Senior Vice President, Strategic Development, LAN Airlines,
S.A. 9

Vern Raburn, President and Chief Executive Officer, Eclipse Aviation
Corporation 14

Captain Silvano Manera, Director General, Italian Civil Aviation
Authority 25

Rene Rodriguez, Director General of Civil Aviation, El Salvador 31

Captain Donald L. Gunther, Senior Director, Safety and Regulatory
Compliance, Continental Airlines 40

**Break**

**Exciting Times for General Aviation, Phil Boyer**, President, Aircraft
Owners and Pilots Association 68

**Plenary Session 3**: Performance-Based Air Transportation System

**Moderator, James C. May**, President and Chief Executive Officer, Air
Transport Association 85

**Panel Members**

Charles A. Leader, Director, Joint Planning and Development Office,
Federal Aviation Administration

Captain Larry R. Ganse, Senior Vice President, Operations, COPA Airlines

James J. Morris, Vice President, Engineering and Manufacturing, Boeing
Commercial Airplanes

Ashley Smout, Chief Executive Officer, Airways New Zealand

Captain Karen D. Lee, Director of Operations, United Parcel Service

**Closing, Marion C. Blakey** 125

P-R-O-C-E-E-D-I-N-G-S

8:34 a.m.

MR. SABATINI: Good morning. If you would encourage your colleagues out
in the hall to come in and join us. Good morning. Just a few
housekeeping items. One, if you need an airport transfer, please check
with the hotel desk.

Secondly, I hope you will get a chance to visit the exhibits. They are
terrific. We have more than we had last year. We have displays on
research, new flight technologies, and a special emphasis on safety
programs. They are upstairs in the Jefferson Room.

Third, as we did yesterday, we will take questions from the audience
during the plenary session. Do remember there is a buffet lunch after
Administrator Blakey\'s closing remarks. That will be upstairs in the
Fairfax Room.

Lastly, I think you would agree that these have been lively and engaged
discussions. Let\'s continue with more lively discussions today. This
morning\'s session covers what is one of the most important ways to
assure safety. You can have modern equipment.

You can have highly experienced and trained employees. You can have
documented processes and operate under a quality management system. You
can practice hazard identification and risk assessment under a safety
management system.

You can do all this but the keystone, the bedrock, if you will, of
operating under the highest levels of standards, highest safety
standards, is to have a safety culture. Safety must be a way of
thinking, a mind set imbedded in every decision and that safety culture
starts at the very top of the organization. I heard a very good comment
yesterday in terms of commitment from the very top. It is like a
waterfall. It would be like Niagara, continuous and unrelenting.

Now it is my pleasure to turn this discussion over to the distinguished
panel we have with us today and the Vice Chairman of the United States
National Transportation Safety Board, Robert Sumwalt, who will moderate
the discussion.

MR. SUMWALT: Thank you and good morning. Of all of the topics that I
could have moderated, this would be the one that I would have chosen
because this is the one that I have an extreme amount of interest in. I
have long believed, as Nick indicated, that safety culture informs the
way that we do our business. If we have a positive safety culture,
things will get done the right way. If we don\'t have that culture, then
we are not going to be in good steed.

We have a very distinguished panel this morning. We have top-ranking
regulatory officials. We have operators. We have the CEO of an up and
coming aircraft manufacturer so we should have some very interesting
discussions this morning.

Not only do I believe and not only does our panelists believe that
safety culture is important, but so does the National Transportation
Safety Board. A number of years ago after seeing several accidents
related to a lack of safety focus, the NTSB in 1997 hosted the symposium
on corporate culture and transportation safety.

I attended that along with 500 other participants from across all modes
of transportation. It was a very good seminar. What the then chairman of
the NTSB Jim Hall said, and I\'ll quote what Mr. Hall said, \"We found
through the 30 years of accident investigation that sometimes the most
common link is the attitude of corporate leadership towards safety. The
safest carriers have more effectively committed themselves to
controlling the risk that may arise from mechanical or organizational
failures, environmental conditions, and human error."

The theme of the forum this week is Safety from Top to Bottom. I have
long believed, as Nick said, that safety has to start at the top of the
organization and permeate the entire organization. Nick also mentioned a
quote, and I was going to refer to ICAO President Kobeh\'s remarks
yesterday that, \"Safety must start at the top and flow down like a
waterfall.\" I thought that was a very vivid description of safety
culture.

Truly if the leaders are not on board, if the leaders are not on board
with the safety culture, then how do we expect the rest of the people in
the organization to embrace it. We are here to talk about safety
culture. I would like for you, before we turn it over to the panelists,
to think about this. When somebody mentions to you safety culture, what
comes to your mind? Think about that for a few seconds.

I think our panelists will be able to help us to engage in a spirited
discussion about this. I gave a talk to a group a few weeks ago on
safety culture and I had defined corporate culture before but I thought,
What is safety culture?" At the end of the day I said safety culture is
doing the right things even when no one is watching. To do that it
requires integrity of your organization. It requires core values of your
organization.

So do people in your organization do the right thing even when no one is
watching? Do you have integrity in your operation? Do you have core
values in your operation? As you think through these questions, if you
are not pleased with the answers, don\'t lose hope because I believe our
panel this morning will help to stimulate some thoughts on how you can
transform your culture into a safety culture.

Our panelists: I will not read each of the bios because you have the
extended bios in the brochures, but just by way of introduction, our
first panelist will be Luis Videla who is the Senior Vice President of
Strategic Development of LAN Airlines.

Next is Mr. Vern Raburn, someone who I consider to be the father of very
light jets. As you know, Mr. Raburn is the President and CEO of Eclipse
Aviation Corporation. Next will be Captain Silvano Manera who is the
Director General of Civil Aviation Authority of Italy.

Mr. Rene Rodriguez is the Executive Director of the Civil Aviation
Authority of El Salvador.

Finally, Captain Don Gunther, Senior Director of Safety and Regulatory
Compliance at Continental Airlines.

Gentlemen, I\'ll turn it over to you. Luis, what are your thoughts on
safety culture?

MR. VIDELA: Well, first of all, Robert, thank you very much for the
invitation today to be here. I am very pleased to share with you some
thoughts about safety culture. I would like to give you a perspective of
a Latin American Airline that could be maybe different than other
airlines from other parts of the world, environments that maybe are
differently developed economies.

It\'s not the case of the environment that we are involved in our
operations. Latin American is a small market. It is restrictive in a
protectionist environment in terms of the aviation industry. We have
several problems to develop this industry that is worldwide and we have
to compete with the best airlines in the world.

LAN has a very ambitious challenge. Our goal is to be one of the best
airlines in the world. We understand that it is a big challenge but we
think we can do it. The basis of that is having the best safety standard
we can find in the world.

LAN has a very good safety track record and a very good image in safety
but image has to be supported by facts and there are facts like
certifications, for instance. LAN has got IOSA certification this year.
But there are other facts that come from the way you are doing things,
you are doing your operation. I would like to point out some very
important facts that I think would help us to get the best safety
culture.

I would like to mention three points that I think are very important for
having a safety culture. First is to have a very good source of
information. Sometimes you can talk about safety culture but if you
don\'t have the information it is really difficult to find or to know if
you have it.

We have an aviation safety information system. ASIS is the name. It is a
system that we\'ve had since 1998. We participated in the development of
this system with Aer Lingus. It gives us the opportunity of having a
report for every person in the company from everywhere that would report
any incident or threat to our safety from their homes or in the case of
pilots from their hotel they stay. It\'s an easy system to use and it
gives us very good information.

Another very important source of information is the flight data
monitoring that we have in almost all our fleet since three years ago. I
understand this has been sometimes difficult to get into some companies
because some staff would maybe have some fears about how the management
is going to use the information. Our case has been a very successful
story.

We have incorporated our staff with pilots from the beginning of the
development of the system and we have discussed how useful it could be,
the system, for us for having very good information for safety
improvements. We need those improvements from operational trends and not
from the individual performance.

Another very important source of information are surveys that we do
every year through the companies. We get the information from all of
those surveys about safety culture. We discuss with our staff and we try
together to solve and improve the negative points that those surveys
give us.

Second, a very important point. When you have information you can put
goals in the company, in your operation divisions, and also in your top
management and corporate staff. We have several goals that come from the
fields where we are not very good and we put those goals in individual
performance and the group performance that we measure every year.

We follow those goals and the way we accomplish them is on a monthly
basis. We have a monthly meeting chaired by the CEO where we review all
the most important incidents, negative trends that we can have, and we
show to the rest of the organization how we are doing.

Third, I think audits are very important because, on the one hand, they
are another source of information but, on the other, it is a way to
understand how you are achieving your goals. We have internal audits
every month on our procedures and operational performance.

And we also have external audits from aviation authorities, aircraft
manufacturers, and other partners of the industry. We think those
external audits are very important for incorporating better practices
that maybe we don\'t have. We understand in cooperation with other
partners of the industry it is very important for improving.

One very important audit that we use is the Line Operation Safety
Audits, LOSA, that give us the opportunity to be aware of the threats
that we can have in different environments because we operate a lot of
different routes in different airports in some countries that do not
have the same operational standards.

I think those are three very key points for having a strong safety
culture and we understand it is imperative for us if we want to be one
of the best airlines in the world. On the other hand, it is the most
important investment an airline could do in the long-term.

MR. SUMWALT: Excellent. Thank you. If we are still trying to answer in
our minds how do we establish that safety culture in our own
organization, Luis has given us three take-home points right here. We
need sources of information, multiple sources of information. We need
goals.

The thing that impressed me about the goals that Luis mentioned was who
chaired the committee that sits down and meets every month? You\'re
right. It\'s the CEO. Remember, safety has to start at the top of the
organization. It appears that by having your CEO chairing this
committee, that\'s indicating some real interest on his part.

Finally, the third take-home point that Luis mentioned was the audits,
the internal audits, the external audits. Very good information. We are
going to come back and talk more about this as our panel continues. We
will turn to Vern Raburn. Yesterday I heard Vern say a very unique idea
as an aircraft manufacturer.

It\'s not unique. Other manufacturers are trying to do this as well but
it was very interesting to hear that Vern not only is trying to
establish or is establishing the safety culture in his own organization
in terms of the manufacturing of airplanes, but he is also trying to
instill the safety culture with his customers, the people who are
actually buying Eclipse airplanes.

Again, I know that other large aircraft manufacturers all are doing the
same thing but I am very interested to hear what you\'ve got to say.

Good morning, sir.

MR. RABURN: Thank you. Good morning. Let me start by a couple of quick
observations. The first one is how much I enjoy participating in this
conference because of the tremendous diversity that is represented here
in the room today from all nations, from all types of operations. I
personally find this an environment that is very stimulating.

It helps me to start thinking about things that we don\'t see in our
day-to-day operations. I think on this panel there is exactly that
diversity represented. I\'m looking forward to some of the conversations
because I know we are going to learn from each other.

One of the challenges that we have at Eclipse is we perhaps operate in
one of the most diverse environments of any organization in this room.
By that I mean we have our own internal issues, our own internal
challenges in terms of establishing a safety culture starting with the
fact we are a new company. That means we don\'t have a culture. That
means we don\'t have a way of doing things.

In fact, we hire people and bring people in from lots and lots of
different very successful companies from Boeing to Cessna to Raytheon to
Lockheed. You name it and we have folks that work in our company. You
might think that makes it easy because they know the best practices.

In reality what happens for some reason, and I think this is almost a
condition of the human experience, we end up with the lowest common
denominator. We usually end up with the worst practices it seems like so
there is always this challenge of how do we establish this culture.

Again, within our company we have a huge diversity that ranges all the
way from experimental flight test, which is a very unique environment.
Even in the last couple years there have been two fatal accidents in
experimental flight testing of GA aircraft, to our own corporate
operations, production flight tests, to a very unique form of flying
which is sales and demo flights to training, how we are going to do our
customers.

Then on top of that you layer in things like ramp operations and
manufacturing where we get into OSHA issues. Safety culture is an
extraordinarily important point throughout the company. Then we go to
our customers and one of the very unique things about the Eclipse 500
that is appearing increasingly that this is an airplane that appeals to,
meaning it will be operated by, the whole spectrum of aviation, ranging
from fleets and whether it will be scheduled \--Initially I don\'t
believe that will happen \-- to certainly on-demand type of operators,
to military organizations looking for aircraft today, to corporate
organizations and individual operators. Again, we cover virtually the
entire spectrum of aviation so how do we translate, how do we transmit,
how do we incent into this very, very, very diverse base the idea of a
safety culture and the attitudes.

In the spirit of Giovanni\'s speech yesterday morning where he sort of
called a spade a spade. Let\'s admit that general aviation safety is not
good. In fact, general aviation safety is bad. Anyone who tries to defer
otherwise is just ignoring the simple facts of life. Does it have to be
that way? Our thesis is absolutely not. In fact, much of the methods,
much of the culture that is being pioneered in the airline industry, in
government, can be translated into these organizations and that is what
we are trying to do.

Now, in thinking about this I couldn\'t help but think about some of the
conversations I\'ve had with Nick about his experiences with ECOT. In
any investigation you always hear what\'s the means and what\'s the
motive. We have tried to take that concept and translate that a little
bit and say what is the availability and then what is the incentive.

What do I mean by this? Well, someone once described to me that most
training in general aviation, particularly after a pilot gets their
initial rating, and maybe even after they get their initial rating and
then an instrument rating, most learning is done by rumor. We do not
have the structure.

We do not have the formalized method of delivering information,
particularly to a very diverse customer base that exists in an airline
or military organization. In the military it\'s, \"Yes, sir. We\'ll do
what you say,\" and an airline will fire you. There are all kinds of
negative incentives but there\'s all kinds of structure to help that
change.

We focused very hard, and this is the means, if you will, or the
availability of information. We are pursuing standardization. It\'s a
lesson again out of the 121 rule. You do not see much standardization in
operation of GA aircraft in part because, once again, of the huge
diversity in the data.

Al Mulally said two years ago here at this conference that, \"Data will
set you free.\" Well, we have a slight variation of that at Eclipse we
call, \"God lives in the data.\" It is really a simple concept that with
data we can figure out what is going on.

To that end from the very beginning we architected the aircraft and
designed the aircraft in such a way that today on production aircraft we
capture about six megabytes of data per hour flight and that\'s
everything from classic flight data recorder information to health
monitoring data to system status to even the status of the software
configurations on the entire aircraft.

That data, in turn, was downloaded either through iridium satellite data
link, which is standard in every aircraft so we use a data triage system
that says on certain events we get notification so if a pilot shuts down
an engine in flight, I\'ll know in Albuquerque 32 seconds after that
happens anywhere in the world.

We download the data at maintenance events either through Wi-Fi or USB
and then we store all that data by serial number meaning we ultimately
have not only the classic as-built record that the FAA requires, we have
the as-maintained record because we have electronic log books. We have
an as-operated record for every single aircraft.

Now, what do we do with that data? That is one of the really good
questions. We have actually been looking at organizations like Wal-Mart
which, for instance, has in terms of number of transactions of skews of
stock-keeping units about the total number per day that this industry
see in flights per year. They are using data-mining software to try to
identify trends, which deodorant sells best, which shampoo sells best,
same technology we believe we can be adapting in mining this data which
ultimately will represent petabytes worth of data. For the first time in
history a fleet-wide record of not only how the aircraft are maintained
but how they are operated, both exceedances and just the day-to-day
operation.

Then we also tried as part of this availability to touch the customer.
The classic relationship between a general manufacturer and the
customers, \"Give me your check. Here\'s your airplane. Oh, by the way,
if you need some parts, let me know.\" That is about where the
relationship ends.

On the other hand, we are trying to completely change that. Imagine if
you will a Venn diagram that barely even touches. We are trying to make
this diagram overlap significantly. The way we are doing that is through
incentives so this is the motive. Incentives that we are using are
fundamentally economic meaning we have today a program that we offer. A
lot of people do nose to tail programs but ours goes way beyond this. It
has the classic maintenance, parts cost and everything like that. It
also includes things like navigation subscriptions.

Recurrent training is bundled into the hourly cost so there is no
additional cost that the customer has to incur when it is time to go
back to recurrent because we know proficiency and recurrents are a key
component from a pilot\'s standpoint.

If you need more than that, there are incentives. If you work within our
safety programs, if you work within our safety culture you get things
like discounts on insurance, a 30 percent discount on insurance.
Typically about a 25 percent discount on fuel because, again, remember
our customers don\'t have fuel purchases. They buy fuel at retail which
if you think the airlines pay a lot for fuel, wait until you buy a
gallon of Jet A at retail. It starts at about five bucks and goes up
from there.

We are trying to put in place some incentives for these customers that
(1) allow them to participate or give them a reason to participate, and
(2) allow us to talk to them on a regular basis which is the last one.
We built a flight dispatch organization, not a flight dispatch in the
sense of the regulatory board dispatching but in the sense of we do
flight planning for our customers.

We help with hotel reservations, car reservations. In other words, every
time they fly the airplane they talk with us. We get to talk with them.
Now, if we could put all that together \-- and we are there actually
today. We are offering this service. The service is up and running today
\-- we believe that we can provide again the motive to force, to entice,
to encourage a new type of safety culture in aviation operations.

I think that is an important last point that I want to close on. There
is the perception that GA pilots are all cowboys. They are all people
who are going to fly into buildings or scud runs or whatever the case
may be. I would theorize that the rogue pilot, Tony Kurn has written a
lot of excellent ideas on this, exist in all phases of aviation.

It\'s the ability of the organization and the ability of the safety
culture to try to find, identify, mediate, mitigate, change those rogue
pilots. The vast majority of our customers are relatively successful.
The airplane is a million and a half dollars. For a jet that\'s a pretty
good price but it\'s still a million and a half bucks.

That means that not just every Tom, Dick, or Harry can walk in off the
street. Most of the people who have that means are there because they
are successful. They are successful for a reason. Maybe they have the
good sense to pick really good parents and so they are successful from
that standpoint but mostly they are successful because of what they did.
That means they are relatively intelligent and a relatively aware
individual. In our experience, my personal experience in 40 years of
being a pilot with over 7,000 hours of operation of which over 5,000
that are single pilot IFR operations from high performance pistons to
jets, my experience is the number of pilots that don\'t want to be good
is infinitesimal.

What they suffer from in general aviation is the inability to access the
information and inability to be rewarded for that which is the
fundamental key, I think, of an SMS system in terms of how do you
implement this. We believe that by offering this we will be able to
fundamentally affect a change in attitudes, a change in culture in the
general aviation fleet.

It is an interesting challenge and my role as CEO is to be the person
that says we\'ve got to do this. This is not only the right thing to do,
this is good business for us to do. As a new company and how we are
going to succeed as a company we have to establish the safety culture.
We have to establish the safety culture. We have to establish within our
company. Most fundamentally we have to establish it within our customer
base and help them be as safe as they possibly can be.

MR. SUMWALT: Absolutely fascinating. Thank you. Again, we have seen a
case where the CEO is saying not only is it something that we should do,
it is something that we have to do. The trick is how do we get that
message out to other CEOs. You have provided a motive for people to want
safety.

A few years ago \-- I have long been fascinated by a particular company
in this country that truly does have a very good safety culture. They
are in a lot of different businesses. We use their products daily in our
house, in our homes. They do have an exemplary safety record and the
figures show it.

I was discussing that one day with one of their employees and the
employee said, \"Well, they don\'t really do it because they want people
to not be hurt. They do it because it saves them money.\" It was almost
a criticism. I\'ll tell you the truth, if somebody can figure out how to
appeal to the bean counters to show that safety does make financial
sense, then you have made the case for me.

I don\'t care what the motivation is for somebody wanting to do safety.
I just want them to do it. I don\'t care what the motive is as long as
they do it. If it\'s financial, that just makes my case all the easier.

Great comments and I know already you\'ve got lots of questions. What I
thought we would do is run through the panel, go through one time and
then we would have some questions at that point and then we\'ll come
back and engage in some provocative questions amongst the panel. Already
you are probably getting questions so in just a few minutes we\'ll open
it up for those questions.

Next is Captain Silvano Manera. I think you are going to talk to us
today about the challenges that a European operator, European nation
would have so I am curious to hear your thoughts.

CPT. MANERA: Thank you, Robert. Good morning to everybody. Being the
only European representative, of course I want to speak about the
European priorities in setting culture. Yesterday we spoke all day long
about information sharing, the gathering of information. Information is
the basic element of a culture to define a culture. The way we process
that information give us indication about the culture.

The culture a sociologist would say is made by attitude and behavior so
the attitude is the way we look at information we have because the
information by themselves aren\'t neutral. The way we treat them show us
how is our culture. To change attitude is the basic element to change
culture and then to have a behavior consistent with these attitudes.

Coming from a small continent from the American point of view, my basic
concern is that we are in that small continent 43 different countries
with 51 different traffic control centers and we have more than 30
different languages. I am not able to count how many legislative
settings we have down there.

The problem is just to realize or to provide recommendation for having a
consistent behavior before saying what is the just culture. Let\'s try
to have common elements to define a culture and then to realize
consistent behavior. That is the basic need for Europeans just to act
accordingly to improved safety levels. We were discussing in the last
year of past centuries just looking at how and what we had to do just to
set recommendations at European level so we just helped.

We created in Italy a place where we could exchange and think about
information and trying to define what was the best way to treat those
information in Italy so we created some kind of obligation of flight
safety foundation where the Italian Flight Safety Committee we founded
in 1999 that is a parallel organization of the UK Flight Safety
Committee, a place where technical operation of people could meet and
exchange freely out of the formal and the regulatory pressure to
exchange information. This was just a basic element to speak about
culture with a group of people.

After a few months of this setting of this committee all the acting
people in Italy joined in because having a place where to speak freely
was a real need so everyone from Air Force to manufacturers to aircraft
maintenance people, airlines, ATC service providers, whichever, airport
operators, join in just to find, let me say, answers or a place for free
exchange of information.

I\'m speaking about free exchange because in more than one legal system
freedom of information circulation is something very difficult to obtain
because speaking about Roman code or Napoleon code information, error
punishment is something that is linked together. Stuart Matthews
reminded us yesterday that there is a criminal case in France that has
been going on for 14 years.

It was the accident at Mount Saint-Odile with the Airbus. Everybody died
so there is no retribution or jail to send somebody but they are still
arguing from the legal point of view who is responsible for what. We
believe in Italy that punishment is the way to educate people to better
behavior.

Everybody will understand how this impedes the circulation of
information because each information, and I\'m talking about the
reporting system SMS, is relating to something that is wrong. It is not
doing perfectly. For a local prosecutor it is a huge and good place
where to find criminal diction for everybody.

The first thing was to have common ground where to speak freely,
protected a little bit from criminal persecution. Then being or becoming
a regulator and when trying to foster or to facilitate the circulation
of the information, I tried to put myself as a former safety manager as
a guarantee of protection of free circulation of information even if the
judicial resistance with some restraints.

Now at European level we have a few regulations that define and protect
SD Resolution 35-17 of the ICAO which urged state to provide protection,
legal protection, for the free flow of information. That principle has
been incorporated at the European level with the regulation and
directives of the weak points of the stories that those directives must
be translated in local legislation.

We have legislation that incorporates directive 2003-42 and says to
provide protection in the respect of the actual penal codes. There is
something comparable because we define and we had some former protection
but not a full one so we are working on tearing out names and records
just to recognize who brought what so we have a system at the moment
that we are providing to our potential reporters.

The guarantee that after a few days we tear away our personal data so
even if some local judge comes to bring and to pick up those pieces of
information, he won\'t be able to detect who did what. We are just in
the beginning so the problem at the European level is just to harmonize
and to travel at the same pace.

We have very strong systems since, I think, \'78 in England is that when
that reoccurrence reporting that worked well but they have a good
separation between technical and judiciary investigation in case of
accident or incident. This is a potential accident.

In France they have some kind of balance between technical and judiciary
system but many people think that is not good enough. In Italy we are
trying to find a way of living together with those two different
systems. One wants to find the guilty person to improve him to save
lives. We pose as regulators \-- me personally, I am a regulator. I went
to the parliament to say this is a simple question to be answered.

We want to have a perfect formal system, judiciary system that can pick
any kind of information for the sake of justice, or we want to be safe
to avoid dead people, death at the end of the year. That is a simple
question just to be answered.

For a moment I would like to stop here and just maybe pick up a few
arguments later on. Thank you.

MR. SUMWALT: Thank you. Indeed, this will set the stage for some
provocative discussions so we will look forward to continuing along
these lines so thank you very much.

Rene, tell us what is going on in El Salvador with respect to
establishing a safety culture.

MR. RODRIGUEZ: Thank you, Robert, and good morning. I would like to
start my intervention with an anecdote if I may. Earlier this year I was
asked by a top-ranking FAA official a question. It was so simple for me
but I think it was very confusing when I answered it to him. He asked
me, \"Why do you think more countries don\'t go up to category 1? Why is
it just a few countries and Latin America are at this low pace?\"

I quickly replied, \"Because they are not interested in doing so.\" I
think I confused him or I perplexed him because he did not comment on my
reply. He just stayed quiet for a few seconds. I think it sets a tone of
what happens in many countries. Obviously not in El Salvador. I\'m just
trying to set up a frame of mind here for everyone to understand that
not every country is the same. Countries are at different stages of
development.

Our law, for example, sets the tone for the executive director to
establish a culture, a safety culture. Actually the first responsibility
it gives to the director is to promote civil aviation safely. Over here
you are talking about two important words within the law.

You\'re talking about promoting and talking about doing it safely. It is
setting the tone for a revolutionary way of legislating because this is
in many Latin American countries really revolutionary. Not only
evolutionary but revolutionary.

I would like to go back a little bit and set the stage for what I\'m
talking about. In the beginning of civil aviation, well, there was no
civil aviation at first and we know that when the Wright Brothers flew
their first successful flight the FAA was not present. There was no FAA.
There was no need for one.

Obviously this explains that the industry came before the regulator did.
The industry was there first and it developed to a point where the
regulation was needed where so many people were starting to \-- every
time you have a speaker a fly flies in front of him. It\'s a common
practice.

The regulator came later and in many countries there was always a step
behind between the regulator and the regulated, the operator. In most, I
would say, underdeveloped countries there is still this gap between the
operator and the regulator and this is something we have to understand
when we try to talk about setting a culture. It is difficult to set a
culture \-- it is impossible to set a safety culture when you have the
regulator that is a step behind the operator.

The first thing that has to happen, and I would consider this more in a
developing country, is that the government has to take a step forward
and change attitudes and decide to bridge that gap. This is the first
step. This comes before setting a culture. Culture is not an easy thing
to set. Culture is the way people think and the way people act. In order
to change this it takes time and it takes everything to be in place.

In our country that step was taken years back and definitely that gap
was taken out. Many countries still have that gap. They have not been
able to bridge that gap and I think this is the first step and the first
role of a leader or the role of the first leader, let\'s say, in civil
aviation of some countries would be to bridge that gap, to make it to
that point which some of the countries represented here might think of
it as something natural, something maybe not worth discussing because
they passed that many, many years ago. That is not the case in all the
countries and that is why we see so many differences in the levels of
safety of so many countries.

Then I believe that after that happens you can consider in developing
countries the role of the leader becomes to enforce using all the tools
that had been set up when you bridge that gap, when you train your
people and you certify them by ICAO standards and when everything
changed and when everything was \-- When the attitude changed, then you
start to enforce and you do a lot of enforcement and it\'s all about
enforcement.

Obviously there is a lot of punishment involved with this. Yesterday and
even this morning we talked about the culture of punishment. It\'s a
safety culture but it might not be the right one in the long run. Then
when you have a developed country then you have all the pieces in place
to start creating a culture.

Now, we are talking here about attitudes obviously not only from the
operator but I\'ve focused on attitudes at the top, as has been said
before, on the government from the President down. It\'s an attitude
change that starts to form a culture.

Now, with the enforcement the FAA very successfully changed a lot of
countries from having that gap with the operator to being an enforcement
country. This is only a middle step. I think the IASA program has done a
lot of good in many countries. It has made a difference with a lot of
countries who want to fly to this great market in the United States. But
what happens to all the other countries that don\'t want to fly here or
don\'t have an airline to fly here or are content with flying
regionally? What does it mean then \-- what is going to happen then?
Obviously every country has to have their own IASA. We have our own
IASA.

It is not an IASA program but we have gone from certifying our airline
to overseeing that the airlines that want to operate in our country or
that want to operate from their country to out country and to other
destinations. We have had the task also of verifying the certification
processes that they went through in their country.

Some of these airlines that had AOCs, some of these airlines were denied
operational access to our country because our auditing system tells us
that maybe they were not certified completely under ICAO standards. This
is also sometimes that happens in many regions of the world. Then you
start doing your own IASA program in your own countries and in your own
regions.

We also have ACSA which many of you might have heard of which is the
Central American Agency for Aeronautical Safety which has been a
tremendous regional agency for raising the standards, raising the safety
levels of all the countries in the region like Central American
countries and Belize.

I can tell you, and this was discussed earlier yesterday, this regional
council definitely works and it works even better in countries with very
limited budgets. Definitely we have to be careful with this because we
cannot be confused.

Organizations like ACSA, regional organizations, are not the responsible
entities for safety. They are advisers, they are providers, and they
have different functions but each country has their own responsibility
and each country has to have their own support also from top to bottom.

Now, with this in mind it is interesting also to mention that regionally
one of the results of ACSA, which I think is one of the most interesting
results, is that we are starting to see a regional Central American
safety culture. As the standards all start to go up, you start to see
the same way of thinking and the same way of acting.

You are in the process of creation and this is very, very interesting
because it gives you a way of thought that maybe regional organizations
are not just for supplying what the country\'s limited budget may not
allow you. I think they can go much farther than that. Definitely
regional cultures is something that was not mentioned before but it is
something that can happen and I believe it is something that should
happen definitely.

Now, with that in mind, definitely, to end my comments, institutions or
organizations will always be enforcement organizations but the leader of
the regulatory organization at certain points, at certain maturity has
to start thinking of promoting this culture and not just thinking as an
enforcement/ punishment organization.

Communication, in my opinion, is the key there. Cooperation is a word
that has been used for years and it\'s a very good word for establishing
a relationship between upgraders and between regulators which they have
a common goal obviously of having safe organizations and safe airlines.

But communication, in my opinion, is a much more difficult word than
cooperation when it comes to safety cultures because it implies a change
of attitude between the regulator and the operator. It implies changes
of attitudes on both part. Obviously when you talk about punishment, as
has been talked about so much in this forum, it is difficult to imagine
much communication happening between operators and regulators. If you
have a culture of punishment as a focus, communication will not flow.

If your communication doesn\'t flow, it really is difficult to say that
there is a culture. As you said at the beginning, Robert, a culture is
something that the way you do things even if nobody is watching. That is
one of the best definitions I have ever heard of. Definitely when you
communicate you inform and you give feedback and you are actually
demonstrating a common purpose of safety.

This can only be done after you have passed all those stages I have
discussed earlier. I have gone through the process because I think it\'s
important to realize that it is not an easy thing to just say that the
leader is the person responsible to create the culture.

You have leaders and the operators in the airlines. You have leaders at
the CAAs who is a leader who is going to set up the culture. You can
impose it. You must agree upon it and there must be a common ground.
With this I\'m going to finish my presentation. Thank you very much.

MR. SUMWALT: Thank you. I am always looking for the sound byte that I
can write down and take back with me and one thing that I did write down
was that the basis for changing the culture is changing attitude. You
pointed out that communications leads us away from that culture of
punishment. We need good communications, good open communications
between the regulator and the operator.

You made \-- I was writing down and your first point \-- your second
point was the role of the leader is to enforce. What was the first point
of that?

MR. RODRIGUEZ: I was saying that the first leader will have to bridge
the gap, I would say, in the earlier stage of under-developed countries.
It takes a leader to bridge that gap and takes a leader to convince the
top government to make that change.

MR. SUMWALT: Thank you. Thank you very much. I know the audience is
ready to jump in there. We\'ll get Don Gunther to speak and then, again,
you will have the opportunity to become involved in the active
discussion.

Don.

MR. GUNTHER: Thank you, Robert. Before I start, I would like to thank
Administrator Blakey and the entire FAA team for putting this conference
on. I was talking to Nick Sabatini before the start of this panel and I
told Nick, I said the richness in this conference is coming from the
international team so for all those international attendees, I want to
personally thank you because you have added tremendous value to this
conference for all of us.

What I would like to do is start with a quote from an article in
\"Aviation Week\" which appeared a couple of years ago. It was an
article on healthy organizations. It was written by a retired Air Force
colonel. Unfortunately I lost the actual article. I don\'t know his
name. If you know me, I\'m from the Naval Academy and for me to
complement someone from the Air Force it\'s taking a tremendous amount
of energy.

He wrote an excellent article and in part of it he said, \"Investing the
time and money needed to get at the root cause of a problem takes total
commitment at the most senior levels of a company or organization.\" In
most organizational settings communicators learn early in light how bad
news can impact their leaders. If the news is valued and the
communicator is protected, there is a real chance information can and
will routinely flow upward in time for proper action to be taken.

He said he felt the airline industry was a healthy organization. I agree
with that. But I also don\'t feel that we are physically fit yet. We
still have some working out to do. Some of those changes we\'ll talk
about.

I would like to put my flight operations hat on for a second based on
that quote. I\'ll tell you my biggest fear as a captain in the airline
industry. My biggest fear as a captain is that someone on my crew has a
safety concern and doesn\'t bring it to my attention because of
something I did or did not do.

Your biggest fear as a manager should be the same, that someone on your
team is not bringing a safety concern to your attention and it goes to
our whole industry. As an industry our base concern is that there are
safety issues out there that are not being brought forward that we need
to address.

In looking for ways to improve upon an already safe system, and we do
have a safe system, we have started a movement that I believe takes us
towards establishing and formalizing a safety culture, a safety culture
that is critical to the success of any safety management system. In
fact, I consider safety culture the heart and soul of the safety
management system.

The establishment of the safety culture within any organization requires
a cooperative effort between management, labor, and the regulatory
agency. It\'s that three-legged stool we talked about. Obviously if one
of those legs aren\'t even, that stool is going to rock quite a bit.

The non-jeopardy reporting systems we\'ve put in in the last several
years, the Aviation Safety Action Program, ASAP, my hat is off to Scott
Griffin and American for being the pioneers in that program. Personally
I have found that program the most valuable source of information I have
ever seen. It\'s a great program.

The Flight Operational Quality Assurance or Flight Data Monitoring
System, again another non-jeopardy system, and Line Operation Safety
Audit, we\'ve talked about LOSA, those programs have been successful
because of the relationship of those three entities, management, labor,
and the regulatory agency.

The road we travel with these programs has had bumps along the way and
lately some of those bumps for me, those potholes, look like Grand
Canyons, and some might want to get off that road but we really need to
stay the course. If we don\'t, we give away the achievements that have
been made along the way and the system-wide improvements that we are
starting to see.

Let me give you a couple examples from our Aviation Safety Action
Program and what I\'m talking about. ASAP program is a threat and error
management program. We get two kinds of reports from our crew members.
We get a threat report which is a heads up report, or we get an error
report which in polite words is an \"I messed up\" report. They give you
a threat or an error report.

I\'ll give you the value of that in the fact that one of the threat
reports we got was a pilot taxiing into Minneapolis-St. Paul late at
night and he just wrote up, \"The way they are parking me next to this
regional jet with their wings overlapping, at some time someone is going
to hit an airplane.\" We sent our ground safety team out there and he
was right. They were doing nonstandard parking. We changed that the next
day after that report arrived.

One of the values of an error report, when I first started with the
Continental ASAP program in 2001, we were getting reports, about three a
month, of pilots not following their TCAS RAs. I could not believe that.
As manager of Human Factors at the time I said that is not possible. We
have trained this. We have talked about it.

In fact, that continued. We looked at our FOQA data and, in fact, that
confirmed what our suspicions were that there were cases where they were
not following. I want to thank the Airline Pilot\'s Association. We had
crew contacts through them with the FOQA data and found out some of the
reasons. \"I had him visually,\" so forth and so on.

We went through extensive training. We went through information training
for our crews as well as in the way of professional publications. We
actually put TCAS RAs in the simulator randomly to make sure the crews
responded. The ASAP reports went away.

FOQA confirmed that our crews were now following their TCAS RAs as we
had wanted them to regardless of whether ATC gave them a command. What
is the value in that? That all happened 18 months prior to the collision
over Europe which was a TCAS event. For us we solved the precursor and
we were able to attack it.

We cannot take credit, though \-- I get no credit really for the lack of
a ground mishap in Minneapolis or the lack of an accident but when you
show continuing safety improvements, we need to say this program is
worthwhile.

We have established the beginnings of a reporting culture, yet the
difficult part is ensuring it is also just. Again, the trilogy of
management, labor, and the regulatory agency must work together to
protect the communicator. This is a difficult task that requires a
thorough understanding of human factors and human error.

It is never enough to say the causal factor in any incident or accident
was the result of human error. If you know me, I\'ll say human error
never caused an accident in a commercial jet. It was the fact that the
crew didn\'t track or mitigate that error, because errors are going to
happen but was there error management? That is the value in our crews.
When you see good threat management or error management, that is what we
reward. Errors are going to happen out there.

As we know all too well, many times the latent threats of systemic
faults existing in policy, procedures, or infrastructure are root causes
of issues that must be discovered and mitigated. Certainly the crews
controlled the behaviors but in a system designed by others.

We must also give the report value and the value comes through a
difficult process of analysis, corrective action implementation,
effective monitoring, and feedback. Only by these actions will be become
a learning culture.

When a training program is adjusted based on FOQA data, when an approach
or arrival is amended as a result of ASAP data from several carriers, or
when stable approach guidelines are modified based on LOSA data, we have
not only succeeded in learning from the analysis of the data from these
safety information systems, but we have successfully acted on the data.

We are all too quick to talk about data-driven safety and I guess my
question is sometimes, to my team anyway, who is driving and where the
heck are they going because we have data out there but what are we doing
with it? Are we analyzing it properly?

If, in fact, we focus on creating positive safety change and we report
back to our employees on the corrective actions, those safety changes
made because of that report, we have fostered the reporting culture
which is so rich in safety data. Maturing of safety cultures to become
just reporting, learning, and acting will have its challenges.

We must be prepared to take those head on and continue in the right
direction. It will take a joint effort and continual communication of
industry, regulators, and labor to succeed. This success will only be
achieved if we are willing to be an industry driven by data in the right
direction and not by events. Thanks, Robert.

MR. SUMWALT: Thank you, Don. I think you have raised a point, many good
points, that it\'s something we\'ve learned in this country but as I
traveled around to other countries, I realize that this message is not
necessarily understood in some other countries, and that is you point
out the three-legged stool. In order to have an effective safety program
we need management, we need labor, and we need the regulator all working
together.

We learned from that fairly well in this country. We need that. We
discovered that beginning back with the U.S. Air Altitude Awareness
Program back about 16 years ago. When we get the management, the labor,
and the regulator all working for the same thing, wonderful things can
happen. I would be glad to talk further about that during the break.

I did promise I would open it up fairly early in the panel for
discussion. I see that the fly is now on me. We are going to send it
back your way. We are going to open up the field. Let\'s take about
three or four questions and then we\'ll come back. Who would like to be
first? Yes, sir. Good morning.

MR. AL HADDABI: Good morning, ladies and gentlemen. My name is Ahmed
Al-Haddabi from the United Arab Emirates. First of all I would like to
thank the moderator and the distinguished speakers for the valuable
information we have just received this morning.

Safety requires human and technical resources, regulations, standards,
policies, and structured program and enforcement efforts. This is all
required. The question that I really have has to do with the individual
civil aviation challenges. What are the challenges facing individual
regulators in implementing, maintaining, and promoting aviation safety
as compared to the original approach requirements?

This is the question that I really have. I\'m asking this question to
Dr. J.R. of Civil Aviation of Italy. Also I would like to receive more
comments from the distinguished speaker. Thank you.

MR. SUMWALT: Silvano.

CPT. MANERA: Thank you. I\'m trying to get exactly the point. I spoke
about precondition to have a free flow of information. Then as regulator
you must define what are the typical behaviors in your region to be
addressed. Typical items are others in the crew or management that
behave in your country with some kind of, let me say, macho attitude.
Are there too many within your crews, trained crews, hierarchical
gradient that impede communication from captain to co-pilot and so on.

How in the company you regulate do they treat error management? Do they
explain how to handle error, how to detect, and how to change from
restrictive attitude to an open mind? We change the set of actions after
we discovered the error instead of blaming someone. How do you
facilitate putting in place flight error management?

What are the elements in your country for the LOSA program to be
actively put in place? Do you have any resistance from the unions to
that program? What are the elements significant to your country for the
FOQA program? In the FOQA program you can look at a wide range of things
but you have to pick up the one that is culturally most significant in
your country so just to address the human factor or behavior element.
There are things that are typical or not equal for everybody. We have
instruments that are common to everybody. Each one must address his own
cultural things and provide protection. We spoke about culture and
leadership, the leaders.

I mean, the chief or head of the regulator, the CEO in the company must
guarantee that within their company or within their organization I\'m
guaranteeing, let me say, as Marsh McCune would say, I\'m not sending
messages. I am the message because I worked in the Flight Safety
Department for 15 years so my presence in the regulatory position is the
guarantee that that will protect you if you will tell me something
useful.

The second thing is just as Vern Raburn said. You must prove that there
are incentives if you give useful information so there is not only
detect an act but the problem is to give feedback to people who provide
information, so you take them into the loop and give them information.
Information provokes actually an improvement and somebody tells me, or I
can see, changes in procedure and so on. You have to close the loop
starting from top to bottom.

MR. SUMWALT: Thank you. Another question. Bill.

AUDIENCE MEMBER: Thank you, Robert. This is a real interesting
discussion. I have a question that kind of builds on kind of what Don
mentioned a moment ago about not getting credit for not having an
incident on a ramp or a flight or something like that, which means that
in a particular safety culture the absence of negatives don\'t get
recognized as a positive process for preventing it.

I would be interested to have the panel members discuss recognition and
reward systems for positive behavior. It could be coming down from
management. How do you avoid the absence of a negative, and nobody ever
gets any recognition, to having some kind of a proactive leading
indicator process where you do recognize a sustained positive
performance?

MR. SUMWALT: That\'s a great question. Who would like to take that one?
I\'ll start a little bit on that. That is a good point, Bill, and part
of that is when we have someone write-up Minneapolis St. Paul parking
and we changed it because of that, we have to get that information out
there, Part of our chore in the Safety Department is to let people know
(1) we acted on your write-up and (2) it had value. Then we have to make
sure we give that credit.

Now, the incentive for that pilot who wrote that up really comes from
the fact that he made a change. I promise you there. Now, let\'s talk
about other airline personnel. Let\'s talk about ramp. Let\'s talk about
check-ops, maintenance. How do we incentivize them through making
suggestions and that lack of a mishap?

You do need to have some kind of \-- in safety so many times where they
are handing out the ticket, \"Hey, you\'re going too fast,\" or, \"You
didn\'t stop at the stop sign.\" How about in safety awarding a certain
status to a station because of their reduction in mishaps, their
reduction in employee injuries? Very proactive measures. What you find
is the whole station takes that award. It\'s not an individual thing. At
least for us that has been fairly effective.

We have certain levels they achieve and the end result is the numbers
start showing and then for us as safety professionals where does that
help us out? If you show 10 percent cost reduction in employee injuries
year over year, CEOs, CFOs will say, \"That has value.\" So do the
employees. They are real proud of their achievements.

MR. SUMWALT: That\'s a great point.

CPT. MANERA: Just to build on that, because I had written down a couple
of times during the discussion about, specifically to your point, Bill,
that there is a lack of rewards when correct behavior is there. Removing
punishment is good. It is obviously the first major step. The lack of
rewarding gets a little tough.

I am reminded I read an interesting interview with Michael Dell a couple
months ago about the problems Dell is having with their customer
service. They were rewarding their customer service techs and phone
sales people for how rapidly they ended the call, how fast they got off
the call because they had this volume of calls and they were trying to
deal with it.

They were seeing a couple of phenomena happen. One was the volume of
calls was going up instead of down even though the length of calls was
being reduced. Two, they were having massive customer satisfaction
problems. I mean, 50 percent decrease in customer satisfaction. Huge for
a direct marketer. He said, \"What we were rewarding for, what we were
solving for was the wrong variable.\"

In other words, they said it\'s not the time that is important, it\'s
did you solve the problem. They changed the incentive system. Suddenly
they saw their call volume go down 20 percent and their customer
satisfaction go up 40 percent because they incented people to solve the
problem, not to get off the call.

I think when you set up incentive systems and reward systems you always
have to be extremely careful that you are incenting or rewarding for the
right solution, not just, \"That\'s good. Here\'s some money. Here\'s
some recognition.\"

MR. GUNTHER: If I could just add, Vern, because Vern is right on. The
concern is let\'s take the station that we gave this award to. I fear
giving it to an individual for chocking an aircraft properly or for
push-back properly because that\'s the expected behavior.

When you give it to the team for the overall accomplishment of
reductions in ground damages and employee injuries and even a facility
walk through to OSHA standards, they understand that it is a team award.
Vern makes a very valid point. You have to be very careful. Are we
awarding for expected behavior? I\'m not sure I\'m comfortable with that
either.

CPT. MANERA: We had an incident this week, as a matter of fact, where we
fired a tech who had installed a component incorrectly, screwed up on
the edge distance in drilling a component in. The reason we fired him
was not because he made a mistake. The reason we fired him was because
he hid the mistake.

We discovered it in inspection further down the line. When we dug into
it why was this piece installed incorrectly and generated an NCR, why
did that happen, that was when we were able to discover that there was a
cover-up. When we fired this guy, we got the entire team together and
said, \"Look, we are not firing this person for a mistake. We are firing
this person for a lie.\"

Those are the kinds of balancing acts that you have to walk. You have to
really look and understand what is it that you are rewarding, what is it
you are penalizing. You can\'t remove all penalties. There are certain
behaviors for certain things that you have to penalize. Conversely, you
can\'t just reward people universally for doing what they are supposed
to be doing. It is a challenging balance.

MR. SUMWALT: Let me jump in there on this one because it\'s leaning
towards the notion of a just culture. We heard that term. Don, you
mentioned it a few times. We heard it a number of times yesterday. My
question is what is a just culture? I suspect that there are people that
may be asking that very question. The Flight Safety Foundation in the
Flight Safety Digest in March of 2005 published a very extensive article
on just culture.

It is the roadmap to a just culture enhancing the safety environment.
Basically according to Dr. Reason \-- let me quote something out of an
FAA Advisory Circular. This is from the FAA Advisory Circular that just
was released back in June on safety management systems. That\'s AC
120-92. It refers to Dr. Reason\'s work.

It says, \"Dr. Reason further stresses the need for a just culture where
employees have the confidence that while they will be held accountable
for their actions, the organization will treat them fairly. I would
suspect in your case had this employee said, \"I messed up,\" it would
have been one thing but the fact that they tried to go underground with
the issue was quite another.

The just culture is so important and it is not really well understood.
Basically Reason says that it\'s just this, \"Employees realize they
will be treated fairly. Not all errors or unsafe acts will be
punished.\" If someone goes out and commits what I consider a loosely
termed honest mistake, they are not going to be punished.

On the other hand, if somebody deliberately commits an unsafe act, if
they fly under a bridge or something like that, certainly the
organization will if they act recklessly or take deliberate
unjustifiable risk, then those have to be punished because if most
everyone in the organization is trying to do it well but you\'ve got the
two or three percent that are trying to not do it well and they are
always deliberately shortcutting procedures, what message does that send
through the rest of the organization?

The notion of justice is that we are going to treat people fairly and
that means if it\'s an honest mistake, we are going to try and learn
from it. If someone is unjustifiably going out and deliberately doing
bad things, then there has to be some discipline there.

The Flight Safety Digest that I just mentioned defines a just culture,
and I quote here, \"An atmosphere of trust in which people are
encouraged, even rewarded for providing safety related information but
in which there is also a clear line about what is acceptable and
unacceptable behavior. Good segue into the just culture. Silvano, I
think you had a comment.

CPT. MANERA: Just culture is the balance between rewarding good behavior
and punishing or correcting, with a sharp and precise and linear
attitude, one who doesn\'t behave, who is hiding something. From the
reward point of view, because I like to speak about a positive side
instead of the negative one, you must pick out and choose the examples
that will be perceived by all the personnel as typical of a good
behavior.

Somebody makes an error but openly and quickly says, \"Yeah, I\'m doing
this and that.\" Are other people, colleagues and the peers, confident
that that is the good behavior to put in place in practical terms? The
rewarding must be an example for everybody on what is good to do to
improve operations.

That is a critical point because you have to provide those examples in a
consistent way, methodical and understandable to everybody, because the
culture in one organization, I\'m speaking about a manufacturer
operation, are different.

In a typical airline, let me say legacy airline, as we call them today,
there are three different cultures: the operational one, the technical
one, and the administrative one. They have different attitudes. Let me
say, for example, in respect of a variable like the time, applying
pressure is the most effective things in an operation.

It\'s neutral, let me say, in the technical side because they have to
follow procedure what time takes. On the initiative side time is an
opportunity so be very careful to let each single group to understand
exactly what in their department is the good behavior and the example of
your rewarding is very, very useful so that is why you have to weigh
them carefully.

MR. SUMWALT: Thanks. We said at the beginning of the panel we wanted to
give you some take-home points and I think there are plenty of take-home
points that are emerging from this panel. Some take-home points that I
have learned from Jim Reason are that we need to have a safety culture.

We need an informed culture, a reporting culture, a learning culture, a
just culture, and a flexible culture. We just talked about a just
culture. What is informed culture? Several of our panelists have alluded
to that, that we need information. We\'ve got to get information in and
that is the informed culture there.

In order to have the informed culture we need a reporting culture and
the Flight Safety Foundation Icarus Committee about 10 years ago came
out with a series of Managing for Safety briefing bulletins.

In one of those Managing for Safety bulletins they pointed out the need
for a non-reprisal policy signed by the CEO to say that \-- to reassure
employees that the organization will not initiate disciplinary
proceedings against an employee who discloses in good faith a hazard or
safety occurrence that is the direct result \-- that is the result of
conduct that is inadvertent, unintentional, or not deliberate.

Confidentiality has to be maintained. The data have to be identified.
Employees must know that the information they submit will be acted upon.
If we don\'t do that they will quit submitting the information. This is
a couple of things that we need, the just culture, the learning culture,
the reporting culture. Learning culture basically means that we are
going to learn from our prior mistakes.

So we\'ve just got a moment or two. How about a question or two?

AUDIENCE MEMBER: Thank you very much. The real safety challenge today is
the developing world and the developing world faces a multiple of
challenges. First, of course, the aviation sector has little funds for
even safety oversight. Then even the public sector in many countries is
not working well, governance problems. At the end the public itself is
not so sensitive.

Let\'s say in Africa you have 500 people losing their lives in airplanes
every year compared to thousands with Malaria, AIDS, or even on the
road. Developing countries have a multiple layer of challenges which the
developed world doesn\'t have. We have no tolerance for bad safety in
air safety in the United States and Europe but it\'s different \[in
developing countries\].

I\'m particularly interested how El Salvador, which is a country still
in development was able to get to Category 1 and to create a safety
culture which I observe is now spilling over to other Central American
countries.

MR. RODRIGUEZ: Thank you. That\'s a very interesting question. All of
the developing countries are pretty much developing because they have
come from something that was not right back in time, let\'s say. I used
the two different terms in my presentation when I spoke of
under-developed and developing countries. When I used the two different
terms, I was trying to refer to a level of maturity of government.

When you compare different countries and you try to place them in the
developing or in the under-developed categories, I think that one of the
big decision makers to which category a country falls in is pretty much
what the attitude and how much that country\'s government is changing
the way it\'s structured, the way it is moving forward.

Is it integrating into what is happening in the rest of the world. I
think that integration is what leads you to change. This whole fact of
trying to integrate yourself in the world and whether it is aviation or
a different issue is that there must be change.

Changing countries, changing governments, governments with a much more
modern mentality are those who are going to take a country from
under-developed to developing. It is a natural stage. You can\'t go from
being a first power in a few years.

In El Salvador we have been changing attitudes from top to bottom for a
few years now. One of the changes was definitely in the aviation field.
It took the commitment, and I think that is probably a very good word to
use here, commitment from the president down, the president of the
country, to invest, first of all, in aviation, to invest in making sure
that aviation is safe.

There is a common denominator in aviation in under-developed countries
or in developing countries that basically the operator is the one who
sets the culture in the beginning when you don\'t have a good enough
regulator. We need to have a regulator that can actually do its job and
then it is the operator who starts setting up its own safety policies
and its own internal safety culture. Basically it is just a matter of a
more modern government attitude. I\'m out of time so I\'m going to have
to answer like that.

MR. SUMWALT: Well, thank you. I guess the former airline pilot in me
I\'m thinking we want to be right on time. I\'m sure the FAA would
appreciate that. I really think that this panel could have gone on for a
long time and we do want to end on time but I found this to be very
fascinating and I know that the panelists will look forward to talking
with you during the coffee break and during lunch.

I will close on this note. A little while ago I asked do you have a
safety culture in your organization? In reality I certainly hope that
you do but if you don\'t, I hope that this panel has provided some way
of helping you to transfer your culture. Even for those of us who think
we do have the safety culture, Dr. Reason has some words that will sort
of keep us all on our toes and these words are, and I quote here,
\"Finally, it\'s worth pointing out that if you are convinced that your
organization has a good safety culture, you are almost certainly
mistaken.

A safety culture, he explains, is something that is striven for but
rarely attained. He says it\'s the very process that we are striving for
this safety culture, that we are constantly striving for, that is more
important than the product. That is something to think about. We never
want to be so smug thinking that we are there because as soon as we do,
something has a way of biting us.

I would certainly like to thank our panelists for some very
thought-provoking discussions today. I would like to thank the audience
for their questions. I would especially like to thank and congratulate
the FAA for their leadership in hosting this symposium. Thank you very
much.

MR. SABATINI: Thank you, gentlemen. That was very informative. I would
like to share a story with you. My good friend, Bill McKay, recently
retired from Dupont. Certainly Dupont is a leader in SMS and has been
for a very, very long time. We have said time and again for the past day
and a quarter that SMS is not just an action. It is embedded in the way
you think. It is a mindset. It is in the DNA of your behavior.

Bill has shared with me a story that I think clearly illustrates the
point. There was an executive, still employed at Dupont, but as a young
engineer many years ago when he was recently a graduate from an
engineering school he drove to Dupont to seek an application for
employment. Pulled into the parking lot, pulled into the appropriate
spot but when he stepped out instead of following the guided path which
was marked with hash marks, etc.

Stepped over a little chain-link fence onto the grass and across the
grass and across other things that he should not have been stepping on,
and walked up to the guard shack. The guard asked if he could be of help
and he said, \"Yes, I would like to have an application for
employment.\" The guard said, \"No, I don\'t think so.\"

He said, \"What do you mean?\" thinking to himself, \"I just recently
graduated from an engineering school and I\'m ready to be employed by
Dupont.\" The guard proceeded to tell him, \"You need not apply here.
You have already committed half a dozen different violations."

The point is that it is an example of leadership causing the thinking of
the organization to work it\'s way down to people in every element of
the organization and every part of the organization. It permeates that
entire organization. You know, it doesn\'t being and end at the guard
shack. It goes beyond.

Dupont continues in their environment to monitor injuries off the
premises so to speak. You take it with you in you personal and daily
life and they monitor and track that. That is the importance of a safety
culture. It is embedded in how you think and how you behave every single
day.

Gentlemen, thank you once again. Please be back at 10:30. We\'ll take a
break and be back here at 10:30.

(Whereupon, at 10:13 a.m. off the record until 10:36 a.m.)

MR. SABATINI: Well, now let\'s turn to our next agenda item, our guest
speaker. We are very pleased that the leader of the world\'s largest
civil aviation association could join us today. Perhaps the aircraft
number on his organization\'s citation jet, November 4 GA, will give you
an idea of his constituency and of his passion.

Our speaker is a 7,000 hour plus instrument and multi-engine rated
pilot. He has been flying for more than 30 years. Fifteen of those years
have been as an aircraft owner. In the interest of full disclosure, I
must tell you that his personal fleet includes one very sweet walkout.

Our speaker\'s piloting experience and his passion along with a
background in business and communications has served him well as he has
led the Aircraft Owners and Pilot\'s Association for 15 years. Under his
leadership AOPA has been a forceful advocate for new technology and his
advocacy is not just for technology sake, though I am told our
speaker\'s nickname is The Gadget Guy.

AOPA understands the safety benefits from technology, from GPS, WAAS,
and ADS-B. There\'s an ADS-B ground station at AOPA headquarters and
AOPA aircraft are equipped with ADS-B. Yet, our speaker understands
safety is more than technology. He knows pilot awareness and training
are absolutely essential. Under his leadership AOPA has sharpened its
focus on safety training and pilot outreach.

Ladies and gentlemen, it is my privilege and pleasure to introduce the
President of the Aircraft Owners and Pilots Association, Mr. Phil Boyer.

MR. BOYER: Well, thank you, Nick. I thought under full disclosure you
were also going to say that you are an AOPA member and, of course, read
our magazine every month and then often times calls me or e-mails me and
has some kind of a criticism or comment. I think we changed the last
mistake we made. As you know, the FAA and AOPA are not always on the
same side but when it comes to safety, that is certainly something from
a domestic standpoint here in the United States or internationally we
all believe in.

We represent general aviation. Thank you so much for including this
portion of aviation on this very distinguished program. We call it \-- I
guess it\'s horrible to define it as what it isn\'t. It isn\'t the
airlines and it isn\'t the military. Otherwise, it\'s all of aviation in
this country.

I am proud to tell you that more than two-thirds of this nation\'s
pilots belong to AOPA. A new record actually. The end of October we just
got this and celebrated in the building on the first, 409,000. You know
what? Round it off, 410,000 AOPA members.

We are part of a larger organization. I serve as the President of the
International Aircraft Owners and Pilots Association. It was founded in
1962. There are 64 countries so very definitely one of the countries
that you may be from here is a member of IAOPA. Total we have about
470,000 members and we do have official status with ICAO in Montreal.

The mission of IOPA and AOPA is certainly representation, information,
and the promotion of GA and ICAO\'s definition, GA and aerial work from
an international standpoint. Our members are well served. They wear the
wings on their label, in many cases, unless they are trying to hide the
fact like Nick that he is a member.

It may be interesting for you to understand that 68 percent of all
general aviation in this world takes place here in the United States.
Now, once in a while I come up to a member and their wings are crooked.
Well, a famous star figured that out also.

(Video shown)

MR. BOYER: Are you optimistic or pessimistic about general aviation? We
asked our members that question about once every two years and it\'s
interesting to see that in the last survey 67 percent were optimistic in
light of the tragedy of 9/11, increased air space restrictions, higher
costs, higher fuel costs. Two-thirds were optimistic about general
aviation.

An important event happened here in this country in 1994, the General
Aviation Revitalization Act. It eliminated some of the product liability
trail that manufacturers were having to bear. As you can see there, the
jump from 46 to 60 percent happened just after that product liability
bill was passed by Congress.

It\'s really a great time to be involved in general aviation. Billings
are up, shipments are up on GA aircraft. There are new categories of
airplanes, new technology available, as Nick mentioned, new power plants
finally for the first time, not dealing with our 50-year-old piston
engines. And all of these things I would maintain bring added safety to
this important segment of aviation.

U.S. shipments of single-engine piston airplanes and if we look at the
core AOPA member, it would be somebody flying a four-place piston power
single engine airplane. They continue to show an upward trend. These are
the last six months of 2006 compared to 2005.

You can notice in that segment that I said it\'s our core
representation, 17 percent up. There was a point before this bill passed
in 1994 that shipments of GA planes were down to as low in the piston
fleet as 300 airplanes. As you can see, huge numbers this year in the
first half and they continue for the manufacturers.

The new products we\'re getting continue to come from existing
companies. You will all recognize the Cessna in the upper left-hand
corner, the Piper product below. But new products are also coming from
brand new companies that have emerged since the passage of the General
Aviation Revitalization Act. New aircraft companies, airframe companies,
and new avionics in the cockpit for more safety, better situational
awareness, easier to understand in terms of operation. Don\'t forget,
most single pilot operations are single \-- most single-engine
operations are single pilot. They also go into airports, not certainly
as robust as the airports we are used to for air carrier operations. A
greater degree of skill needed by half the size of a normal crew.

Look at that cockpit there. That isn\'t a Boeing 777 or the Airbus 380
when we finally get to see it fly. This is a general aviation cockpit,
all glass and with the latest technology. And, you know, Wichita used to
be the center of the universe. I think the Secretary said yesterday she
had been to Wichita. Now these planes are coming from unusual places,
Deluth, Minnesota. This particular airplane from Bend, Oregon.

New companies, new aircraft. Let\'s not ignore some of the wonderful
technology that is taking place in Europe, both Germany and in France,
with diesel powered engines, ones that can burn jet fuel and not rely on
our leaded av-gas.

Here is a new twin engine plane that I know many of the flight schools
are looking at for their new twin engine trainer. Nick, you\'ve got to
get the complex aircraft thing signed off so that we can use that. This
one has FADEC engines. They are more economical and the schools see this
as a great entry level with glass cockpits for the people that
eventually will go to fly the airlines.

Unique twin engine airplanes. Some of us go back and remember the
Mixmaster, the 337, but this is a plane being built, once again, in an
unusual place, outside of Denver, Colorado, the Adam A500. I am sure you
have heard and talked a lot about the very light jets already. Two
certified just a month and a half ago, the Cessna Mustang and the
Eclipse. This brings a whole new world of flying to the owner pilot and
other opportunities.

They don\'t just reside here in America but Honda has just announced
that they will be building a very light jet. Then one of our very
traditional companies just recently, two weeks ago, said they would be
coming up with, once again, an all glass cockpit very light jet with a
single engine.

Light sport aircraft. Let\'s go to the other extreme. We have the
typical AOPA member in the middle, light jets on one end, and now the
light sport aircraft just beginning to emerge. Many of these aircraft
are being imported by your countries. They are already in use in many of
the European and Far East countries.

Just recently our main manufacturer for both business jets and
piston-powered airplanes, Cessna, announced they would prototype one.
These are some pictures that I just got the other day we weren\'t
supposed to get because I think they are going to test fly it for the
first time officially, or just did. These are about two weeks old. They
were flying a prototype of the Cessna light sport aircraft.

The administrator said to me at the reception Wednesday be sure to
indicate to you \-- I know a lot of the schools in this country \-- this
is a wonderful entry-level way for flight training to emerge in many of
your countries. First of all, they use a unique Rotax engine that burns
about three to four gallons of fuel an hour so in the rest of the world
where fuel \-- although we are coming there pretty fast \-- is more
expensive, these planes run at about the third the operating cost,
two-seat trainers, very economical.

It is what is inside, though, that counts. I\'ve got to tell you we have
a whole new breed of avionics that you can put in an older airplane.
This is a 1977 Cessna Skyhawk. You recognize it, Nick. This plane is
equipped with the latest of all glass instruments. Look at the airspace
depiction on the map here. Look at the navids depicted on the map.
Weather can be uplinked to this airplane.

Some of this is coming from traditional companies like Honeywell\'s
Bendix/King, and others of this are coming from brand new entrants.
Boxes that do all kinds of things based on microprocessor technology.
The Garmin 530 is sweeping the country. I talk to Garmin and continue to
and they say, \"Well, Phil, they are not just buying one of these boxes
for their planes. Many people are inserting two of these in a stack in
their airplanes.\"

In another company out of Boise, Idaho, is working with synthetic vision
that will be able to come to the small general aviation airplane.
Remarkable situational awareness. Imagine yourself flying a
single-engine airplane at night or in the clouds and a terrain database
is drawing exactly where you are going. That is here and it\'s now from
a manufacturer named Shelton.

Our planes are moving almost entirely to glass just like the air
transport category airplanes have in the past. The Garmin G1000 is in
many, many operational airplanes and contains all kinds of information
to bring better situational awareness for the pilot including, as I show
here, certainly to terrain avoidance.

You will notice the new breed even contains on the left side all of the
engine instrumentation. There is now a new class of older airframes with
newer avionics. As you can see the transition from the upper right
putting in as much glass as you can to finally building the new plane
from the ground up around the glass cockpit.

Cessna, which is one of our traditional manufacturers, now is delivering
almost all of their planes with a glass cockpit. I heard a story where a
sheriff\'s office wanted to match their existing fleet so they didn\'t
want the pilots going from one plane to the other to have different
systems so they asked for the old steam gauges, the round gauges. Cessna
charged a surcharge to be able to build a plane without this new modern
glass cockpit.

Just recently announced \-- this is exciting. Go back to that 1977 plane
\-- they will be able soon, next year, to buy glass for the primary
flight instrumentation and outfit an older airplane all glass. Up to
this point you had to buy a new airplane to have a glass cockpit.

Instrument approach charts. This is the greatest boon. I love showing
this off in both my personal airplane and the company airplane.
Instrument approach charts which show the airplane on the approach.
Pretty tough to be on the wrong ILS. Pretty tough to not be on the
center line. Pretty tough to not land on the correct runway when you
have this depicted right in the cockpit of a general aviation airplane.

Speaking of runways, here is the airport diagram. You can zoom in on
this. I love this when they say take Charlie to Delta use E4, turn right
at this. You are looking at it right on the screen.

I guess one of the greatest boons that we are yet to see all the
advantage of yet is this little box. The numbers mean nothing. This box
has the capability of not only using our GPS system but also the new
wide area augmentation system.

(Video shown)

MR. BOYER: Doesn\'t this drive you crazy, Marion, Bobby? I mean, \$3
billion. We worked for this for 10 years and my members haven\'t the
slightest idea what it\'s all about. This is the administrator at
Herndon turning on the 26 ground stations a few years ago that allow us
to approach to precision approach minimums to almost any airport.

The technology Nick talked about as we started, ADS-B, which affords us
all kinds of both surveillance and benefits to the GA cockpit. We can
have our location, our altitude, in non-radar covered environments. And
in the cockpit because we are setting up this internet connection, or
this data link between the ground, other aircraft, and the airplane, we
can also use it to uplink to the plane, traffic, and weather data
together.

This is a picture of where our country is equipped at this point in the
United States along the East Coast, down at Daytona Beach for a flight
school. Over in Prescott, Arizona where the leading university there,
Embry-Riddle, has no radar coverage for all kinds of aviation activity
and they now use ADS-B to track all of their planes.

Fantastic positional awareness. We just had a recent wingtip ding
between two air transport aircraft. This is an idea of how you see on
the actual airport chart the airplane itself and a ground vehicle that
may be going at the same time because remember this isn\'t just an
airborne system. It can be a ground system.

Once again, like our data link real-time weather these little Pacmen
type pictures are actually airplanes in a non-radar environment. A lot
of this has taken place in Alaska in the Capstone Project area with
inclement weather with lots of high accident rates where a member plane
like AOPA\'s plane is used as the typical charter airline actually in
very, very remote areas with trips of maybe 30 miles to islands. ADS-B
has been used very heavily there and it has brought about by a
University of Alaska study a 47 percent reduction in accidents. That\'s
what it\'s all about. In closing, our AOPA Air Safety Foundation works
hand in hand with the FAA, with industry, and it\'s supported by most of
the pilots in America. This is what\'s critical is that industry itself
is working to bring about better safety.

The Air Safety Foundation has been around for about 56 years and unlike
all the things AOPA works on, it has one mission and one mission only
and it doesn\'t take its eyeball off that. That is to make flying safer.
Right out of the statistics that have been collected since about 1938,
as you can see, the red line is all accidents and a continuing decline
in the accident rate, pilot related accidents and, as you can see, even
in the past we have not had a high degree, the bottom line, of
mechanical accidents.

The accident rate per 100,000 hours has continued to drop in the last 10
years. We track very carefully what are pilot related accidents and what
are the causes of those and try to produce educational materials that
will address the route causes of the main reasons we lose lives or ding
airplanes.

I would like to call your attention to just one of the elements but one
of the very important ones that is available around the world because of
the World Wide Web. We have really gone to what we call kind of the
academy online of aviation safety. Not just for general aviation because
many of our topics apply to any kind of a pilot but our online safety
center is full of about 24 courses, require no membership, no fee.

You can click in anywhere in the world. You do need a broadband
connection. I would advise you to do that. You can take these courses.
They are fresh, they are interactive, and they are creative. In this
country we have a partnership with the FAA on something called wings
credit.

You previously had to go to a meeting like this, sit in the audience,
listen to an hour and a half lecture, then you could get your log book
signed off for this credit. It is now available 24/7 online. Hopefully
we will expand beyond that small group of people, usually the same faces
that would go to the safety seminars.

I have put up just a few of the kinds of programs we have. Let me just
give you a little \-- this is one in mountain flying. I\'m not going to
take you through the whole thing but just to give you a little idea.
Many of us in aviation know the effects of temperature and altitude,
it\'s called density altitude, on the operation of an airplane.

When it\'s cold, and so we are going to \-- this is all done on the
internet. It let\'s you select a temperature. I\'ll select 10 degrees.
Then we can see if this small single-engine plane at 10 degrees is going
to be able to clear the mountain. It says yeah. As you can see here,
density altitude is low and the aircraft performance is high.

Let\'s go up and set the slider to 80 degrees just to warn people that
might be at Lake Tahoe or in the Denver Mountains and see what happens
as the aircraft performance deteriorates. As you can see, not a pretty
situation. Once again, just to demonstrate to you the interactivity here
of this kind of technology.

GPS. We have two GPS courses we just launched. I guess the one that I
would show you right now is just an idea, as you can see, the graphics,
the kinds of things we teach in just one specific area. We have one for
VFR pilots. We have one for IFR pilots. Weather wise thunderstorms apply
whether you\'re flying heavy iron, air transport category aircraft, or
small aircraft.

I\'m really please with this program which actually we are doing a
version for the air traffic controllers because we want them to see what
we see in our small general aviation cockpits. It should be a very
interesting example.

This is something we hope nobody gets into but it gives a pilot a chance
online in the comfort of their home rather than in the cockpit to see
just exactly what it would be like from an instrument standpoint, from
the creaking metal standpoint which they have even put in here, of what
it\'s like to fly a small plane when you get too close to convective
activities.

The FAA has participated in this program with us and supplied us two
very good examples that use actual air traffic control tapes to show how
a small plane can get into trouble even with air traffic control help.

Runway safety, probably very topical to talk about right now. We have a
version of this for general aviation and for the airlines. On November
22 we will be mailing 200,000 pilots a CD just to prompt them to not \--
if they don\'t want to go on the internet, here, this comes in the mail
and take a look at it. I think it certainly bears watching.

Nick, I know you said that you\'ve used this program before so I\'m not
going to run through it but it is \-- this is the part that I challenge
anyone here in the audience that\'s an ATP to go through and take this
online 20 minute course and look at some of this signage. Do you know
what they all mean?

The pilots that perhaps work for your companies or your government
employees know what this means? We have found that even giving this to
ATPs we don\'t get 100 percent in the quiz that follows each and every
one of these courses. Safety is extremely important to general aviation
and part of our mantra at AOPA.

I want to tell you that we have some 225 employees dedicated to working
very hard. While we don\'t always agree with the FAA on everything, I
will tell you that we have a fantastic partnership with the leadership
and the employees of this agency in our country. Thank you very, very
much.

MR. SABATINI: Phil, thank you very much for that wonderful presentation.
I will tell you that AOPA with Phil\'s leadership has and continues to
be a significant contributor to raising the aviation safety bar. Phil,
thank you very much.

MR. BOYER: Thank you.

MR. SABATINI: So while our panel gets situated, in the spirit of full
disclosure, Phil is absolutely correct that I am an AOPA member and have
been for a very long time. I will tell you that my roots start with GA.
The first airplane I ever flew was an Aeroca 7AC tail dragger. That was
the airplane that caused me to begin the romance with aviation.

So onto our next panel. Those of you who know me will think we
intentionally saved this session on performance-based national airspace
system for last. You know, as in saving the best for last. It is ironic
that this session is last because building a performance-based air
transportation system is the foundation for the future.

Our common responsibility, our obligation is to do what we can to raise
the safety bar. It is the science and the experience from
performance-based operations from an airspace system where we describe
the required navigation performance, the required communications
performance, and the required surveillance performance that will lead us
more safely to 2025 and the next generation air transportation system.

Years from now when we look back on how aviation got to the year 2025,
this period of focusing on performance-based operations will be seen as
a defining moment. With that, let me turn the program over to our
distinguished and to moderator James May and Chief Executive Officer of
the Air Transport Association.

MR. MAY: Thank you, Nick. I appreciate it very much. We are going to
spend the next hour or so examining how the aviation industry will
transition to that performance-based system that Nick talked about a
little bit about what it looks like, what technologies are needed in the
air and on the ground, consider challenges that stand in the way. Are
they technological or are they economic or are they political?

The answer to all three of those questions is a resounding yes. Like it
or not our transformation efforts are inextricably linked to
reauthorization of the Airways and Airport Trust Fund. FAA\'s financial
stability is going to impact our rate of transformation, etc. We\'ve got
a great panel assembled this morning.

You have their bios in depth in your materials. Let me just quickly
identify each of them for you with a brief descriptor. To my immediate
left is Ashley Smout who is the CEO of Air New Zealand but, as
importantly, the Chairman of CANSO and with a great deal of ANSP
experience.

To his left Larry Ganse who\'s got 42 years in the business, currently
chief operating officer at COPA Airlines going through a transition to
some NEXGEN 737s and some 190s they just got some financing on I see by
the morning news. We congratulate you on that. Huge experience in
Central and Latin America.

To his left is Jim Morris, the Boeing company. We don\'t need to say
much more than that. All the way next to the end is Karen Lee who is one
of the senior management pilots for UPS and a great leader in their
efforts to deploy ADS-B. Finally at the end not last by any stretch of
the imagination is Charlie Leader who heads up the JPDO effort. I think
we all are aware of the great challenges that brings. Sort of a generic
question to get things kicked off starting with Ashley and going right
on down the line. What is it that demands a performance-based system?
What is it we are talking about here from your perspective? Why are we
engaged in this discussion?

MR. SMOUT: I think the three major factors that define it, Jim, and they
go by the CEC cost, efficiency, and capacity. I think those three things
are the future of the industry. Really the work that we do within the
various ANSPs throughout the world is all focused on the fact that our
airline customers are in a financial crisis. The airline industry
hasn\'t made a dollar since Orville and Wilbur Wright made a flight so
we are an important part of that.

We can significantly influence both their operating costs and their
passenger experience. From our perspective a transition to a
performance-based industry isn\'t an option. It\'s mandatory. Everything
we are doing in the industry today is focused on delivering value to the
airlines.

MR. MAY: Larry.

CPT. GANSE: Well, I would say that the movement to performance-based
systems from a technology standpoint is very, very critical to solving
some of the capacity and associated safety issues. I want to be very
clear that I think there is a lot more to a performance based system of
communications, navigations, and surveillance. It has to include very
much performance criteria for the providers and the regulators.

MR. MAY: Jim.

MR. MORRIS: I think if you look at it the performance-based system is
actually critical for us to allow continued growth in our industry
whether it be in commercial aviation or regional jets, business jets,
general aviation. Also we need a change in our system to be able to
accept some of the new configurations that we are getting like very
light jets, tilt rotors, UAVs, are all going to be critical things that
we have plans for in the future.

We see commercial aviation growing with the world economy. The world
economy grows at about 3 percent a year. Passenger traffic grows about 5
percent a year. Cargo traffic grows at about 6 percent a year. What that
means is there is going to be more airplanes in the air.

If you look back in 1996 there were just over 11,000 commercial
airplanes flying. We expect by 2015 there will be about 23,000 and by
2025 there will be almost 36,000 airplanes so it is critical that we do
something to allow them to continue flying.

MR. MAY: Karen, you\'ve got some very hands on experience in deploying
ADS-B. Give us your perspective.

CPT. LEE: Our perspective is that it\'s not if, it\'s when. The bigger
question is how are we going to do it. One of the things that we are
very certain of is that we can do it and we must do it to do it safely,
move to the performance-based to be able to do it safely.

We also know that we are going to have to evolve. We are not going to be
able to envision a future and say in 2025 this is what it is going to
look like. Go through a process of developing and certifying equipment
and then equipping aircraft in the ground systems and then in 2025 we
flip a switch a turn it on. That is not going to work so we are going to
have to evolve.

Our perspective on that is to put some systems out there that allow us
to learn some very good lessons, allow us to figure out what the next
step is going to be, and be able to take those steps very safely. With
our four years of history now we have flown 107 aircraft, Boeing
aircraft, with ADS-B ETI and we have learned a tremendous amount and all
pretty much without a lot of notice.

It\'s not a big bang. It didn\'t create a lot of ripples and we really
have been very successful. Our controllers love it and our pilots love
it. As I tell people, it\'s kind of like taking a can of WD-40 and
spraying it on our operation every night because it just kind of
smoothes things out and only doing one little application so tremendous
promise, tremendous potential.

To me with that success and the success of deploying RNAV RNP procedures
and bringing orderliness and predictability to the system if we can
integrate those technologies together where we need to be at our
starting point.

MR. MAY: Terrific. Charlie, you\'ve got the big challenge.

MR. LEADER: Well, I think there are primarily two drivers. One is the
economic penalty to the country in the world if we are not able to meet
the unconstrained demand for air travel. We have been doing some
benefits modeling at JPDO and estimate that if demand is constrained 10
or 12 years we could as a nation be looking at foregoing about \$40
billion a year in opportunity. That is a big price tag and something
that we don\'t want to have happen.

Secondly, the other factor is clearly safety. As the density of the
system becomes greater, we are going to need to have the
performance-based characteristics built into the system that we are
looking at as a necessary way to improve our safety record.

MR. MAY: Coming back, Ashley \-- and I would encourage if anyone in the
audience has a question, please raise your hand. We will be happy to
entertain questions for the panel. Ashley, you have been involved with a
variety of ANSPs. What are the funding challenges and who do you go
about addressing that?

MR. SMOUT: I would like to step back in time briefly, Jim. Airways was
the first commercialized ANSP in the world. We were commercialized in
1987. New Zealand is a country of four million people. It\'s very small.
We have 40 million sheep. Unfortunately, sheep don\'t fly, although I\'m
sure that if Michael O\'Leary from Ryanair was in New Zealand he would
somehow figure out a way. We are a long way away but we in 1987 had
approximately 1,400 staff with 700,000 odd movements in the country.
Today we have 700 staff, half that with about 30 percent more movements.
Of that 700 staff approximately 350 air controllers. We have a
customer/user pays system which has been negotiated and fine tuned over
the last few years. Our fundamental belief is that the performance based
system has been good for our controllers, it has been good for our
shareholder, and it has certainly been good for our customers.

All the metrics whether it\'s operational, safety, efficiency, have all
been positive. So I think that experience, particularly in a small
environment, has shown that it is possible with the right
infrastructure, the right government policy savings, to move to a system
which is effective for all stakeholders.

MR. MAY: You distinguish between the safety functions and the air
traffic functions.

MR. SMOUT: Correct. CANSO, the Civil Air Navigation Service
Organization, we have about 45 countries represented including the FAA
and we have Russ Chew on our executive committee. One of our fundamental
philosophies is there must be separation between the regulation and the
service provision on the basis that the service provision has certain
focuses, safety obviously being fundamentally one of them, but also
performance.

The regulation has regulatory functions. We are pretty clear on that. We
feel as a global industry that kind of separation is in the best
interest of all players. We have had it that way in New Zealand for 20
odd years. Our safety performance has continued to improve over that
time as has the performance of the regulator both in terms of scheduled
airlines and GA.

I think from that perspective the evidence is fairly clear. We have Ben
McDougall with us today and Ben studied a whole range of commercialized
ANSPs and come to a similar conclusion. I think the data supports that.

MR. MAY: Great. Larry, a new fleet coming in or certainly a grand
addition to your fleet. What are the issues that you\'re looking at on
equipage as you bring those new aircraft into the system?

CPT. GANSE: One of the things that we are looking forward to is
performance-based navigation in particular in our region of the world
has some significant benefits in places like Ecuador and Honduras. The
technology has always been ahead of the regulators and the air
navigation service providers. I found it kind of interesting that Phil
Boyer's members didn\'t really know what WAAS is when then have been
working on it for 20 years. The reason, Phil, if you\'re out there, they
have forgotten what it was. They just have given up on it. It takes that
long to get something done. We are looking toward trying to fly
airplanes that fit into the 21st century.

We have countries and states in our region that still require operators
taking in brand new Boeing or Airbus airplanes to fit them with EDS in
training. Not only is this lending somebody or opening a door to an
unsafe practice with the old dive and drive approaches, but it is
expensive for the operators. We want to be able to use the equipment we
have on the airplanes.

MR. MAY: Jim, what do you see from the manufacturer\'s perspective? What
is the biggest demand for new technology?

MR. MORRIS: As we look at developing a new airplane or developing
retrofit kits or a derivative, the thing that we always try to do is
look at all the stakeholders whether it be the regulators, the
government, whether it be our customers, whether it be the passengers,
whether it be our supplier partners around the world.

When we look at the stakeholders we think about the mission of the
airplane. We think about the fact that our products have lives of up to
40 years so there has to be enough flexibility to be able to adjust over
time as technology changes, as mission change, regulations change. I
think what we really do is we look at sort of four different business
cases. We try to look at business case in terms of our customers, the
airlines. We try to look at business case in terms of passengers, the
regulators and then Boeing and the suppliers and then after talking to
everyone we develop architecture for the airplane for the avionics. With
that architecture we then try it out on everybody so it gets to be an
iterative process so we can come to a consensus as to what is the best
configuration not only for today but for 40 years from now.

As a result of that process, from the 787 today, we have gone to an open
architecture system for the avionics versus a federated system so that
the airplane itself has the flexibility to easily accept change. Less
expensive for any new technologies that might come on board.

MR. MAY: Great. Karen, we talked a little bit earlier today about the
importance of ground navigation as part of the new performance base.
Would you share some thinking on that point with us?

CPT. LEE: On the \-- I\'m sorry?

MR. MAY: On ground \--

CPT. LEE: On, on the service?

MR. MAY: \-- service.

CPT. LEE: Yeah, I\'m with you. All I wish is that I could have what
general aviation aircraft has today with their surface maps and their
ability to have situational awareness and certainly from the next step
perspective after that very definitely with traffic.

If we take a look at the thought process that this group has brought to
discussion over the last two days, and that is that forensics aren\'t
going to work for us anymore. We have to take the data that we have
available to us, look at what our risks are, and then prioritize some
type of mitigation for that. We all know that our highest risk in
aviation today is the threat of a ground collision as a result of a
runway incursion. We also know that from a mitigation perspective that
the best mitigation for that is putting a surface map in the cockpit
with traffic. GA folks have it and Phil told us what that means.

In addition to having that in situational awareness if you put traffic
on that, you can eventually put alerting on that for the crew so that if
they are about to enter a runway that is already occupied by another
aircraft, that alerting can be there. It won\'t be in the first
generation. It will be in the second generation.

Then you get into some other efficiency and capacity type situations and
ground operations where you can have enhanced taxi and low visibility
because of the situational awareness because of the ability to know
where you are, reduced runway occupancy times and low visibility.
Finding the turnoff. How we are going to get off the runway. There is a
lot of ripple through the system and the best part about it is we are
looking at technologies integrated together, used together, that allow
us to increase safety while increasing capacity and efficiency. Those
two things are no longer mutually exclusive and we don\'t have separate
safety systems. We are looking at it in a much more holistic fashion.

We hope by the middle of July of next year to have our surface map with
traffic certified and we are using the Boeing electronic flight bag as
the display for that. Now we\'ve got a multi-functioning display with
both operational and safety benefits. Each one of them in our cockpit
will have their own payback so we can bundle those benefits together and
create a business case for retrofit.

We are not going to be buying brand new 787s. It\'s not going to happen.
We will probably wait until the passenger cycle goes through and then do
a cargo conversion on them. That is way too far out there for us. We
have to have something that is much more immediate. We have to retrofit.
We have to be able to fit into the system as it is evolving.

The idea that we can make the technology enhancements in the cockpit
software driven so that we can easily have that flexibility to move to
the next level of functionality is extremely important for us because we
don\'t want to buy a set of hardware and invest in it and then turn
around and, for the next set of functionality that is a bit more
advanced than what we\'ve got right now, have to buy new boxes.

The software driven technology and the functionality allows us to avoid
that situation and so for the long-term we can project a business model
that we are going to be able to support through operational benefits and
then you can just put the safety on top of that. We are very excited
about the direction that is going.

MR. MAY: Good. I, again, would encourage anybody in the audience that
has questions to just raise your hand and we will be happy to call on
you and engage you more in this discussion.

Charlie, we have talked a little bit about transition. How do you see
the whole issue of transition? What are we looking like from the JPDO
perspective on timeliness?

MR. LEADER: I think that is an important question because too many
people in my experience are focused on 2025 as if at that point in time
we have the system developed and we throw a switch and the lights comes
on and the problems are all solved. That is not what the next generation
of system is about at all because the timeline has really already begun.

There has been a demonstration and process. For example, at the Atlanta
Hartsfield Airport, using our procedures for departures. Over the past
year Delta Airlines estimated they have saved \$39 million in fuel cost
because of the more effective departure routes they fly. In addition,
the capacity of that runway has increased by 15 percent because of the
procedures. That is existing technology. It can be used today. It is a
question more of training and procedures than it is of technology or
major investment.

MR. MAY: Larry, great experiment on ADS-B being created in the
Caribbean. What is your sense of the need for and the ability to sort of
make sure that all of the air navigation services through Latin America
and Central America are coordinated with one another. What is your
thinking on that point?

CPT. GANSE: Well, let me broaden that question a little bit to take it
outside of our immediate area because I think it is a critical point as
we move ahead here. Clearly Karen and Charlie have said that this is
going to be an iterative, a growth process. We don\'t have 20 years to
wait for this to happen.

What this means is the global community, the ANSPs, have air carriers as
represented through the associations and the manufacturers that are
going to have to get their heads together and get them together soon
because we are looking at, some numbers we were throwing around here
yesterday, I believe, about 2012, 2014.

The current system is totally saturated and that is not an acceptable
alternative to be looking at. We need people to get down. We have to
define the system. We can\'t have individual countries or individual
regions promoting their agenda on what technologies should prevail. We
have been talking about VDL Mode 2, 3, and 4 now for 10 years or 12
years. Still don\'t have an answer.

We\'ve got to find a way through the collaborative processes whether we
do it through ICAO, get some additional leadership role in this thing,
or whether we can do it through the collaborative efforts that JPDO and
CESAR are working with our European friends. We\'ve got to define that
standard and then roll it down, to get to your original question,
through the ANSP so that we are all working on the same technology
whatever that is.

I mean, ADS-B has some wonderful attributes but it works really well in
some areas. Other areas it doesn\'t because don\'t forget what Nick
said. We\'ve got not just the surveillance piece. We\'ve got the
communications and the navigation. It\'s all got to be a package.

MR. MAY: Actually ATOP. Any thoughts?

MR. SMOUT: Yeah. I think Karen said earlier that it\'s not necessarily
safety capacity \"or\" efficiency. It\'s an \"and.\" I just mentioned
this morning to Jim to talk a little about experience with ATOP in New
Zealand where it was first used. We set up what we called the Oceanic
Control System in New Zealand in 2000, 2001. Since that time we have had
not one loss or separation in oceanic airspace for the last five years.

The capacity has increased significantly within the system. It is done
obviously through technology, through automation, things that I think we
can do straight away. As the panelist said, we don\'t have to wait. We
as an industry must embrace these new technologies. We must also, I
believe, look to where we can buy, I would say, off the shelf. One of
the problems with that industry today is ANSPs love inventing their own
systems.

I\'ll tell you what, if I had my way, You would take all the engineers
out of the ANSPs and put them with the manufacturers because what we
tend to do is specify not only that we want a car that is a particular
model, we also say we want the engine size to be this big and we want
the piston size to be this big.

We fiddle with it and we end up with all these systems which may not be
interoperable, may have legacy issues, etc., so a couple of points in
there. Technology can drive safety and efficiency together but we must
continue to work together as an industry to standardize, to harmonize,
etc.

MR. MAY: Jim, you just got an offer to employ about another 6,000
engineers.

MR. MORRIS: Send them our way, please.

MR. MAY: What are the hurdles from the manufacturer\'s perspective or
just from your personal perspective? What are the hurdles to make in
this transition? Then I would like others to jump in on that point. We
all recognize the need. We all recognize there is technology out there.

We all recognize that we\'ve got to get going and have a transitional
mode to do it now. We have talked about the fact we don\'t have a whole
lot of time. We\'ve got great crunch of capacity in this system. What is
slowing it down if it is being slowed down?

MR. MORRIS: I think there are two areas that we can focus on. I think
the first is we talked a little bit about this incremental change. I
liken it to our lean journey in both our office and our factory where
when we look at production process we don\'t look at it in terms of
months or years. We look in terms of seconds and minutes. If we can look
at incremental change that it will take seconds and minutes and then
hours to improve our efficiency, we\'ll have huge, huge, benefits.

If you think about it, if we are able to take one minute off of the
flight time for every flight around the world, we would save \$4.5
billion a year in operational cost. Huge leverage for making small
incremental changes going forward. I think that is the key thing is that
we need to get on with it and make the incremental changes, look at the
requirements, and then use technology as an enabler rather than as an
end in itself.

I think the second thing which is going to be important for us is
harmonization of the requirements around the world. Many people say,
\"Do we have to do it?\" I think absolutely we have to harmonize other
requirements around the world. Is it going to be hard? Absolutely, it\'s
going to be hard. It\'s going to be hard work.

We strongly believe that it is necessary. We think it\'s important so
that we have original equipment, important so that we have a set of
requirements for retrofit programs. We are working very hard on many of
the committees around the world to facilitate harmonization. Working
with RTCA and PARC, with IATA and ICAO, FAA, Eurocontrol. Even Airbus,
you know, because it\'s important for our industry to go forward.

FAA I know has continued to push forward in the harmonization area as
well from both a multilateral agreements and bilateral agreements. I
think one good example of that is the NAAT, the North American Aviation
Trilateral, which came to an agreement on the requirements so we can all
upgrade together.

MR. MAY: Great. I think I saw a question in the audience. Please
identify yourself.

MR. UNDERWOOD: Yes. I\'m David Underwood of Aviation International News.
You spoke of incremental changes but the problem which Captain Ganse and
Captain Lee face is that they are not exactly incremental. We have got
now RNP but sitting out there in the sidelines is required
communications performance, big step. Big money for these people.
Somehow this is hanging over their heads because eventually they are
going to have to comply with it. Maybe a question for the JPDO is when
do we expect to have required total system performance established and
how can manufacturers, both OEM and avionics, start to prepare for those
situations?

MR. MAY: Piece of cake question for you. When are you going to have
required communications and the rest of the package?

MR. LEADER: Well, that is a complicated question to address because
there are so many different stakeholders in the process not only to make
the decisions up front but then to execute or implement along the way.
The approach that we\'re taking within JPDO and the FAA is to focus in
concept of what we want to achieve by 2025 but to focus initially on
what can be implemented in the next 10 years by 2016 because that\'s
when the capacity issues really become greatest.

It is that kind of horizon that is required to get certified the
equipment and the procedures that are going to be necessary to execute
that stage of the next generation system and to equip the fleet and the
airports with any necessary equipment. That is an ongoing process. That
is part of the planning that we are engaged in.

We have industry in state and local governments involved who are going
to be making the investment decisions on the equipment that is required.
We are comfortable that if there is the will on the part of the parties
involved that we can achieve the performance increases for both 2016 and
2025.

MR. MAY: Karen, from an operator\'s perspective what is your \-- what do
you need to know?

CPT. LEE: I know enough already. Honestly we know enough already. When
you talk about system performance, I think the JPDO has done a very good
job of defining what that is. The best part about it is it\'s not
defining how you are going to do something. It is defining at the end of
the road what you have to deliver in order to be able to operate in this
air space.

That brings it back to us to figure out the how which is really what we
are pointed at in Louisville right now trying to figure out the how.
There is tremendous work going on in a lot of different areas coming
back to that wonderful success in Atlanta and Dallas and how to use RNAV
RNP and existing equipment on the aircraft to put in predictability and
consistency in the system which reduces workload and is an application
of technology that Nick talked about yesterday to go from five crew
members to two and be very safe about doing so.

We are just taking an extension of that concept. I don\'t think we have
to have every i dotted and every t crossed on the plan at 2025. What we
know right now from our trials in 2004 we did two weeks worth of
continuous descent arrival trials. We did it without any supporting
technology in the cockpit. We were just astounded with the results.

We lowered our noise emissions below 3,000 feet by 34 percent and there
is an environmental component to all of this discussion that we haven\'t
touched on yet. We reduced our noise below 6,000 feet by 30 percent. In
course, by doing so we saved around an average of 350 to 450 pounds of
fuel per flight. If you just extrapolate that out over the Louisville
operation and we achieve continuous descent arrival procedures
throughout our whole inbound operation, we are looking at about a
million gallons or more of fuel a year.

Whatever the price is today it\'s a \$1.90 a gallon or \$2.00 a gallon,
whatever that is, push that out. When you take that same technology that
we\'ve got on the airplanes and apply it to us and ground operations so
that we can manage our queuing and meet ourselves on the outbounds, it
is a task that ATC doesn\'t need to do for us. We can do it ourselves.

We just need to deliver the aircraft to the ATC system all metered so
that we\'ve got a continuous flow going on there. We are looking at
around \$2 million a year in ground operations. We are applying that to
100 airplanes in a one in and one out a day, five nights a week. We
don\'t even operate seven days a week in Louisville.

If you put that into some of the top airports in the world in terms of
density and can achieve results that are anywhere close to that, you can
see what the economics are going to be. The big wall that we keep
running up against as in Battery Park is I\'m not going to equip until
you show me the benefits.

Folks, not to be controversial or anything but you go do your own
benefits analysis. Look at your operation. What would it save you if you
could take four fly miles at low altitudes out of your operation every
day. We have done that sometimes from 40 miles to the runway we have to
fly 50 miles, 55 miles sometimes because of the way our airspace is
constructed and we are constrained by that.

If we can remove those constraints, we feel we can cut six fly miles off
of that if we can implement the CDAs in high density air space. We know
what\'s required to do that. At the end of the trials we said we have to
do this. We have to do this to survive. We have to do it so that we can
increase the capacity at Louisville Airport. We think we can get
anywhere from 10 to 20 percent. The more pragmatic person in me says 15
percent.

That is an awful lot of packages arriving in the same arrival window.
Our urgency is there for that. We said, \"What do we have to do?\" The
thing that we had to do is get some spacing delegation moved into the
cockpit or control of our spacing moved into the cockpit because the
pilots can do it better than ATC can do it for us. In doing so it lowers
ATC\'s workload.

If we put the technology there, it lowers the workload for the pilots
and we can get the job done. In terms of what does it need to look like
in 2025? We know enough about that because of that flexibility and the
equipment that we are putting on the planes right now can grow to a
certain extent.

It won\'t take us all the way but it is going to take us so far down the
road and we\'ll make enough money off that that we can afford to buy the
next round. We are in good shape. We are confident and ready to go. Just
get out of the way.

MR. MAY: Very compelling case. Larry.

CPT. GANSE: I\'m going to pick up on that because it really goes back to
what I was saying earlier. We need the ability to use the equipment we
already have. Once we get that ability, and this is where we need the
help of the ANSPs and the regulators, we\'ve got to break some of these
barriers. Air traffic control was probably a mistake calling it that.

They should be called air traffic separators because that\'s really what
they do. We have the capability to move these airplanes more precisely,
more accurately, and do spacing better onboard the airplanes today than
they can do with their radar scopes that are getting 13 sweeps a minute.
It is just the way it is. We need your help, ANSPs and regulators, to
get the benefits of what we have now so that we can afford whatever it
is that comes up.

MR. MAY: Mr. Leader and then back to you, Jim.

MR. LEADER: I think the UPS story in Louisville is just a perfect
example of what it is going to require to get to the next generation
because the Joint Planning and Development Office can do all the
planning necessary but unless there are \-- it really comes down to
individuals in industry and government who are willing to take the
leadership and to make things happen.

What has been demonstrated with controlled descent approaches and with
the surface traffic management is proof of concept. Once the leaders
like UPS demonstrate that this actually does work and can actually
increase safety, I think others will quickly make their own business
case and start investing in the same kinds of operations.

MR. MAY: I think what UPS is doing and others are suggesting is air
traffic management, not air traffic control using existing technology.

Jim.

MR. MORRIS: I think more about the required total system performance. It
really will provide us a capability to do system engineering on the way
we operate our aircraft around the world because it will allow us to do
the systematic allocation of communication, navigation, and surveillance
performance requirements so that great tradeoffs can be done because the
future isn\'t about technology.

We are not specifying technology solutions like we have in the past
where we are specifying requirements so it can\'t be about technology.
It has to be about requirements and the way we fulfill the requirements
or use technology to get there and have that flexibility to trade off
between those three elements we\'ll be able to have much more efficient
operations.

MR. SMOUT: I would just add a comment that I fully agree with Larry on
the basis it must move from air traffic control to air traffic
management. We saw the other day Russ Chew put up some figures in the
ACTCA conference around the growth of traffic in the U.S. over the next
10 years and over the next 15 years. Clearly without automation we are
going to reach the limit of human factor capabilities. I am sure our
controllers would like nothing more than to become managers as opposed
to tacticians. We don\'t want to be on the playing field sort of
separating everybody. We would rather be sort of saying, \"There\'s 22
players on the field now and those are the rules and you guys fly by
them.\" I think we are all on the same page here. There is certainly a
maturity that has to come both in the cockpit and on the ground in terms
of how that is going to happen but clearly necessity will be the mother
of invention.

We are going to reach a point where resectorization and other options
are no longer enough so I think the industry is working as a whole.
There may be things like the fuel prices are a blessing in disguise
because they force us to things like continuous descents and all sorts
of things. They force us into those kinds of initiatives quicker than we
might otherwise have done.

I can assure you the industry, the ANSP industry, is on the same page
here and we need to keep this dialogue going. CANSO and EASA we are
talking very closely now about a whole range of different initiatives
around what matters to the airlines both in the short-term and the
long-term. It starts there. And also country-to-country dialogue so,
yeah, we are ready.

MR. MAY: Good. Questions from the audience? I want to make sure we are
satisfying your interest areas here in terms of all of the information
that is available. I think we have had a good discussion about that
transition phase going forward, what it is from a carrier perspective
you are challenged with what the manufacturer is putting into the
process. Charlie, you have given us a good sense of what you are looking
at. What are the demands that force this action as you would see it.
What are the metrics of demand going forward?

MR. LEADER: The metrics of demand on the system?

MR. MAY: On the system.

MR. LEADER: Well, there\'s multiple metrics. I think it depends on what
you are talking about. Many people are predominately focused on the en
route part of the system demand and think of it in terms of a factor of
whether it\'s going to be two or three times the current demand and what
year. Actually when you really get into it the metrics need to be much
more specific than that, specific to regions, specific to approaches to
particular airfields. It is just very difficult, I think, to generalize
except that whatever series of metrics you use we are clearly running
out of the ability to scale the current system in any metric to meet the
demand that we know quite clearly is going to be here in the near
future.

MR. MAY: Some have suggested that you need to scale up to two or three
times but others have suggested if you get that kind of demand without
making change, the system isn\'t going to be able to handle that anyway.
What from your perspective are the immediate near-term changes that need
to be made? What are you going to tell Congress when they come in as to
what has to happen first?

MR. LEADER: Well, we have to continue to execute what we are doing now.
The FAA has a 10-year plan for increasing the runway capacity at major
airfields in the country. That\'s a good thing and a large number of
runways have been added just in the last several years. We need to
continue to do those kinds of things.

I think Larry\'s remark about getting the most out of what we have today
ought to be the near-term priority because waiting for additional
technologies, new technologies, is not going to solve the very near-term
problem. That equipage has already been invested in. It is a known
quantity and we should make sure in the near-term that it can be
exploited to get the extra capacity that we know we need.

Jim.

MR. MORRIS: I think you look forward to congestion and what is that
going to do to us. We always talk about a safe and efficient air
transportation system and the safety is one thing that we can\'t ignore
about it is that this performance-based system is going to enhance the
safety. I think about RNP with the containment of the flight path, much
better than we have today.

I think about VNAV in terms of controlled flight into terrain, the
benefits that we get out of that. I think about day links and the
benefit for reduced workload for the pilots in the cockpit. And ADS-B,
the fact that we are going to have an assured separation much better
than we have today. I think as we get more airplanes in the sky there is
going to be a big improvement in our safety capability as well.

MR. MAY: Other comments? Larry, did you have a thought on that point in
terms of the demand equation?

CPT. GANSE: No, I mean, because I think it\'s a given. Europe is already
in crisis on the demand side with all their problems both at the
airports and en route. Northeast U.S. is probably that close in Southern
California. We just have to get on with it and we have to remove some of
the constraints. This idea of, \"I don\'t want to equip.\" You know
what? If you don\'t equip, you don\'t fly there. Look what happened with
RVSM. We waited and we waited and we waited until almost everybody was
ready but we paid a lot of fuel and money and wasted time in that. There
is plenty of precedent for doing that. Before RVSM we had MNPS on the
North Atlantic. If you want to play, you pay.

MR. MAY: I think we are at the point, Mr. Sabatini, where we have
covered this topic fairly exhaustively. I\'m going to suggest that
you\'ve got Nick sitting here and the administrator sitting down here.
As sort of a lost round-up, if you will, what is the message we want to
leave our policy makers from each of your perspectives? Start actually
with you.

MR. SMOUT: Okay. I mean, can I just perhaps speak briefly from the
international perspective \--

MR. MAY: Please.

MR. SMOUT: \-- as opposed to maybe the North American perspective. I
think what we are saying is that we, particularly CANSO, believes that
the -movement to a performance-based system or performance-based
navigation industry worldwide is happening. We have several beliefs
about the split from the service from the regulatory.

We believe government needs to get out of the business of running ANS.
We believe that government makes a very good regulatory function.
Government can be a shareholder and there is a whole range of models but
the day-to-day running of it if it\'s subject to political interference,
we find that you end up with sub-optimized outcomes. More and more I
think our membership is encouraging.

That\'s not to say that government will do a bad job necessarily but as
the speed at which adaptation has to happen, the speed with which the
ANS industry has to adapt to the needs of the airline industry happens,
we believe that is better handled by a group that is focused on the
efficient operation of the business as opposed to having all the other
political regulatory issues in the background.

Today the industry is a patchwork quilt. We have 180 different ANSPs
throughout the world. We heard earlier in terms of Italy the perspective
of that means interoperability is a huge problem. There is tremendous
over-investment in facilities in Europe. We have to start to look at
things like functional airspace as opposed to sovereign airspace.

The politicians have to accept that, particularly in Europe that
sovereign airspace is no longer an acceptable way to manage the system
and that functionality is the key issue. There are some tremendously
challenging issues for the industry. I suppose when I look back the last
five or so years we still do a lot of debating. We still find it very
difficult to make decisions, Jim.

I guess maybe it might be the issue that we need some sort of crises to
get these things going. 9/11 with all its tragic aftermath brought a
certain step forward and certain response rights. The fuel is doing
something else. I think the political aspect of our industry is one that
we need to sort out and put a distance between the industry and the
day-to-day politics.

That is our message. I think CANSO, we are committed to that. We have
benchmarking capabilities. We are looking at a safety matrix. We are
developing a global safety matrix so within our member organizations you
can understand how your operation is doing in comparison to others. We
have cost and efficiency matrices we are developing in conjunction with
IATA.

We are working closely with ICAO because we realize a lot of our member
countries are still at the stage of early development and developing
their regional planning initiatives and we can help with that. I believe
we can help both ICAO and IATA in that initiative. Those are some of our
philosophies, separate service provision and regulation, get governments
out of the business of running INS, and help the developing countries to
improve their performance management around safety and cost efficiency.

MR. MAY: Larry.

CPT. GANSE: I guess I certainly don\'t want to say anything unkind about
our host. I want to thank and congratulate the agency. I\'m in kind of a
unique position being an American working in the industry here in the
U.S. for many years and now finding myself in a whole separate region of
the world.

The FAA has a near-unique opportunity at this point in time. Along with
Eurocontrol, and I apologize. Earlier I said Cesar which is a
Eurocontrol initiative. Along with Eurocontrol these two entities can be
leaders, not directors, in bringing about much of what Ashley is talking
about. He said that you have 43 members?

MR. MAY: Forty-five.

CPT. GANSE: Forty-five members and 180 ANSPs. By my math that is 125 and
they are still out there going all their different directions. I would
urge the FAA and the other regulators that are present in this room to
look ahead. Don\'t be parochial. Find out what makes the system safe and
efficient.

MR. MORRIS: I think it is absolutely critical that we implement the
performance-based air transportation system in order to facilitate the
continued growth in aviation and all the things that it brings to this
world in terms of bringing people together, in terms of economic growth
globally.

As I look at it, the success factors are all the pieces working
together, the airplane equipage, the infrastructure, the regulations,
and the procedures and that is what is going to create value for each
one of us.

CPT. LEE: I think for my closing thoughts to our host today is that the
airborne application of ADS-B can get us very far very fast integrated
with RNAV RNP which we\'ve proven to ourselves that we can do that very
successfully. I would ask that we put some or continue to focus on the
airborne applications and the operational and safety benefits that they
are going to provide us.

Obviously we\'ve got a way to show the way in Louisville so let\'s
leverage that and get on with finishing up that suite of integrated
technologies and let the world come and view it and use that data and
information for their purposes. Then the second thing that I would ask
is that the biggest barrier I think that we face to getting into the
immediate benefits is the equipage issue.

Economics obviously plays a part in that. Many times in the conversation
it is the airlines can\'t afford it. Okay, I don\'t necessarily totally
agree with that when you are looking at safety because that is always a
tradeoff between the level of safety that you are going to buy and the
amount of money that you are going to spend on it, but I think we need
to look closer at that equation, particularly in the area of the surface
maps with traffic and the cost benefit ratio there.

Also from a holistic point of view we know that we can\'t allow too many
stragglers out there. The mix equipage environment keeps coming up. We
are going to be mixed equipage for a long, long time so it\'s a matter
of getting to critical mass. What is a critical mass where we could
switch an airport over to almost a full CDA type profile in high-density
arrivals?

What is that critical mass of equipage? Let\'s look at how many
airplanes that\'s going to take, how long will it take to get them
equipped, and then back up from there and figure out when do we need to
start. I mean a real business plan here, not a theoretical plan, \"If we
build it, they will come.\" Let\'s work on the equipage issue and figure
out how we are going to get the stuff on the airplanes.

MR. MAY: So, Charlie, I\'m not going to put you in the position of
trying to suggest to the administrator what ought to happen. As a good
Marine you\'ve got a firm sense of the chain of command. But turn the
question around from your perspective. It\'s easy for us to talk to the
industry reps to suggest to the government reps what ought to be
happening. From the JPDO perspective what do you want to tell industry
that they need to do to be better partners in this process?

MR. LEADER: I think they have to examine the potential of the next
generation system of performance based operations with much less
skepticism than they have. There has been a high level of skepticism and
a low level of really getting to understand the potential of what can be
done in the near term as well as in the long term.

Within FAA I cannot imagine how I could get more support from the
administrator or from Russ Chew to advance the NEXGEN system. When I get
outside into other agencies and Homeland Security and Defense are
clearly critical parts of the security of the NAS and of the overall
surveillance picture. This is not their number one priority and they are
skeptical about whether we are serious and whether industry is serious.
Industry is sitting back and saying, \"Is government really serious
about this because I have been burned in the past by investing in
equipage that I was not able to use.\" I think this was a topic you and
I discussed in our first meeting.

MR. MAY: We did.

MR. LEADER: At some point the performance-based operations will only
advance when individuals and companies both on the political side and in
the related aviation industry step forward and do things like are being
done in Louisville. Then JPDO can highlight that and become an advocate
for it. There is a clear business case that exist that shows that
something is happening here and that there is economic benefit for all
of us involved in using the NAS.

MR. MAY: I think to wrap it up from the moderator\'s perspective, at
least, the industry is ready for change. We may quibble a little bit
over what the perfect step might be but I think we are lead, follow, or
get out of the way, if you will. We recognize the extraordinary
challenges, the growth and demand in the system are going to provide. We
recognize the need for a steady assured funding system.

We recognize the need for some independence of thought and action on
behalf of the business. We are ready to move forward, administrator, and
we look forward to a continued partnership in doing that because I think
a performance-based NAS is absolutely critical to our future.

Mr. Sabatini, unless there are further questions from the audience, I
think we have fulfilled and it is my honor to ask the administrator to
come up and join us and be the closing voice in this really terrific
couple of days that you have put together. Thank you, sir.

ADMINISTRATOR BLAKEY: Well, I was just thanking Jim and our panel here
for a very excellent discussion because, I\'ll tell you, I was right
here in the front row taking notes so I think we\'ve all had a lot to
learn from this specific and so many of the other discussions over the
last two days.

The charge I\'ve been given is to try to wrap up with a bit of summary
of the discussion for the last two days, and I\'ll tell you it\'s very
hard because it was packed with an incredible richness of dialogue and
ideas that I think we have all taken a great deal away from.

I thought it was terrific that Secretary Peters was here to kick things
off right on her first month on the job and talk with us about her
commitment to the infrastructure and 21st century solutions for 21st
century problems.

Roberto Kobeh, we can\'t thank you enough, again, for your first
official trip from Montreal and ICAO being here to talk about safety as
a mindset and how important the plans you have for ICAO are going to be
for all of us as we move forward.

And Giovanni Bisignani, wasn\'t he great with a very provocative
discussion to really bring us around about the fact that this is not all
a simply horizon with a great dawn, you know, with the sun rising. There
are also some very significant clouds right here in front of us.

The plenary session yesterday that kicked things off with John Byerly
talking about every metric in the system shouting growth. And Roberto
Salvarani. When he started talking about the problems that he has seen
from the maritime industry invading aviation, flags of convenience,
it\'s pretty arresting when you really think about the safety problems
that implies in a lot of states.

Alvin Tuala from the Pacific Islands. When he talked about the real
world of those emerging countries that are trying very hard to use the
standards that are there, but it\'s not a question of standards. It\'s
also the people and the resources. Really quite extraordinary.

And then Bob Shuter talking about the question of what do we really mean
by these standards. Are they the best we can do or are we simply talking
about minimums? If you recall, this is where we began getting into the
discussion about prescriptive standards versus performance standards.
Sarah McCloud, one of our panelists, made an eloquent plea for simpler
standards as well.

So, you know, then you look at the question of data sharing and this
came across over and over and over in our sessions. Nick referred to the
fact that we are collecting right now, at least from the government\'s
standpoint, only about 5 percent of available data. 95 percent in the
hands of the MROs and manufacturers and operators. What are we all doing
with this data?

And the fact, and I think, again, this is one of those issues that came
up time and time again. Don Phillips raised it yesterday, in fact. The
issue of criminalization. It kept coming back because we do find that in
so many parts of the world we don\'t have a legislative framework that
really supports free and open data sharing without fear of
criminalization. There is a lot of energy behind that and support for
the Flight Safety Foundation\'s position and that of other international
organizations on that front.

Okay, did you like Elon Musk? The red planet invading our sphere. I\'ll
tell you, I have to confess that this is an area that I get tremendous
energy from, our commercial space work. I do think it is a very heady
combination of exploration and transportation eventually. Maybe
adventure travel now but it\'s not just intergalactic bungie jumping as
some would suggest. It\'s going to be something that more and more is
coming at all of us.

I\'ll take a few moments if I might on the four panels yesterday because
unless you all were able to do a better job than I did, you can\'t clone
yourself to be in all of those panels. I really did think some of the
discussion was absolutely marvelous. We had at the Safety Management
System Panel standing room only so you can tell what kind of energy
there is behind that topic.

You know, I think John Lauber did a wonderful job of making the
discussion on something that can be a dry and process oriented topic.
Very lively and provocative. There is a lot of discussion about the way
we are going about SMS and does it have to follow the development of CRM
which was done in a more fragmented piecemeal fashion.

Or can the international commitment that we see now really move this
ahead in a more seamless aggressive way? The fact that SMS not only
increases but supports an important business case for increased
efficiency and cost reduction. Yes, it\'s about safety but it\'s about
more than that.

I think it was terrific when you recall, too, about the fact that it\'s
more than just the system being designed because as Major Gorenc
suggested, it doesn\'t matter whether you lose a mechanic on the ramp or
an automobile as he leaves the plant. The key thing is that if you have
safety that is permeating your entire system, it has benefits that go
far beyond the work place itself. The fact that the military is very
committed extending SMS beyond the operations on the tarmac.

So there was a great deal that went on with this panel and I have to say
that I think, you know, people like Marinus Heijl talking about the
standards that are important in terms of, yes, they are important in and
of themselves but a lot of the implementation is where the issue is
about a tremendous amount of energy, too.

Airport safety. This was the first year in which we did a panel on
airport safety and, boy, that was interesting because there you really
had a wide variety of topics that represent the geographic diversity all
the way from Beijing to Teterboro to the United Arab Emirates.

Issues of birds, status lights, engineer material arrest system. We take
EMAS for granted in some of our applications as an alternative to the
runway systems that we have, the runway safety areas that we require in
this country, a lot of energy about what kind of technology it presents.

One of the things that I think was great, too, was the focus on
construction because as we see this huge growth around the world, how do
you manage an airport as a dynamic system with all of the shifts and
construction that can happen on literally a daily basis was very key in
this panel.

And Charlene Chow from Beijing talked a great deal about that and as
they push for the 2008 Olympics. It was also interesting that Ahmed Al
Haddabi of the United Arab Emirates talked about the fact that not only
do you have challenges in many parts of the world on that kind of
dynamic on the surface, but you are managing work crews which may speak
as many as ten different languages and come from 10 different cultures.
Those are safety challenges.

Maintenance and manufacturing. I\'ll tell you, Panel C, they had energy
from the get-go. In fact, I watched a few fingers being poked in chests
about, \"Don\'t you remember how we did it then?\" \"Yes, but\...\" So
it was great because we had some real veterans on that panel. I think we
found that it was a great discussion.

The consensus certainly was that chain of necessity is coming in
maintenance and SMS is a very important part of it. But as Ron Utecht of
TIMCO said, \"If it doesn\'t reach the mechanic, the technician, or the
pilots, it\'s going to be meaningless.\"

He also talked about the importance of standardized maintenance
programs. I think we all know that this is an enormous challenge in
terms of all the customization and all the boutiques that go on in the
maintenance arena that are costly, complicated, and don\'t necessarily
contribute to safety. And the fact that maintenance data needs to be
public and this is important.

Ray Valeika was even more direct. He said the answer is to fire all the
engineers. He said the system we currently have was created by the
existing personnel and the existing engineers out there and to try to
shift to a different culture. That was a somewhat tongue-in-cheek
recommendation but he did say, you know, we are going to have to face
the fact that there is going to be fundamental change for this work
force, as well as fundamental change for us as regulators as we\'ve been
followed.

But it is a dramatic change because the industry in the maintenance area
is projected to grow from a \$40 billion business to a \$60 billion
business in 10 years. No small thing. Right now we are talking about
17,000 jet aircraft and 11,000 of those are flown by organizations that
have fewer than 20 aircraft so when you are talking about maintenance,
how you gather and share data is very complicated.

The last panel, air traffic control services. Again, a very energetic
and great discussion. I think it\'s important to note that they made a
distinction very early on between privatization often being terms as the
same as commercialization. But the point of fact is relatively little
private capital actually going into air traffic services. But there is
considerable movement around the world toward separating air traffic
services from government and a lot of discussion about the benefits and
the relative tradeoffs there.

There was, I think, a good consensus that when considering the potential
conflict between safety, efficiency, cost effectiveness, these are not
competing interest in a privatized construct anymore than they are
within a public construct.

Victor Aguado talked about the importance of a separation of regulation
from the provision of service. I think there was a lot of consensus
again on that panel that this is important to address what is inherent
conflict of interest. Perceived or otherwise, but nevertheless,
therefore.

It was interesting because some of our providers, certainly NAV CANADA
and Wrenelle Stander from South Africa talked about a number of the
benefits that they have seen in being able to divert revenue to
investments on the safety front. There was a great deal of food for
thought there.

Now, moving to today, you were all here for the panels this morning and
the discussion so I\'m certainly not going to take you through those in
great detail because these were plenaries, but I have to say I very much
liked Robert Sumwalt\'s comment that safety culture is about doing the
right thing when no one is watching.

We have a similar sentiment in the FAA\'s flight panel and we do look at
it that way. It was also great when Vern Raburn said, \"God lies in the
data.\" I think that emphasis on the preeminence of data in these two
days there is no question about it.

So did we learn a bit about GA? I thought Phil Boyer\'s presentation was
terrific, particularly when he was talking about what is coming at us in
new technologies, the glass cockpit. Really some of the advances where
general aviation is leading the way in terms of a number of key safety
advances.

Yet, it is a very challenging arena, as we all know, because you do have
a lot of individual operators out there and, therefore, consistency both
in safety and other aspects of it. It is very difficult but it was a
terrific presentation to bring that all to the forefront.

Plus what the Air Safety Foundation is doing. I do hope people will take
advantage of a lot of the very hard work that has been done on the
courses and other information that is now right on the web. Certainly at
the FAA we work very closely with AOPA on those programs because we see
them as very valuable.

Then, of course, our panel that we have just enjoyed. I\'ll tell you,
Jim, I liked the sentiment at the very end, \"Industry is ready for a
change.\" I don\'t think there is any doubt about the fact that we all
see a performance-based system as being where we are going.

This is something that performance-based air transportation is a strong,
strong commitment on the part of the FAA and others in this room and the
specifics of how we get there and how we bring the kind of benefits that
Karen, for example, was outlining. How we recognize the imperatives from
a manufacturer\'s standpoint. All of these are things that we need to
bring to the forefront because we\'ve got some very tough decisions
about how fast we move.

I for one would like to run, not walk, but we are going to have to move
as a community and I think that is what is represented here on our panel
today. In closing, I simply want to thank you all for being here. You
know, it\'s interesting because I also get glimpses of side meetings,
agreements.

Groups are able to sit down together and work on specific issues. I am
very glad because we want the schedule and we want this occasion to give
that rare opportunity to work across boundaries, to work from one side
of the globe to the other on really common issues.

I want to thank you and I want to say simply that we are very grateful
for all the input as well as all of the ideas for next year because we
are committed to this and we do see this as being an area that is an
important way to advance safety.

With that in mind, I am going to turn this over to Nick Sabatini just to
wrap up on any of the final things. I suspect Nick wants to encourage
you to do your evaluation forms among other things.

MR. SABATINI: Thank you, Madam Administrator. There isn\'t much more
that I can add to those eloquent words. Thank you all to everyone and
certainly to remind you that we have a buffet lunch. It\'s up on the
second floor in the Fairfax Room. Again, thank you so much for your
active participation. It is what makes raising the safety bar exciting
and certainly very challenging. Again, thank you for your participation
and hope to see you again next year.

(Whereupon, at 12:19 p.m. the meeting was adjourned.)