UNITED STATES OF AMERICA

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DEPARTMENT OF TRANSPORTATION

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FEDERAL AVIATION ADMINISTRATION

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INTERNATIONAL AVIATION SAFETY FORUM:

\"LEADING TO NEW LEVELS\"

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GENERAL SESSION

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THURSDAY,

SEPTEMBER 23, 2004

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CHANTILLY, VIRGINIA

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The General Session was held at the Westfields Marriott Conference
Center, 14750 Conference Center Drive, Chantilly, Virginia, at 8:30 a.m.

[C O N T E N T S]{.underline}

[PAGE]{.underline}

Welcome, Nicholas Sabatini 4

Associate Administrator for Regulation and Certification, Federal
Aviation Administration

Opening Remarks

Norman Mineta 9

Secretary, U.S. Department of Transportation

Keynote Speaker

Marion C. Blakey 19

Administrator, Federal Aviation Administration

Panels:

Safety and the Bottom Line, Why

Isn\'t Safety a Profit Center?

Moderator Tony Broderick 33

Aviation Consultant

Panel Members:

WILLIAM B. ASHWORTH, Vice President of Operations, Goodrich Aviation
Technical Services, Inc.

JOE LEONARD, Chairman and CEO, AirTran Airways

JOHN MARSHALL, Vice President, Corporate Safety, Security, and
Compliance, Delta Airlines

RAYMOND NEIDL, Airline and Aerospace Analyst, Calyon Securities

DAVID NEELEMAN, Chairman and CEO, JetBlue Airways

Wide Area Augmentation vs Local Area

Augmentation: Which Is It?

Moderator Russell G. Chew 91

> Chief Operating Officer, Air Traffic Organization, Federal Aviation
> Administration

Panel Members:

PHIL BOYER, President, Aircraft Owners and Pilots Association

MICHAEL R. CRAMER, Principal Engineer, Flight Management Systems
Technologies, The MITRE Corporation

CAPTAIN GREG CRUM, Vice President, Southwest Airlines

J. KENNETH HIGGINS, Vice President, Airplane Validation and Flight
Operations, Boeing Commercial Airplanes

DAVID J. LINDSKOOG, Vice President, Flight Operations, ATA Airlines,
Inc.

BOB RACHER, Vice President, Safety and Air Worthiness, FedEx Express

Adjourn 138

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

8:40 a.m.

MR. SABATINI: Good morning. Welcome to the first annual FAA
International Aviation Safety Forum. I hope you had a wonderful time
last night at the reception at the Air and Space Museum.

(Applause.)

MR. SABATINI: What a wonderful and fitting venue for kicking off such an
event. What a privilege and pleasure to host so many people who do so
much to make air travel as safe as possible.

And it\'s a great pleasure to host an event made possible by the hard
work of FAA staff and the gracious support of our cosponsor, the Air
Transport Association, and of our sponsors AirTran, Airline Pilots
Association, AirBus, APCO Worldwide, Bombardier, Embraer, General
Electric, JetBlue, and the National Business Aviation Association.

(Applause.)

MR. SABATINI: We have an impressive array of international safety talent
here today and we\'re looking forward to high level and provocative
discussions.

To save time, we\'re introducing our panelists in print. In your
registration package, you\'ll find a booklet with the biographies of
today\'s speakers, listed in their order of appearance in today\'s
program.

If you have any questions today, there are several FAA staff members on
hand who will be happy to help you. If you need airport transfers,
please check with the hotel desk.

And we are documenting today\'s proceedings and will be making them
available to you.

Most important, there are evaluation forms. And no one leaves unless you
fill them out.

(Laughter.)

MR. SABATINI: And it\'s in your registration packet. Please take the
time at the end of the day to fill these out.

This is an annual conference. There will be another next year and we
want to make it as valuable for you as we possibly can. Drop the forms
in the drop box just outside the Jefferson Room.

Now there\'s one more administrivia that I\'m supposed to give to you.
It\'s not here in my notes and I\'ve been told that I need to tell you
where the lavatories are located. I think you will find those on your
own if you are in need.

Enough of what a friend calls administrivia. Let\'s get to the real
reason why we\'re here. And that is to talk about safety.

So let me start at the beginning and thank you for what you do for
safety. And what you \-- what we have all done is nothing short of
remarkable. Just months into the second century of powered flight, look
at what the aviation community has achieved.

Here in the United States, the commercial accident rate is a record 0.22
fatal accidents per 100,000 departures. And worldwide, fatal accident
rates continue to improve. Globally, air travel is the safest form of
transportation. Just look at how far we\'ve come in just one century.

Yes, aviation is an incredibly safe way to get from Point A to Point B.
But we know we can and we must make air travel safer. The public expects
nothing less than a continuing decline in the accident rate. The
question then is how do we do that?

And that\'s the idea behind this conference, bringing the best minds in
aviation safety together, putting together a provocative program, and
placing the key issues on the table.

It\'s also in these gatherings where we establish and build on the
relationships that are so essential to success. Two weeks ago, Klaus
Koplin was in Washington for his last meeting with the Commercial
Aviation Safety Team. As you may know, Klaus retires from the Joint
Aviation Authorities in just a few weeks.

He came to the FAA and met with my executive team. Klaus spoke about the
good work that we have done together over the years, the challenges we
still face, the work yet to be done.

But where Klaus paused, where he gave his words special emphasis was
when he talked about relationships. No one makes air travel safer alone.
Aviation safety is truly a team sport. And we have the full team here
today.

Now this morning\'s first speaker is known for many things. He\'s known
for a long and distinguished career in public service starting as a
member of the San Jose, California City Council and serving as Mayor of
that city and then representing his district in Congress only to have
all that followed by his serving his nation as Secretary of Commerce and
then Secretary of Transportation.

Our speaker is well known for his service to his country in setting up
the Transportation Security Administration following the terrorist
attacks on September 11th. He led a team that met 36 mandates set down
by Congress to make air travel more secure. We at the FAA were proud to
support the Department on that effort.

Our speaker is also known for chairing the National Civil Aviation
Review Commission or NCARC as it has come to be known. NCARC produced
its report in 1997. Now this report is almost singular in government. It
has many recommendations. It has good recommendations. And almost to a
one, they are being followed.

The NCARC Report was in two parts, one on funding the nation\'s aviation
programs and the other on aviation safety. So let me focus on safety.

NCARC called for prioritizing safety efforts, for using data for setting
these priorities, for setting goals, for establishing performance
measures for quantifying safety success, and for strengthening
government and industry partnerships.

And the report provided some very specific, articulate, and helpful
recommendations on how to do these things. Mr. Secretary, the NCARC
Report has been a template for us at the FAA.

And I want you to know that to many people you may be known as Mayor or
Congressman or Mr. Secretary but to me, as someone who gets up every day
asking how I can make air travel safer, in addition to Secretary, you
will always be known as Chair of the National Civil Aviation Review
Commission. What a wonderful blueprint for reducing the accident rate.

And let me quote one sentence from the report. It\'s on page 12 and it
says, \"The FAA must take the lead in promoting safety through
collaboration as well as compliance.\" That\'s exactly what we\'re
doing, sir.

And it\'s my honor and privilege to introduce the Secretary of
Transportation Norman Y. Mineta.

(Applause.)

SECRETARY MINETA: Nick, thank you very, very much for your very generous
introduction. But more importantly, I would like to thank Nick for his
abiding commitment to aviation safety for more than 25 years with the
Federal Aviation Administration. And we thank you very, very much as
well.

(Applause.)

SECRETARY MINETA: Thanks to all of you for that very warm reception and
more importantly for, again, taking time from your own busy schedules to
be here at the first International Aviation Safety Forum. And I cannot
express how encouraging it is looking around the room and seeing so many
leaders from around the globe representing every facet of aviation. And
what I find so heartening is that you have gathered here today to focus
on safety.

Safety is a subject that is near and dear to my heart. It is the highest
transportation priority for the President of the United States. And it
is also a subject that is central to the future of aviation.

The first fatal airplane crash occurred just a few miles up the Potomac
River from where we are meeting today. It happened 96 years ago. Orville
Wright was piloting a test flight at Ft. Meyer, Virginia. And the
airplane went down.

And his passenger, Lieutenant Thomas Selfridge, died three hours later.
It\'s sometimes easy to forget how fragile those early aircraft were and
how far we have come.

Aviation enters its second century with an enviable safety record. The
commercial accident rate in the United States over the last three years
has averaged less than one-quarter per million departures. As Nick said,
0.22 fatalities per million departures, the lowest that it has ever
been. Fatal passenger accidents have been reduced to one for every 15
million flights.

Now Nick spoke of the work of the National Civil Aviation Review
Commission. And having had the privilege of chairing that Commission, I
know a bit about it. And although the Commission\'s report was released
seven years ago, what it said holds true today and I quote:

\"Aviation safety is achieved through the combined efforts of
manufacturers, airlines, unions, and the government. Promoting safety in
an efficient aviation transportation system is, and must continue to be,
the FAA\'s and industry\'s top priority.\"

By working together to put many of the Commission\'s recommendations
into practice, we have succeeded in driving down an accident rate that
has been stubbornly stable for some 25 years. That\'s impressive. But we
are not finished.

In fact, if I might take a personal point of privilege at this point, if
David Traynham is here, I\'d like to have David stand. David was our
Executive Director of that Commission. David?

(Applause.)

SECRETARY MINETA: Industry and the FAA are working together to identify
and understand safety trends and to determine where we should
collectively apply our resources. Cooperation is critical in providing
data from air carriers and their employees. And this information is
driving improvements in training, in operation, and maintenance
operations, and in air traffic procedures.

The data is facilitating the shift from command and control regulation
to risk management working with industry to identify risks and
anticipating potential safety problems so that we can prevent accidents
before they happen.

Now the aviation industry and the federal government are investing in
safety enhancements based on the data. And these investments have the
potential to significantly reduce the fatality rate in commercial air
travel.

We are harnessing technology and converting it into more usable capacity
in the air space system and even higher levels of safety and security
using, for example, state of the art global positioning system
technology.

Now today our safety programs at the Federal Aviation Administration are
guided by a strategic plan. And they are oriented toward measurable
performance goals.

Now President Bush insists on results and we are delivering. And I
believe that a major reason behind our success is that the President had
the foresight to appoint a proven leader with a very strong safety
background to head up the Federal Aviation Administration.

And Marion Blakey, we thank you very, very much for your dedicated
efforts on behalf of the traveling public.

(Applause.)

SECRETARY MINETA: Seven years ago, when we undertook our comprehensive
national review, we did so with the clear recognition that the future of
aviation is tied to the safety of aviation. That point was driven home
sharply in the aftermath of the horrendous terrorist attacks of
September 11, 2001.

Following those suicide attacks where civilian aircraft were used a
weapons demand dropped like a rock. And the message could not have been
more clear. If the public does not feel safe flying, the public will not
fly. Demand in the industry is elastic and even a remarkably low
accident rate of 0.22 per million departures cannot counteract the
impact of a single catastrophic crash.

Whether an accident or an attack, the public sees the dreadful image
repeated over and over on every news program and on the front page of
every newspaper. Their confidence can be badly shaken.

Regardless of the cause, the impact reverberates throughout the
industry. It doesn\'t matter whether the crash was an accident or the
result of a deliberate act of terrorism such as we saw on 9/11 or,
again, in Russia just this last month.

In today\'s world, safety and security are tightly interwoven and
integral to the health of the industry. The stakes are high, very high.
And our tireless efforts on both the security and safety fronts over the
past three years have enabled us to turn the corner and regain the faith
of the traveling public.

Passengers are returning to the skies in record numbers. And by the end
of the year, we expect to be back at a pre-9/11 operating level at 15
major U.S. airports, including eight of the top ten. And while this is
clearly a transitional period for the industry, one thing is certain,
nothing is more important than safety to the industry\'s ability to
ensure the continued vitality of our air transportation system and its
ability to meet the growing transportation demands.

As we look forward, the growth that is expected in aviation is
staggering. This is true by virtually any measurement you might consider
from passengers to operations to air cargo. And we\'re looking at
threefold increases in the next 25 years.

And each of us in this room has a stake in ensuring the system\'s
wherewithal to accommodate whatever increases in demand our growing and
robust economies place on it.

Aviation today cannot be separated from the success of our global
economy or from our quality of life. So while we can all be proud of the
tremendous progress that has been made, we also must recognize the need
to take it on to the next level.

We cannot think in terms of safety versus growth. We must continue to
innovate. We must continue to collaborate. And we must continue to
improve the way that we do business so that we can achieve both

Which brings us to the focus of today\'s forum, the FAA\'s first ever
International Aviation Safety Forum. Under your leadership, we have
already achieved the lowest accident rate in history. And this
achievement has been dependent on working with the global aviation
community to make a safe air transportation system even safer. And we
want to continuously and constantly raise the bar.

Now this forum provides an opportunity for government officials and
global aviation leaders to have a productive and provocative exchange of
ideas. It is an opportunity to build on current partnerships and to
develop new ones. And it is imperative that we challenge ourselves
individually and collectively to see where we can go further to make
even greater safety gains.

Can we do better? I am confident that we can. Indeed, we must. And with
your help, we will.

Again, thank you for traveling such long distances and taking time from
your own busy schedules to be here. I appreciate very, very much your
shared commitment to continue reaching still greater heights in aviation
safety and its system. You are truly helping America and the world
travel safely.

Thank you very, very much.

(Applause.)

MR. SABATINI: Thank you, Mr. Secretary. As always, beautifully stated
and to the point.

And now to frame the discussion we\'re going to have today about the
safety challenges we face, it\'s my pleasure to introduce our next
speaker.

Let me tell you about the first time I met Marion Blakey. She had just
been named Chairman of the National Transportation Safety Board
\[NTSB\]. I had just been named Director of the FAA Flight Standards
Service.

One day I was at the NTSB meeting with Member John Goglia. John said,
\"Why don\'t I introduce you to the new Chairman?\"

Well, it was her first day on the job but John seized the opportunity
and the new Chairman, being the gracious lady that she is, fit me into
her schedule. I was Marion\'s first official FAA visitor.

(Laughter.)

MR. SABATINI: At that first meeting, I learned that our Administrator is
astute, intelligent, and intensely committed to safety, intensely. I
knew right away that we shared a passion for safety. Little did I know
how much more we would have in common.

In less than a year, in September of 2002, the Senate confirmed her as
President Bush\'s choice to lead the FAA. Since then, of course, I\'ve
had the opportunity to learn even more.

One of the most important things to know is this Administrator believes
in setting goals. She believes in laying out strategies to achieve them.
And she believes in thoroughly measuring performance. She has brought
clear vision to the FAA as well as rigorous discipline.

And everyone who works in the Regulation and Certification Organization,
from aviation safety inspectors, to engineers, to flight surgeons, and
more, everyone benefits from the Administrator\'s experience heading the
National Transportation Safety Board.

She knows firsthand the importance of our work. And the potential
consequences if we don\'t get it right. She\'s been there.

Our Administrator also brings a depth of political understanding to her
position with her background at the Department of Transportation and the
Department of Commerce. Two years ago when Administrator Blakey joined
the FAA, the industry was troubled. And yes, it still is.

But I was greatly encouraged when, in her first FAA speech, she told the
United States Chamber of Commerce as far as safety and efficiency and
the recovery of this industry are concerned, simply put I believe the
most important the FAA can do is do our job and do it extremely well.

Extremely well, that is the standard that is under this Administrator
and that is the standard we strive to live up to each and every day.

Ladies and gentlemen, it is my great pleasure to introduce the
Administrator of the Federal Aviation Administration and my boss, Marion
C. Blakey.

(Applause.)

ADMINISTRATOR BLAKEY: Thank you, Nick, for that very gracious
introduction and I also have to say a special thanks to Nick and his
team for pulling off this conference. It\'s really easy to say first
ever. But guess what? When you\'re starting from scratch, guys, you know
there\'s a lot of life involved there.

And I have to thank the Secretary for his backing and support. This
Secretary has always been all about safety. And he was very much behind
us on this from the first day. So I do want to say thanks to both of
them on that count.

And I also want to thank all of you for coming. You know, I know it\'s
not easy when you\'ve got lots of things in front of you. And these are
tough times from the standpoint of the industry. Another meeting,
another conference on budgets that are stretched awfully thin for folks
that don\'t really have the resources right now to extend.

You all are terrific to be here because I do understand this represents
an uncommon commitment, an uncommon vision on your part in coming
together with us on this.

Now you know as I look around, I see 350 decision-makers from more than
a dozen countries here. It\'s impressive. It\'s a terrific affirmation
of our common commitment to safety.

It\'s been a long time since we\'ve had a conference like this,
especially one with a real all-star cast. And that\'s what we\'re
looking at.

And so I want to say that considering the agenda, considering the people
involved everyone of whom could keynote a conference on the issues
they\'re addressing on safety, we are very, very grateful to you all for
coming together with us, again because of an uncommon vision.

Now we all know that we\'re at a remarkable point in the safety of
aviation. The Secretary was very eloquent in sketching out the
achievements. The safest three-year period in the history of commercial
aviation, you know it\'s often said that we\'ve harvested the
low-hanging fruit and we\'re reaping the benefits of that. Well, as I
look around this room today, I see a lot of folks who worked very hard
to make that happen. And it didn\'t seem like low-hanging fruit back
then, did it guys? But, you know, it did get us to where we are.

And we should be very rightly proud. So in assessing this journey
that\'s in front of us, I\'m reminded of the story of a college
professor. The professor had prepared a test for a graduating class of
seniors. Needless to say, they were all nervous. It was the last big
exam.

The professor divided the test into three sets of questions. The first
set was the hardest. The second set was hard but not as hard. And the
third set was the easiest. Students were extremely pleased because they
got to pick which set of questions they were going to answer.

When the test was done, the professor graded the papers on the spot
without ever reading the answers. The students who chose to tackle the
hardest set were awarded an A. The ones who tackled the middle set, they
got a B. And those who chose the easiest, they got a C.

As you can imagine, two-thirds of the class was outraged. They demanded
of the professor to know what was he thinking. What was this all about?

And the professor looked over the rim of his glasses and he said, \"I
wasn\'t testing your knowledge. At this point, I know you\'ve got that.
I was testing your aim.\"

Now that\'s my message this morning. We\'ve got to aim high. There\'s no
doubt that the group in this room has got the knowledge. No doubt we\'ve
got the commitment. What\'s key here is not only that we aim high but we
focus that aim on what matters most. And we agree to tackle the tough
ones for safety with an uncommon vision.

So where are we now? I\'m convinced that we\'re at a tipping point in
aviation. Passenger confidence is returning post-9/11. Activity is up at
some of our biggest markets. And, you know, with the tide that is
washing toward us right now, we\'re going to have to do more about
safety.

There\'s no question that the current bankruptcies and great financial
difficulty of our industry are a very bitter pill, a bitter pill for an
industry that still represent almost nine percent of America\'s gross
domestic product.

International markets are also showing tremendous increases as well. And
they\'re changing the face of aviation abroad.

The World Bank has attributed nearly 1.4 trillion dollars of the
world\'s gross domestic product to aviation. And when you look around,
airports like Amsterdam, Madrid, De Gaulle, Bangkok, they\'re all back
to pre-9/11 levels right now.

By 2025, China is going to be second only to the United States in
overall aviation air traffic. That\'s pretty impressive.

And actually the accident record, our safety record all around the world
is in the right direction, too. Fatal hull losses are down 60 percent
worldwide. One of our panels is going to discuss the approach that says
look, we\'re already headed in the right direction. Let\'s just keep
riding this wave. We\'re doing fine.

I\'m pretty sure that particular debate is going to kick it up a notch
or two. But with all of this said, I think we all know the question is
how to be ready for this wave that\'s coming at us. And I\'m hopeful
that this conference will serve as a forum for us to raise and consider
the really tough questions and to be a catalyst for action.

This conference is a first for the FAA and for aviation. And we\'ve all
been to dozens of conferences on aviation, almost all of which do
consider safety. We have lots and lots of meetings at the technical
level. We wrestle with safety questions week in and week out. And don\'t
get me wrong. All of those meetings are very important.

But what makes this gathering a bit different is that we\'re now
focusing exclusively on safety. And we are here not only to tackle the
tough questions and seek the consensus because you all are all the
decision-makers, manufacturers, airlines, repair stations, foreign
governments, safety groups, our industry associations, we have the right
people in the room today.

We all know that safety is more than just no accident. We know that in
order to raise things to the next level, we\'ve got to take steps
together. Just like with the professor\'s exam, in order to score the
most points, we\'ve got to tackle the toughest questions.

For example, we\'ll no doubt find that the bottom line on safety is
going to be a compelling discussion. Tony Broderick tells me that he
expects the panel to raise some pretty provocative questions. Why don\'t
we see investing in safety as a direct contribution to the bottom line?

The role of the CFO \[Chief Financial Officer\] effecting safety
decisions has a broad reach across a number of our panels today. But we
all share a concern simultaneously about the health of our industry. My
question is it\'s not how much does it cost to increase safety, it\'s
what is the cost if we don\'t.

I also think we have to look at navigation, moving toward a
performance-based NAS \[National Airspace System\] is a major step. RNP,
required navigation performance, is a concept that comes to mind right
away. It allows everyone to use all the tools. And, again, important in
these times, all the tools that are often already in the toolbox.

As you know, RNP provides not only lateral guidance but vertical
precision guidance as well. And when you think about the fact that RNP
reaches all domains of flight, in route, departure, arrival, it\'s an
operational concept that I think we really should embrace.

I think the capacity and efficiency benefits have been obvious and
discussed a lot. But the safety angle is something with RNP that we
really should be stressing. In places where you can\'t get conventional
procedures, RNP offers real savings as well thinking about tight
airspace, places like Kennedy, LaGuardia.

With this in mind, however, another question pops up. The investment
we\'re making in RNP is receiving support across a wide berth. Airbus
and Boeing both support it. It\'s being embraced in Europe, Asia, South
America, our neighbors to the north in Canada.

The issue here, though, is that there are those of you who think that
we\'re not being aggressive enough about RNP. Now I ask you, is the
perfect the enemy of the good here? It\'s a question in my mind.

With RNP, we can operate in narrow airspace, reduce vertical clearance,
provide guided missed approach procedures with precise guidance. That we
can.

Some of our industry partners insist that we implement all of these
capabilities with each new procedure. I understand your concern that the
optimum may never come. We\'ve had that experience a lot in aviation.
But is it worth waiting until we have the maximum capability right now?

We need to get operational experience. We need to move forward in a
progressive manner. Perfection can be an inhibitor for progress. So as
they say, let\'s talk about this today, okay?

Let me talk for a minute about another piece of the navigation puzzle as
well. There\'s no one size fits all navigation concept out there. But if
we\'ve learned anything, we know that the government does not have a
blank check for aviation. Never has, never will.

So how do we balance very finite resources in terms of WAAS \[Wide Area
Augmentation System\] and LAAS \[Local Area Augmentation System\]? The
panel puts it pretty bluntly. Which one should we buy? The international
ramifications to that question are substantial. And I\'ll be very
surprised if the manufacturers in this room don\'t raise some real
questions in a pretty loud voice on this one.

LAAS continues to enjoy the support of some of the airlines, cargo
carriers, but at the same time, we know that there are substantial
technical obstacles in front of us.

The FAA has a research program going right now to refine our
capabilities in terms of CAT I \[Category I\] operations. CAT II
\[Category II\] and CAT III \[Category III\], it\'s further out there in
terms of development. But let me call to your attention something else.
It\'s darned expensive. A hundred and sixty systems over a 20-year life
cycle, we\'re estimating over a billion dollars so we\'ve got to think
about that.

And WAAS was commissioned over a year ago. I\'m looking at Phil right
now. I remember when we celebrated, Phil, it was a big deal.

The development of new instrument procedures is continuing. And GA
\[General Aviation\] loves it, am I right? But to achieve maximum
benefits, like all new technologies, we have to recognize that WAAS also
is expensive. It makes for a tough choice.

Here\'s the issue. How do we balance cockpit automation that relies on
GPS with providers such as the FAA in our ongoing work in installing
ground-based NAVAIDS \[Navigational Aids\]? What\'s the best mix? I\'d
really like to hear your thoughts. We can\'t do everything.

I\'m often asked what are we going to turn off? I was talking with
Merlin Pruce last night about the fact that Canada\'s taking steps to
turn some things off. In this country, we\'re not.

Using data more effectively, that\'s equally a controversial issue. We
need to do it to improve on a safety record that\'s already excellent.

The panel heading suggests that the information sharing we\'re talking
about here is truly the next safety frontier. And I think that\'s
absolutely right. ASAP \[Aviation Safety\
Action Program\] is catching on. We\'ve now got 36 carriers that have 57
programs covering pilots, mechanics, flight attendants, dispatchers.
Thirteen airlines have FOQA \[Flight Operations Quality Assurance\] now.
We\'re very proud of that.

And, in fact, I think we need to take another big step. Aviation
rulemaking committees agree that the objective and the subjective data
we\'re gathering from those two programs needs to be shared and it needs
to be integrated. Without that, we\'re not going to be able to see the
national fleet and geographic trends, the huge advances when that all
takes place.

I think we need to move to a place where everyone\'s data can be
de-identified and aggregated. And it then needs to be available to
everyone on a secure network, perhaps with limited access. That\'s fine.
You can\'t just identify a trend, however.

It\'s a very important thing to say without this kind of overall data,
we won\'t be able to see the big trends. We\'ll only be able to see what
may be a center. Except you won\'t know for sure. It\'s another place
where tough decisions come in.

These are tough economic times. And if we\'re not really sure about what
the cause of the problem is, if we can\'t go to that kind of macro data,
or maybe we don\'t know that X is, in fact, really a problem, maybe we
shouldn\'t invest in it.

Maybe we should be putting our money elsewhere. Again, this is a case
where the CFO steps in. And if we don\'t have empirical data, I think
it\'s a much tougher point to argue.

But the sticking point, from my perspective on data sharing, is time. We
needed to be doing this five years ago. Timetables say we can implement
this over the next five years. That strikes me as just too slow. We can
do it now. And if we move forward, we\'ll see some real breakthroughs.

You know with respect to data sharing, I\'m glad to see we have such
great international representation on that particular panel because
safety is an international issue. And with the sharing of information
that will increase safety, this needs to happen on an international
scale.

Giovanni and I have talked about this a lot. And I think it\'s going to
be very exciting if we can all move out together on a global basis.

Okay, finally, what about tomorrow? I\'m talking about a lot of things
that are pretty real world and immediate right now. It seems likely that
the X prize could be awarded in just a few days. None of us know, but it
looks likely. We\'ll have to see.

You know Burt Rutan was going to be here. I talked to him about it and
he was quite excited about this conference. But we\'re actually paying
very few of our panelists ten million dollars to participate.

(Laughter.)

ADMINISTRATOR BLAKEY: So he decided to go out and stay on schedule to
make history instead.

The X Prize raises another issue all by itself. How are we going to
incorporate sub-orbital flight into our airspace? Heavies, bizjets,
microjets, cubs, and now rockets with passengers onboard? Guys, it\'s
coming.

That\'s going to require some very complex artwork on the part of our
airspace. And it\'s going to require some real artistry on the part of
you all in your schedules as well when this all starts.

These are uncharted waters. When Amr El Sawy of MITRE says we don\'t
know what we don\'t know, he\'s right. There are any number of issues on
the plate we call tomorrow.

But we\'re going to have to tackle the tough questions we know today if
we\'re going to move away from the experience all too many of us in this
room share and that\'s the infinite pain of standing at the edge of a
major crash site.

The flight of American 587 comes to mind. It ended 150 seconds after it
took off from JFK just about four years ago. The smell of jet A, the
image of tons of twisted metal still remains all too clear.

But with the brainpower we\'ve got in this room, those types of
accidents are not an ongoing inevitability. I\'m convinced we can
anticipate and eliminate those accidents before they ever occur.

So how are we sure we\'re on the right path of this journey? Let\'s go
back to where I started. We\'ve got to aim high. We\'re in the middle of
the safest period in commercial aviation specifically because we work
hard together at identifying these issues, thinking them through, and
then coming to consensus on how to solve the problems at hand.

The panels today are a clear indication that we\'re willing to tackle
the toughest set of questions the professor has to offer. We\'ve got to
continue to do so.

There are lots of different viewpoints, I understand that, pro and con.
But each of our panelists is pushing forward for improvement, for
safety, for efficiency. And, yes, most importantly for that kind of
consensus for safety that will make all the difference.

We are at a tipping point. The discussions we\'ll have today I think
will help us tip in the right direction. One thing is for sure, raising
safety to the next level is up to all of us but we\'ve got to do it
together. Aim high.

Thank you very much.

(Applause.)

MR. SABATINI: Thank you, Marion. Again, beautifully stated and as always
on point and right on target.

So, let\'s get to it and start with Tony Broderick, a dear friend and
colleague, mentor. And the panel on Safety and the Bottom Line, Why
Isn\'t Safety a Profit Center? Tony?

MR. BRODERICK: For those of you standing in the back, there are a number
of seats down here in the front. So you\'re welcome to come join and be
more comfortable.

Good morning, ladies and gentlemen. With me today are five really good
panelists. Let me introduce Bill Ashworth, who is Vice President for
Operations of Goodrich Aviation Technical Services, Joe Leonard, who is
Chairman and CEO of AirTran, Ray Neidl, who is an Airline and Aerospace
Analyst with Calyon Securities, David Neeleman, who is the CEO and
Director of JetBlue Airways.

And unfortunately today, neither Captain Alex DeSilve from Singapore nor
Mike Palumbo could attend. Alex had a family emergency that he had to
deal with but Mike was good enough to ask John Marshall to sit in for
him. And he has agreed to do so. And John is the Vice President for
Safety, Security, and Compliance at Delta Airlines. And he also happens
to be the industry Vice Chair of the CAST Program, the Civil Aviation
Safety Team.

Our panel has about an hour to begin the forum. And our central theme
revolves around safety and the bottom line. The FAA asks the question
why isn\'t investment in safety initiatives seen as a contributing
factor to the bottom line? That, of course, assumes that safety is not
seen as contributing to the bottom line. And I\'m not sure that\'s true.

To paraphrase Fred Kahn, though, who said this at an interview published
just last week, the airline industry used to be a great romance for most
people. It\'s not a romance anymore. It\'s a business. And it should be
subject to the same economic pressures as any other industry.

Given that comment, is safety something that can make money for an
airline when the investment cost is considered given the accident rates
that are so low today? It\'s an interesting question.

The FAA promotes voluntary safety programs on the part of airlines and
industry, programs that go over and above the regulatory minimums. But
this is a time with both extraordinarily good airline safety records, at
least in North America, Europe, and Austral-Asia and extremely tight
discretionary resources on the other hand.

To achieve these new safety heights, relying on minimum safety
regulatory requirements is just not enough.

FAA promotes aviation safety by setting minimum standards and
regulations. But the law notes that the duty of the airlines is to
provide their service with the highest level of safety. I think those
who wrote the laws saw the FAA regulations as a sort of safety net to
ensure the safety of those airlines who did nothing more than meet the
minimum regulatory requirements.

But the laws\' authors also expect the airlines to do more than that, to
strive for the highest standards of safety. Industry resources are
limited perhaps more now than every before.

So let me begin the panel discussion by asking the following question.
When an operations staff finds a new program or an aircraft modification
that is not required by the FAA, but which they believe will contribute
to improved safety at the airline, what do they have to do to convince
those in the decision-making role to make the investment, even though it
will not increase revenues and it will not reduce costs?

How do you weigh this kind of expense among all the other competing
needs of the management team at an airline? What does it take at an
airline to get the approval for discretionary investments in safety?

Joe, why don\'t you start off?

MR. LEONARD: Okay, thanks.

(Laughter.)

MR. LEONARD: Well, first of all, I\'d like to say to the basic question
there\'s no question that safety has a direct impact on profitability.
Or stated a different way, lack of safety has a huge impact on lack of
profitability.

As the Secretary stated, after 9/11 traffic was off in excess of 20, 25
percent. And while the traffic has returned, the revenue has certainly
not. The revenue is still considerably lower than it was prior to 9/11.
So safety has a direct impact on profit.

There\'s always a dilemma in any organization, whether it be an airline
or the FAA or a manufacturer, where you have a certain group of people
that see the sky falling every day and are warning about safety
ramifications hundreds of times.

And so when you judge what they request, it doesn\'t come with the same
credibility as somebody who comes in with a very logical case and says
if we do this, we will be safer. You obviously put a lot more credence
on the latter than you do on the former.

And it\'s a dilemma because the former maybe right occasionally. But
they\'re wrong so many times that their credibility \-- and so that\'s
something as managers you always have to try to deal with.

And you try to get second sources and that sort of thing. Or you call
the outside consultant to come in and verify it as a way of getting
around that. And we do that regularly.

I\'ll give you one case in point and it starts with the philosophy that
we want our captains to be flight managers. They\'re not just flying
from the left seat. We expect them to manage their flight, to be
involved in every aspect of it. So that\'s the philosophy that we start
with.

And talking about that, we say we want to make sure that anybody that
moves into the left seat is ready for it. And so our Flight Operations
Department went out and came back and made a recommendation. In fact,
they didn\'t recommend, they just did it.

The FAA requires 25 hours of IOE \[Initial Operating Experience\]
experience for new captains. And that can be reduced based on the
experience and qualifications and experience of the captain and the
system they\'re flying in.

In our case, we require 50 cycles minimum, which is somewhere between 80
and 100 hours of actual flying for a new captain to be qualified on our
system. Now that\'s very expensive. It makes it very tough to schedule
instructor pilots with new captains. So there\'s a logistics issue. We
require additional check airmen as a result of that.

But that\'s a case where our Vice President of Flight Operations, who
has tremendous credibility with senior management, says this is
something we ought to do so when we put our head on the pillow at night,
we feel assured that we have done the best we know how to do to make
sure that our captains are competent, capable, and are in a position to
teach the first officers to get ready to be captains.

MR. BRODERICK: Good example.

David, what does it take at JetBlue to invest money in safety that\'s
not required?

MR. NEELEMAN: Well, you know, I can think of lots of examples even in my
prior existence with Morris Air and at JetBlue where we have, you know,
I think we start \-- we have five values at our company. And the first
one is safety. Then it\'s caring, fun, integrity, and passion.

And so we can\'t have safety as our first value and not take every
single thing that is brought to us that has a safety element attached to
it very seriously because it is of value in the company.

And I think it\'s an analysis of risk. I think, you know one of the
things that we have to look at as we \-- even with the FAA as they look
at the priorities of, you know they have lots \-- we have lots of rules
and lots of regulations that we operate under.

And I always like to talk to our people about the MIN principle, the
Most Important Now, which is that item that has the most ability \-- the
highest ability to cause a catastrophic event. And to talk about and
really focus on those things.

And I think as we analyze something and, you know, as we were looking
through the 190, you know, the E-190, Embraer-190, and we had lots of
different things that we could put on there that were safety related,
and looked at the history, and things that could happen, we decided that
we would go with not only heads up display but we would go dual heads up
display, which is highly unusual.

And I can remember heads up display is one of those things that comes
together as the intersection of profitability and safety because when I
was at Southwest Airlines for a very short period of time, and after I
sold the Morris Air, we had heads up display in our airplanes.

And Southwest had less automation in their airplanes than, you know, we
do today at JetBlue with our auto-land capability. And so we made a case
that not only would heads up display be a safer and have a safer level
of \-- an increased level of safety, but it would also make the company
money because there would be less diversions, you know they could
operate into places where they couldn\'t. And so that became a very easy
sell.

And so we took that experience with what we had at Southwest, talked
about heads up display, talked about the advantages of having the
auto-land system for heads up display.

And were able to get enough credit for one system to be able to put dual
heads up display in our 190s which, we think, flying into smaller and
medium-sized airports is very important for that particular aircraft and
it was something that obviously we didn\'t have to get but we feel very
comfortable putting our pilots in control of our airplanes having that
system.

MR. BRODERICK: Well, it sounds like a double win.

John? Delta\'s got really tough times now. Nobody \-- that\'s no secret.
What is the criteria that you apply at Delta when you\'re talking about
safety issues that are over and above the minimums?

MR. MARSHALL: You know, quite candidly, it is a very difficult time for
Delta Airlines and many of our other colleagues who are suffering the
same anomalies of costs and cost challenges. So the question is fair.

The truth and the answer, though, is also very much what Joe Leonard
just said. Within Delta, and I\'m sure in my other fellow companies,
self safety continues to be integral to our business plan and our
business strategies. Why is the question.

Well, first of all, let\'s put it in boundaries and talk about from my
\-- the things that I\'m trying to balance, which is aircraft safety,
minimization of ground damages, and, of course, our employee- or
customer-based safety.

So an accident, if we have an accident, to us we look at that as a
billion-dollar problem. And while much of that will be paid for by the
insurance company, it erodes the confidence by the traveling public, it
erodes the confidence by our employees. And that\'s going to be cost.

But there\'s another cost that isn\'t taken generally into
consideration. The last time Delta had a relationship with an accident
was Swiss Air 111. We were a coach air partner with them. And we relied
very heavily on them. We provided support to them.

It was a brain drain for us as we supported the recovery activities. And
our company literally stood still as we addressed those actions that
were required to take care of the next of kin and the investigative
process. So accidents by any shape or form are expensive.

Ground damages, we estimate that each ground damage, and it\'s obviously
a rounding error, costs somewhere between 500,000 to 600,000 dollars per
event. Unfortunately, we can\'t afford too many of those things. So they
have to be carefully managed. And oh, by the way, they are very
disruptive to the schedule as you try and produce on-time performance
which your customer base wants.

And lastly, of course, is the issue of employee safety or passenger
safety. It goes without saying that our employees expect and demand to
work in an environment that has safety at the forefront.

So what does that do from the business perspective?

First of all, I\'ve been very blessed. Our company, if I have a critical
safety need, it\'s answered almost immediately. And like the
Administrator said, there ain\'t no free lunch out there. There\'s not
enough money to do everything. But the critical issues get attended to
automatically.

It\'s the stuff that\'s in the middle, it\'s the gray, it\'s the
nice-to-haves that have to be debated. And there they do get debated.
And I\'ve got to tell you sometimes I win them, sometimes I don\'t. And
I think that that\'s just the way it is.

But we\'re very, very fortunate to be able to continue to invest. You
know even in the down times that we\'re going through right now, we have
recently put in about three million dollars to equip more of our
airplanes with FOQA \[Flight Operations Quality Assurance\]. Today,
Delta is the largest FOQA-equipped airline in the world. We have 450
airplanes and we\'re continuing to bring on manpower to do the analysis.

We\'re continuing to promulgate and share that information because we
believe in the data sharing concept. But we\'re doing that on our nickel
It\'s not regulatory. It\'s voluntarily because we see great return and
it goes right back to the issues that I was talking about, costs.

Safety is an integral part of our business strategy.

MR. BRODERICK: Bill, you are in a different situation. Sometimes you
probably find yourself across the table from an airline customer that\'s
doing a modern overhaul. And they can do it without a particular safety
enhancement that you may recommend.

What\'s their reaction when you recommend that they invest more money
than is necessary to do the work required? Can you sell safety over and
above that which is required by the FAA?

MR. ASHWORTH: Good question. Does a safety initiative pay in the MRO
industry?

Every one of my co-panelists represents a customer. And they\'re always
willing to take their checkbook out and sign up for whatever we
recommend.

MR. BRODERICK: Right, right. I\'m sure that\'s true.

MR. ASHWORTH: Certainly that\'s an important question and it has to do
with a lot of things. But in the MRO industry, in the maintenance
business, and every airline is in the maintenance business as well as
those companies that are in the MRO industry, have to deal with safety
every single day on a labor hour by labor basis.

There\'s no secret that in the maintenance business, we don\'t generate
new philosophies. We don\'t come up with sweeping new technological
advances that change the face of the way maintenance is performed.

Sometimes the manufacturers do that. And from time to time, the FAA
working with the airlines, will come up with new ideas. But in general,
every single day, every single labor hour is an opportunity to improve
safety.

So how do we sell it when we go to an airline and tell them that we have
a new idea? Are they ready to buy in immediately? Well, the answer to
that question is sometimes. But at the end of the day, you have to look
at what it is we try to accomplish on a daily basis with respect to
safety.

Quite often in the MRO \[Maintenance Repair and Overhaul\] industry,
safety means the minor rewrite of a task card so that a mechanic better
understands what the task is. Sometimes in the MRO industry, safety
means minor redesign to a special tool that allows a task to be
conducted more simply or without any errors such as the installation of
a flight control or the installation of an electronic component.

Sometimes it simply means an hour more of training for a mechanic so
that that mechanic understands better what his job is.

Now those don\'t seem like sweeping changes or significant impacts upon
our business. But what happens is that when we do those things, when we
budget for them and when we put the money into place to do those kinds
of things, we do get a payback. So safety does sell.

And that payback comes in a number of ways. It comes because we have
less rework. It comes because when the customer accepts the airplane, he
finds fewer discrepancies that need to be fixed. It comes because the
customer\'s dispatch reliability is improved. And it comes because we
have fewer warranty claims.

And as a result, the customer is happier with the product. The airplane
is safer. And, as a result, the airplane is more operationally efficient
and the next time we go back to that customer to talk about a new
contract, or to talk about a new aircraft modification, or maintenance
program, those things are remembered.

Additionally, the airlines come back and tell us on a regular basis how
we\'re doing with regard to those initiatives. Did we do something
during the last D check on Airplane A, B, or C that caused that airplane
to fly better or to operate more efficiently?

The airlines keep track of those things, very diligent track of those
things and they come back and tell us on a monthly basis, if not more
often, what\'s happening to those airplanes out in service.

And when an initiative that we have taken improves the dispatch
reliability of an airplane or when a change that the airline agrees with
improves the dispatch reliability of that airplane, it reflects back
very positively on us in a couple of ways.

Number one, as I mentioned, warranty claims are reduced. The airline is
happier. They come back and bring us more work. But at the end of the
day, there\'s another economic advantage for companies like ours that\'s
very simple.

We sell labor hours. That\'s all we do. The more labor hours that I can
sell in a year, the more productive I am and the better my bottom line
looks.

So if I reduce rework, if I do something more efficiently, if I give a
mechanic an opportunity to do something right the first time rather than
having to struggle with it because we\'ve initiated some minor safety
enhancement, I can do more labor hours per year. And I can deliver more
airplanes per year. And my company, as a result, is more successful.

So, Tony, safety sells.

MR. BRODERICK: Well, it\'s good to hear that.

Ray, you have a different perspective than the rest of the panel. Does
the airline \-- does the amount of money that an airline spends on
safety over and above the minimum requirements, and we assume everybody
meets the minimums, does the amount that they spend on safety over and
above that minimum have any impact at all on the stock market? Or does
it impact the investment equation in any way from your viewpoint?

MR. NEIDL: No, I see no signs of that. My customer base is basically
equity investors, stock investors, bond investors. And they\'re more
concerned about if costs go up, why. You have to justify that.

And, in fact, it\'s a good sign, though, because the investors as well
as the traveling public assumes that everybody is safe. So that is not
even a question. The traveling public, their main priority in choosing
an airline is price, price, and then maybe convenience of schedule.

Investors are looking for cost controls in the company and the potential
return they can get from their investment, whether it be equity or bond
investing.

And I think that\'s very positive because it shows that neither the
traveling public nor investors are concerned with safety. They\'re
assuming that it\'s a given that every airline is safe.

And, in fact, most investors don\'t even ask me about the safety of an
airline unless there was a certain incident. And usually the questions
that I get asked about safety is from the media. And my answer to them
is I just assume the FAA is doing their job. And that\'s a given. And
that\'s usually accepted by everybody.

MR. BRODERICK: So from your perspective, the fact that there is no real
visibility about the amount of money spent at an airline over and above
the minimums, that\'s a good sign because the safety record is so good?

MR. NEIDL: Because the safety record is so good, there\'s little, if
any, concern there. And, you know, it\'s been suggested in the past that
some airlines start advertising their safety record. And I think that
would be a tremendous mistake. You don\'t even want to bring up the
subject if there\'s no problem there to begin with.

And, again, like I say the investment community and the travel public
assumes that the system is totally safe.

MR. BRODERICK: Well, that\'s an interesting perspective. But we all know
that in this industry no matter how good the safety record is, there\'s
always the probability, no matter how small that probability is, of a
catastrophic accident.

Exceeded to some degree, probably only by nuclear power industry, every
airline is in some ways a captive of every other airline in that regard.
A catastrophe often brings swift regulatory action, and that often
causes great expense to every airline, not only the one that was
involved in the accident.

So I\'d ask what can you do, as airline executives, to ensure that in
addition to meeting the regulatory minimums, other airlines who might
not have the resources that you do will invest in the discretionary
safety programs that are necessary to reach the safety heights that we
seek so that you don\'t get impacted by the spill out from accidents.
Joe?

MR. LEONARD: Well, that\'s a tough one. And that\'s a good question
because you\'re absolutely right. We\'re all in the same boat to a
certain extent yet we have a tough enough time controlling our own
organizations much less someone else\'s.

I don\'t really have a good answer for that. We do complain once in a
while if we think that somebody else is getting away with something that
they shouldn\'t be. And we\'re pretty aggressive about that.

I think the only thing that we can do is do the best we possibly can to
make sure we have the safest product out there. And one of the things
that we do, we routinely bring in outside consultants to do audits of
us. And we pick subjects at random.

Let\'s take a look at maintenance training records. And we\'ll do a
complete audit of our maintenance training records. We do that routinely
internally. But we\'ll bring in external experts to do that. Or let\'s
look at pilot training records. Or let\'s audit our aircraft overhaul
facility.

So one of the ways that we assure that, you know, you don\'t know what
you don\'t know, so we bring in people who take a different perspective.

We view our partnership with the FAA that same way. Some folks look at
the FAA as somebody that\'s going to, you know, write them a ticket or
catch them and that sort of thing. We view our relationship with the FAA
as some experts that are there that we can use to help us fly more
safely.

And, as a result, we have a completely open relationship with our FAA to
\-- they come to our operations meeting every morning. A lot of people
wouldn\'t even think of doing that. If we have an incident, the first
thing I do is pick up the phone and call Jack Moia and say here\'s what
we know. Here\'s what happened. I\'ll call you when I know more.

So we view that as an expertise pool that is looking at us from a
different set of eyes to enhance our safety. So all we can really do is
focus on what we do and share information.

And as was just mentioned, I mean we\'re in FOQA. We\'re in ASAP
\[Aviation Safety Action Program\]. We have a number of audit and data
collection agencies, our internal evaluation program is superb, and we
take that data and we share it with as many people as we possibly can.

And in converse, we try to get as much information as we possibly can
from other people because there are best practices that are better than
ours. And when we see a best practice, we adopt it.

And so I don\'t think that we can effect what other people do other than
jawbone a bit if we think there\'s an issue. But even that\'s risky
because you can get lawsuits and things like that.

So we focus on what we do and try to do it the best anybody can think
of.

MR. MARSHALL: Tony, can I \-- if you don\'t mind, I\'ll just add one
small perspective because I think it\'s an excellent question. And I\'m
reminded of the charter operation that took off out of Egypt and crashes
and, you know, the impact to the U.S. is what?

Well, anytime there\'s a crash worldwide, and I don\'t care where it is,
it undermines the credibility of the aviation system. So the issue is
how do, as you correctly framed it, how do we, as carriers, and I can
come to two examples that are underway right now.

As a major carrier with Coach Air Partners Worldwide, we insist and
we\'re required to do a safety audit. And today we\'ve had a successful
audit program and process in place. Today, we\'re moving and
transitioning to a new program that\'s been developed and sponsored by
IATA \[International Air Transport Association\].

And I\'ve got to tell you, I think that they\'ve done a superb job and I
give them high marks for lifting the standards internationally.

Now within the domestic U.S., we insist that all of our partners go
through a safety audit as well as those that are international. So I
think that that is something that we, as an individual carrier, are
doing to raise the safety bar globally. That\'s Point One.

The other point is through the CASP \[Continuing Analysis and
Surveillance Program\]. And while CASP is a voluntary system, and it
should be voluntary as opposed to regulatory, we are able through the
integration of the members who are there to promulgate the
recommendations that are being developed. And then work together as team
work to address those issues.

For instance, within the cargo community recently there has been a spat
of incidences. Working together with a cargo association, we have
brought to them to the table recommendations and they are willfully
embracing and adopting them.

We are very thankful for their cooperative action. And, in fact, through
an alliance, we are helping to raise the bar and address critical safety
issue.

So I think that carriers do have an obligation to share the wealth and
to promulgate the successful stories and we\'re effectively doing that.

MR. BRODERICK: David?

MR. NEELEMAN: Well, you know, I think I feel a little inadequate being
up here when we have our President and COO \[Chief Operating Officer\]
Dave Barger over there who is on the Flight Safety Foundation Board and
Steve Predmar who is our VP \[Vice President\] of Safety who just are so
focused on this issue.

And I think, you know, being involved in these industry-type forums
where we can get together and, you know, Dave spends untold number of
hours on that Flight Safety Foundation Board in talking about those
things that are sharing information where we can work together in
helping other airlines and other organizations in our industry
understand what best practices are.

And when we determine what those best practices are, it\'s incumbent on
us to, regardless if they are competitors or not, to share that
information if it\'s through ATA \[Air Transport Association\] or if
it\'s, you know, my service on the MAC \[Management Advisory Council\]
with Marion.

And to be able to determine, you know, what are the best practices in
this collaboration that Joe spoke about with the FAA instead of this
adversarial relationship, we can kind of sit down with one another, sit
down with one another and with other airlines, and say okay, folks,
where are we exposed?

You know, which regulations are the most important ones for safety?
Which ones maybe don\'t apply nearly as much as they did when technology
was different? And what are the pressing issues with airspace issues
and, you know, near misses, and all of those things.

I just think it\'s vital that everyone be included in this discussion.
And those that aren\'t, we should invite them in. And we should go to
them. And we should include them in the knowledge that we have because
we\'re all in this thing together.

And, you know, as has been mentioned, we\'re all effected if we have an
incident no matter in the world it occurs.

MR. BRODERICK: Bill, outsourcing of maintenance work by the airlines
depends upon the quality of the work done by the vendors. So what does
somebody like you do to help ensure that everybody is doing a credible
and high-quality job on any MRO activities?

MR. ASHWORTH: Well, there are a couple of comments that were just
mentioned by my co-panelist that had to do with external auditing and
bringing people in from the outside and sharing ideas and sending
messages back and forth between operators about things that need to be
done differently or things that need to be done in a new way.

And I can tell you that in the industry that I\'m a part of, we have a
unique perspective because at any given time, there\'s four or five or
six major airlines in our facility, all providing that external audit
that you spoke of, Joe.

That airline audit process is very intensive. It focuses on that
individual airline\'s procedure. And it requires that we comply with
that procedure.

But it also brings to us ideas and philosophies and concepts that may
border on the specifics that are in that airline\'s procedure. When we
learn from those concepts and those procedures and those philosophies,
we then have the opportunity to spread those philosophies and concepts
to our other maintenance lines.

Now don\'t worry, we don\'t share your secrets between one airline and
another. But on the other hand, some of the philosophies and the ideas
that come from one airline are eventually used on other airlines\'
products.

And as a result, that exchange of information starts to make sense. It
starts to build relationships. It starts to determine how we can better
produce a product in a safer way based on something that somebody else
learned, possibly something that was learned from an accident, possibly
something that was learned from a simple maintenance improvement that
resulted in better dispatch reliability.

So the whole concept of reliability, safety, sharing ideas, and as a
result having it improve the bottom line, exemplifies the way in which
the MRO industry today approaches this whole process. And the process is
driven by the airlines. It\'s mandated by the FAA but at the end of the
day, it\'s a big team action. It\'s a partnership.

The FAA is better today at maintenance management and oversight than
they have been for 30 years. In fact I can say that, I think, because
I\'ve had a unique perspective over the last 30 years to have worked
both within the FAA and on the outside about equal periods of time.

The FAA\'s enforcement mentality has subsided. Their partnership
mentality has improved significantly. Today they are interested in
customer service. They\'re interested in figuring out how to solve
problems.

The airlines are in the same mode. The airlines are looking at
technological advances. But the airlines are also looking at figuring
out ways to improve that simple task that the mechanic has to do on a
daily basis to ensure that it doesn\'t cause rework or it to ensure that
it doesn\'t impact that dispatch reliability.

And today the FAA is interested in that. So when you combine the
external support, oversight, and direction we get from the airline with
the external support, oversight, and direction we get from the FAA, it
has essentially brought the MRO industry into the forefront as a
full-fledged third-party partner in that safety process.

MR. BRODERICK: Let me change the subject a little bit and ask \-- the
Secretary talked about security. And we\'ve all got in mind 9/11 because
of the catastrophic consequences it had not only to the country but to
our industry.

And it\'s far more common, it seems, these days to hear about new
security measures, new security programs, new security requirements than
safety requirements.

Literally billions of dollars annually are being spend on security today
that wasn\'t being spent just a few years ago. So I\'ve heard a lot of
people asking the question: Is the demand for security funding pushing
out the safety that we could buy with that money? Is there a competition
here that\'s difficult to deal with given the finite number of resources
that we\'ve got?

David, you\'re shaking your head.

MR. NEELEMAN: Well, you know, I think that was a big concern. I mean as
we, you know, post 9/11, there was such a focus on the security side of
the business. And that\'s all we seemed to talk about for a long, long
time.

And we took a step back and we said wait a second, you know, are we \--
have we lost focus on safety at the expense of security? And it was
something that we had to really think a lot about.

And at the end of the day, we decided to split those two functions in
our company and to create an officer for security and an officer for
safety. And say, look, no matter what\'s going on in the security side
of the house, you need to be thinking about safety all the time.

And they certainly intertwine. There are times when they come together.
And, you know, I guess it was much like what happened at the DOT
\[Department of Transportation\] with the homeland security where it was
separated. They do have some commonality but they do have some distinct
differences.

And I think you do have a tendency to take your eye off the ball if
you\'re worried about that. Now the numbers don\'t show that today. I
mean I think maybe we\'ve been lucky. Or maybe we\'ve been good, you
know with the last three years, the numbers look pretty good post 9/11
but I think you need to set up a structure so that you are continually
thinking about safety, continually thinking about security because in
certain ways, they\'re in two different hemispheres. And they need to
operate in such a way that they can create their best practices without
them being tangled up with each other.

MR. LEONARD: Well, they are in different hemispheres in terms of subject
matter. But not in terms of the resource plot. So, Joe, how do you deal
with the concern that some have expressed that we are \-- safety is
suffering? The resources devoted to safety are suffering because of
security expenditures.

MR. BRODERICK: Well, I don\'t know if the safety is suffering. But
there\'s no question there is a finite pot of money that has to pay for
everything, passenger service, training whatever, safety and security.
So the same pot of money is paying for everything that\'s involved in
the system.

And so to the extent that we are spending money on security, there is
less money for other things. Now clearly, security is every bit as
important as safety. The accidents on September the 11th were
security-related accidents, not safety-related accidents.

And so one can\'t take priority over the other. The only \-- and, you
know, I give Admiral Stone and his staff a tremendous credit for taking
an organization that didn\'t exist and building it in the fashion that
it is today.

I believe that it has to become much more efficient. I don\'t think that
the way we\'re going about security today is very efficient. And if
it\'s not efficient, then it means it\'s spending dollars that could be
used elsewhere in the system.

I don\'t believe that the methodology that we\'re using to try to ensure
security is effective. And certainly not effective in the long run.
Technology has to be the answer if we are to maintain our aviation
system in any shape or fashion the way we\'re used to flying it.

So I think technology, in the long term, is the answer. And I think that
we\'re slow in getting that technology in place. [U.S.A.
Today]{.underline} obviously had front page article today talking about
the ineffectiveness of searching bags. And I don\'t think it\'s
unreasonable to believe that that is not effective.

So I think we\'ve got to get the technology more quickly. I think we\'ve
got to get to profiling more quickly. Caps 2 \[Capstone 2\], which has
got a new nomenclature now has to come about and it has to come about
soon because it has proven to be a very effective way of finding the bad
guys.

And I think we\'ve got to take the resources available and apply those
to finding potential bad people and putting our resources there and not
harassing the 80-year-old lady that\'s walking along trying to get on
the airplane, which is occurring today.

So it\'s \-- it does split the pie and it does effect the marketplace.
If you take a city like Atlanta/Savannah, traffic was off 40 percent
right after 9/11 and it\'s still off 25 percent. Why? Because people are
getting in their cars, driving to Atlanta because they can get there
faster with less hassle.

What they don\'t realize is they are putting their safety at risk by
being on the highways rather than being on our airplanes.

MR. NEELEMAN: But Tony, let me just say that I don\'t believe it\'s, you
know, the sea of JetBlue. I think it\'s more about focus than it is
about money.

And I can\'t think of one single program in our company where safety was
sacrificed because of security.

You know there was no money that was allocated away from safety because
of security. But I think it\'s more important. You\'ve got to think
about these things. I see it more as if your head is in the game, then
you\'re going to be on top of your game.

And I just think that we were concerned that security was kind of
overtaking, you know, was paralyzing our thoughts on and safety was kind
of being \-- could have been neglected. And that\'s why we decided to
\--

PARTICIPANT: I agree with David on that.

MR. BRODERICK: Yes, I\'ve heard that from others. And, John, in your
title, you\'ve got both safety and security.

And my question to you is certainly the amount of money didn\'t greatly
expand for your initiatives, you know, after 9/11. How do you balance
expenditures that are seen as necessary both for improved security and
improved safety when you meet the minimums in both cases?

MR. MARSHALL: Well, first of all, I think they do compete with each
other. And I think it does create a problem if you\'re not very, very
careful. And like David said, I know of no incidents where safety has
suffered because of focus on security.

But I think the opportunity is there. And I think we have to be very,
very careful to not get mesmerized and sucked into a feel-good
situation.

That said, as you know, the government has taken over many of the
responsibilities. It still has a financial burden and drain to us as
carriers. And it\'s security that I\'m talking about.

It still will \-- it will in the future have, particularly on our
international flights where we have some risk in exposure. But the real
bottom line, and it goes back to the safety issue, from my perspective,
it is not the issue of finances that\'s available that has the
opportunity to undermine safety within a carrier, it\'s complacency.

And it\'s the complacent people who say hey, I haven\'t had an accident
the last three, four, five, six, seven years, that\'s the bigger
challenge. And it\'s our job and it\'s incumbent upon us to continue to
address the issue of complacency first and not resources.

The resources will be there and they\'re not going to be drained off by
security if we work it and we can continue to keep it illuminated in the
right levels of our company.

And I think we\'re doing a pretty good job of that from an industry
perspective.

MR. ASHWORTH: Let me add to that, Tony, from the MRO side.

MR. BRODERICK: Sure.

MR. ASHWORTH: David mentioned it\'s focus not money. And you just
mentioned complacency.

I think that\'s an extremely important issue. And in the MRO business,
again, I\'m going to drag you back to the micro view. The mechanic that
works on an airplane everyday, the hour-by-hour labor tasks that are
performed that result in the airplane being safe.

If an inspector is on his toes, if an airline team is on its toes, can
they effect security? Can they improve security? Well, the answer is
absolutely. And, in fact, there are examples where that has taken place.

Recently some of our airline customers have had campaigns that resulted
in making changes to the interior designs to eliminate the ability to
hide items in the cabin, air grills and various other locations in the
airplanes where things can easily be secreted that could be used in some
kind of a anti-security effort.

But what happens, the way those items are found, the way those
opportunities are identified is because during the inspection process,
during the MRO process, during the maintenance process, people come up
with ideas. They say hey, you know, that thing is only held on with a
couple of pop rivets. And you can pull that off and you can put
something in there. And you can close it back up again. And no one is
going to know the difference.

If people are looking for those kinds of things, if they\'re not
complacent, if they\'re focused rather than worried about cash every
single day, those kinds of improvements can come as the result of the
maintenance inspection process and improve overall safety through the
security efforts of the airlines that eventually are responsible for
putting those changes in place.

MR. BRODERICK: Ray, let me come back to you and give it another shot
here with the investment community. We don\'t often talk openly about
safety in public forums. We talk geek stuff, technically about things
that might be used to improve safety.

But general speaking we don\'t talk about it as the auto industry does,
for example. Volvo was famous for advertising safety. Just yesterday
Honda had a huge two-page spread in the [Washington Post]{.underline}
talking about safety.

I will agree that it\'s a good thing but we don\'t have to talk about
safety. But don\'t you think that the reputations of airlines for
investing more than they need to in safety is something that should be
widely known in the investment community?

MR. NEIDL: No, I think you\'re just pointing to a potential problem
where there\'s no potential problem. The traveling public assumes it\'s
safe. And if you go out there and say I\'m safer than this other
airline, you\'re going to just open a can of worms.

It\'s kind of like George Bush and John Kerry talking about 35 years
ago, you know, my service is better than yours, which nobody cares
about.

And in the safety area \--

PARTICIPANT: Oh, wait a second.

(Laughter.)

MR. NEIDL: In the safety area, people are assuming things are safe. And
you\'re just pointing to a problem where it doesn\'t exist. And you\'d
be wasting your resources.

As far as your other question goes with security, the thing is there\'s
a number of reasons why the big airlines are suffering so badly right
now. A couple of those reasons are JetBlue and AirTran, it\'s obvious.

(Laughter.)

MR. NEIDL: But, you know, besides high oil prices, the airlines are
being forced to take on a burden which they probably shouldn\'t have to
take on. And that\'s extra security costs. It\'s a national problem.
It\'s not an airline problem. And they\'re being burdened with this huge
additional cost expenditure, which is necessary, at a time when they can
least afford it.

And I know there are deficits in Washington. And the people here are
more familiar with the politics here than I am. But in my opinion, as an
investor\'s viewpoint, it\'s just absolutely crazy imposing these
additional costs on an industry that is suffering so badly right now
through all these other cost increases.

So, you know, security is necessary. I\'m hearing doubts out there
about, you know, shaking down grandmothers at the security gate is
protecting people anymore. There\'s really a lot of doubts that all the
extra security is necessary. I think it is myself but the costs are
tremendous. And the airlines are bearing them.

Supposedly it\'s being passed on to the customer but in a weak ticket
pricing environment, that\'s just not happening.

And the other thing is also maintenance. You were talking about that
before, outsourcing. I think this is a trend for the future maybe with
the exception of Delta Airlines, which claims they do it much cheaper
than anybody else because they\'re more efficient and that could be true
because they\'re non-union in that area.

But I think more and more you\'re going to see maintenance outsourced.
And to my surprise, in the investment community, there\'s not been a lot
of concern about that so far. There might be if there\'s a couple of
accidents due to maintenance. That will get everybody\'s attention right
away.

But I think more and more as it\'s outsourced, analysts like myself will
want to go to the outsourcing companies just to get a feel for their
financial stability and their methods of operations.

So I think down the road that might be something that investors will
want to look at more and more.

MR. BRODERICK: You present a kind of a dilemma, I think, to those of us
that are looking at safety and the bottom line because the investment
community presumably makes its main decisions on the bottom line.

And yet you\'re saying safety is not viewed as contributing to the
bottom line when you spend extra money on safety. But if we\'re going to
get to these new heights, we\'ve got to spend that money.

MR. NEIDL: Well, it\'s not a concern to the investment community until
something happens. As you saw in the case of ValuJet or Alaska Air, once
something happens, it becomes a major concern.

And Alaska Air did a very good job after their accident because
management had the confidence of the investment community. They were
very open. Right away they revealed everything that was going on. They
hired a safety officer. I took some investors out to Seattle to visit
the management and they made sure on the agenda was their new safety
officer talking about what they were doing.

So outside of a few media people in Seattle who seemed to want to put
them out of business, you know, from the phone calls I was getting, that
seemed to be their attitude.

I think unlike ValuJet, the investment community was very supportive of
Alaska Airlines as long as they were very open with what they were
doing, what happened, what they were doing, and what they would do in
the future to prevent this from happening.

MR. BRODERICK: What we need to do, it seems to me, is figure out ways to
convince the investment community to support initiatives to invest more
in safety so we don\'t have these accidents.

MR. NEIDL: As long as you have an accident rate so low, the investment
community is interested in dollars and cents.

MR. LEONARD: But, Tony, I\'d like to comment.

MR. BRODERICK: It\'s really tough.

MR. LEONARD: I\'d like to make two points that Ray talked about. I
think, first of all, when you compare Volvo and Honda and I\'ve seen
their ads, to the airline industry, it\'s light years apart. I mean the
accident rate in this industry is so low that you can\'t differentiate
yourself from somebody else.

If I ran an ad and said I\'m safer than United Airlines, the consumer
would say they\'re absolutely safe. They don\'t have accidents. How can
you make that claim? It\'s a false claim. So that\'s one.

On the roads that kill 55,000 people year, we kill a Vietnam War\'s
worth of people on the highways every single year. It\'s an atrocious
number. So the comparison between what\'s going on on highways and
what\'s going on in the air is just so far apart it\'s hard to make the
case.

And so I agree with Ray that if you bring attention to it, you\'re
really bringing up a negative rather than a positive because the
consumer is already sold on that.

On a different subject that he hit on and I\'d like to go back to which
is the security cost, this is the only industry in the United States
that\'s required to take on the burden of national security. And it\'s a
huge burden. It\'s in the billions of dollars.

I went through the Lincoln Tunnel yesterday when I was in New York and
they had extra police on both ends. They were watching things, keeping
an eye on things. I didn\'t have to pay a security fee to go through the
tunnel.

And I didn\'t have to pay a security fee to get on a cruise boat that I
went on the other night and went up the Hudson River. And I don\'t have
to pay a security fee to get on a cruise ship in Cape Canaveral.

But in the airline business, you have to pay a security fee which is, in
our case, very, very expensive. It\'s an average on a round trip, one
stop, it\'s 12 dollars. And our average ticket price is 75 dollars.
We\'re the highest taxed industry in the U.S. as far as I can tell. Much
higher than alarms, much higher than liquor, much higher than tobacco.
And this is just one more thing on top.

And I really believe that the national policy, governmental policy,
should be that security of airplanes is no different than everything
else. It\'s a security issue and it ought to be borne by all of the
taxpayers.

MR. BRODERICK: Well, I think I understand what you\'re saying I think
but I do a little work with some folks in the nuclear power industry.
And you might be surprised to know that about 20 to 25 percent of the
staff at a nuclear plant is involved, these days not before, in
security. So it\'s not a unique industry.

And I think going back to Fred Kahn\'s comment that I quoted earlier,
this is a business and this is a new constraint on the business. And
it\'s tough.

Let me go into another area. The new FAA certification and safety
oversight programs are being developed, programs like CSET
\[Certification, Standardization and Evaluation Team\] and ATOS \[Air
Transportation Oversight System\] and SASO \[System Approach for Safety
Oversight\]. And they\'re driven more these days by the use of system
safety principles and the application of best practices as we\'ve talked
about rather than using detailed checklist routines of regulatory
compliance as was historically the case.

And it seems generally agreed from the discussions I\'ve had with
industry folks that these programs provide what they call a better
certification program or a better safety oversight program.

But the introduction of these programs involves a substantial startup
cost for the industry, for the airlines that are involved. People like
David who have gone through the CSET process understand very well what
I\'m talking about.

So my question is: Are these new ways of doing business with the FAA
providing more safety at the right cost? Or at least a reasonable cost
and thereby contributing something to the bottom line? Or is there some
way that we can all kind of work together to make them more efficient
and less costly?

David?

MR. NEELEMAN: Yes, well, you know, having gone through the CSET process
in probably one of the only airlines that have ever gone through the
process, you know, I absolutely believe in that process. You know what
was happening before is there were airlines that were going and getting
manuals from other airlines, changing the name on the manuals, and
submitting them to the FAA not necessarily even knowing what was in
those manuals. And, you know, this is verifiable stuff that happened.

And the FAA, to their credit and to their wisdom, said look, you know,
if you\'re going to certify with these manuals, you\'re going to know
what\'s in them, A, and B, we\'re not going to deal with just a local
team that you may have a relationship with.

We\'re going to bring in representatives from all over the country.
We\'ll have a third party that may not know you. And you\'re going to go
through a process and you\'re going to do it right.

And, you know, as painful as \-- you know I hear a lot of complaining
today about Sarbanes-Oxley and, you know, other federal things, I happen
to believe there\'s a lot of good things at Sarbanes-Oxley. And I think,
hopefully, it\'s going to stop some Enron from happening again because
that was all bad for all of us.

But getting back to CSET, yes, it was difficult. It was costly. It was
\-- sometimes it was maddening. But it was absolutely essential and
I\'m, for one, glad we have it.

And as far as ATOS goes and our ability to share information, you know,
I was \-- and I don\'t want to cause any controversy here but, you know,
as far as the \-- had heard that there were some, maybe some unions that
were a little bit concerned about ATOS and the ability to analyze a
certain pilot and know him by name and, you know, what could that mean
to that individual, and, you know, the ability to kind of maybe
no-name-it to get that information.

It\'s so vital to know what human factors are going on, you know, inside
that flight deck and other places in our company, it\'s essential. We
can\'t let organizations who maybe are concerned about maybe an
individual here and an individual there effect the safety of the greater
community of aviation. It\'s just too important for us to be able to do
it.

So we\'re involved in all these programs. We, you know, we embrace them
and, you know, under Nick\'s leadership, you know, I have never seen,
you know, I don\'t have a lot of experience with the FAA but, you know,
talking about somebody who will just sit down and listen, you know,
saying this doesn\'t make and sense, this makes a ton of sense, someone
who wants to find best practices, you know, under Marion\'s leadership,
you know, we\'re just \-- I mean I\'m not meaning to be singing the
praises here but I am because I think we\'re really headed in the right
direction.

And I\'m \-- you know, I don\'t think we should look at complacency in
the past and rest our laurels, you know. We do have to aim high. And we
have to, you know, I think until that number is 000 \-- and even then
we\'ve really got to worry, I think we\'ve got to keep aiming high and
we\'ve got to figure out best practice and share this with our industry.
It\'s very, very vital.

MR. BRODERICK: Joe, what do you think of these new programs.

MR. LEONARD: I think they\'re terrific. You know before I came back to
the industry in 1999, I spent six years at Allied Signal. And we were
very, very much involved in total quality. It was just a principle that
we drove through the company over and over and over again, numerous
training programs in fact-based problem solutions.

And then we were one of the very first companies in the U.S. to adopt
Six Sigma. And started deploying that throughout the company as well in
all the divisions.

So I view this as sort of the same principles, different names,
different methodology but the same principles, fact-based, data-based
decision-making.

And, you know, I\'m a particularly strong fan of FOQA. I\'ve been a very
strong fan of that for going back 15 years. I think the ability to
collect data on the airplanes and look for trends rather than \-- and
take action to fix things before they become an accident or an incident
rather than having something and then look, saying oh, gee, if we just
looked, this was coming a long time.

I think it\'s just one of the best tools ever deployed in the industry.
We\'re very strong supporters. We\'ve got a tremendous amount of data.

And then when you tie that to ASAP and you get not only the empirical
data but you get the subjective data and you tie those two things
together, you really come up with just powerful tools to avoid incidents
down the road.

And from a certification standpoint, we\'ve basically gone through a
re-certification on our own of our company twice since I\'ve been with
the company in the last five years just to, again, document and make
sure that something hasn\'t crept into the system along the way.

MR. BRODERICK: John, you folks have ATOS. And you\'ve seen the change
over the last decade or so in surveillance and oversight. What do you
think of it?

MR. MARSHALL: Well, first of all, let me say this sounds like a little
bit of a love-in here. So I\'m going to take a little bit of a different
approach.

I\'ve been involved with ATOS for a long time. And I must share with you
when it first came out, I wasn\'t much of a fan because quite candidly,
I thought ATOS was a financial opportunity to take some of the pressure
off of the FAA and allow them to use their resources in a different
manner.

And, in fact, they understaffed it. They undertrained for it. They
under-embraced it on a universal level and we, as carriers, there\'s ten
ATOS carriers that were involved, suffered from it. But that was then.
Now is now. And today we\'re all on equal standards.

The ATOS program has been modified. It\'s serving its needs. But it
still has some inconsistencies.

So am I a fan of ATOS? And the answer is yes. And I\'ve shared this with
the Administrator before. So this is no new news.

Does it need requirements to contain the change and adapt to the
changing environment we\'re in? Yes. The answer is yes. And do we see
that? Lethargically.

And so I personally would like to see more expansion and more
commonality of the ATOS programs to all carriers, not just those that
are uniquely entered into the program buy consistently, whether it\'s
the regionals, whether it\'s the nationals, whether it\'s the majors, it
doesn\'t matter to me. If it\'s worthwhile for us, it\'s worthwhile for
them. So I think that there needs to be broadening of the program.

Should it be \-- should we stay with it? Absolutely. ATOS has merit and
it should be stuck with. It just needs to be refined, updated, and, as I
said, universally adopted and accepted.

MR. BRODERICK: Bill, FAA\'s SASO program will eventually take the ATOS
kinds of principles and the CSET principles, for that matter, and apply
them to MRO as well as others. What is your reaction to that? Are you in
favor of it? Do you think it\'s a good idea?

MR. ASHWORTH: Well, as a matter of fact, we are but we\'re also in the
MRO industry experienced with ATOS and CSET because it rolls down to us
from the carriers. Whatever the carrier is exposed to, whatever kinds of
FAA involvement they have, whatever safety systems programs they have in
place roll down to the MROs.

But what all of those programs are about is something that I think we
all agree with, and that is that a safety system means that there is a
process. And a process means that there is a procedure. And a procedure
means that there\'s a beginning and an end that hopefully goes full
circle.

And although no one has mentioned human factors here today, that\'s
essentially what a safety system is all about because in the maintenance
business, like I said, there are very few massive technological leaps
that we see on an annual basis that causes the airplane to be much more
safe because of the way maintenance is done.

It\'s done every day on the floor with every individual mechanic
applying his knowledge to the airplane on an hour-by-hour basis. But
when a mechanic makes a mistake, it\'s important to understand what that
mistake is, why it occurred, what the contributing factors were, why
that otherwise well-meaning person would have had an oversight or made
an error such that it can be fixed.

And that\'s what these safety systems are all about. Now if you go
through the normal process, you brief the mechanic, you train him, you
discipline him or whatever is necessary, it\'s probably pretty well
assured that that mechanic is never going to make that mistake again.
But the guy next to him might.

So if you lose the systems piece of that, if you lose the communication
link, if you lose the transfer of information that is the center of all
of these new programs that we\'re talking about, you haven\'t obtained
the levels of safety that you\'re looking for and you haven\'t
distributed it adequately.

So the answer to the question is it\'s absolutely important. But we have
to remember what\'s at the core. And the core is communication, and the
core is assuring that errors that do occur don\'t reoccur.

MR. BRODERICK: Keep our eye on the ball.

MR. ASHWORTH: Exactly.

MR. BRODERICK: Let me close by asking one last question. We have a
conference that\'s about to start up in Montreal with about 150
countries coming to ICAO. The International Civil Aviation Organization
is, to me, the sort of top of the world\'s aviation safety oversight
pyramid. It sets the world\'s air safety standards.

Is the U.S. industry involved enough in developing the work of ICAO? Are
their programs structured with the right priorities? How can industry
work with FAA to make ICAO better and thereby improve safety around the
world?

David?

MR. NEELEMAN: Well, I think it\'s this whole collaboration issue. I
think, you know, you could ask \-- I think Marion would probably give
you a better idea. You know I know we talk about ICAO a lot on the MAC.
And we are \-- it\'s certainly on our radar screen.

And, you know, with our involvement more in the domestic United States,
obviously with some \-- a few Caribbean islands in there, you know, I
just can\'t stress enough this dissemination of information, the
sharing, you know, our accident rate obviously in the United States is
very, very good. Other countries aren\'t as good as we are.

And anything we can do, you know, putting aside competitive issues and,
you know, country to country, you know, bilaterals and saying look,
these are best practices and what can we do as a world aviation
organization, you know, through ICAO, to say, you know, you need to
adopt some of these things.

We\'ve had experience in these areas. We\'re the largest travel market
in the world. We\'ve learned a lot of stuff. And I think we have a lot
to give. And I think we need to be open with that.

And I know Marion\'s made trips to Brazil and South America and other
places in the Far East, around the world, promoting what we do at the
FAA. And I think we have to continue that. And I think we will.

MR. BRODERICK: Joe, what do you think about the ICAO programs?

MR. LEONARD: In all honesty, I\'m not \-- I don\'t feel that my
experience level at this point is one that I have a great deal to
comment on. We\'re truly a domestic carrier. And so we focus pretty much
on our domestic operations.

We do have a number of international carriers that stop in to visit us
from time to time to see how we operate and we compare notes. But we\'re
not involved in ICAO per se. And our operations are pretty much
domestically limited.

MR. BRODERICK: John, you\'re certainly not domestically limited.

MR. MARSHALL: No, we\'re not. And I think it\'s, again, a very excellent
question and one that requires a little bit of a substantive answer.

I mentioned earlier that IATA has taken on a project to provide a new
standard for the auditing of carriers internationally. It\'s called IOSA
\[IATA Operational Safety Audit\]. And I give them, as I said, great
credit. A lot of people contributed to that.

But the fact is it raises the bar substantially and it requires
substantial differences that are over and above ICAO standards.

And today one of the initiatives or one of the challenges that we have
in trying to move to the IOSA standard is the incompatibility of what
ICAO offers. And, in fact, each of the national countries have their own
regulatory standards. And unfortunately, they\'re not harmonized at all.

So in the U.S., we have FAA, we have ICAO, and now we\'re trying to
adapt to the IOSA standards. And quite frankly because of the
inconsistencies of those, we frequently have an airline who says I\'m
not going to do it because my country doesn\'t require me to do it
because ICAO doesn\'t require me to do it. And so it causes a problem.
It\'s a friction.

The bottom line is that we need to harmonize those issues so that we\'re
all talking together, we\'re all working together, and we all understand
what the minimum requirements are.

Right now, as far as I\'m concerned, ICAO lags significantly behind.
And, of course, I think that they go the lowest recipient who has the
vote or participates in that. And I think where it is incumbent on us as
a U.S. government, it can either work to elevate and lift those
standards so one, there are harmonized in a commonality but two, that
they continue to migrate that standard universally.

And I know Ambassador Stimpson is here today and I know he works very,
very hard at that. So I give them credit. I just think that we need to
continue to expand that so that it really does truly have a single focus
and single standard.

Whether that will be achievable, I think that\'s probably a little bit
pie in the sky. But we\'ve got to do a better job.

MR. BRODERICK: Bill, you guys do a lot of work for carriers in other
countries. What\'s your attitude about it?

MR. ASHWORTH: Simply stated, one of the initiatives of ICAO is the open
sharing of information. International borders shouldn\'t stop the flow
of maintenance data that can improve safety and preclude maintenance
errors.

ICAO is focused on that. We need to do a lot of work in that area. I
would love to be able to share maintenance information with my
competitors in other countries.

We do that minimally today within the country. The border, as of yet,
has not been transcended. And we need to work hard on that. I think
we\'re heading in that direction.

MR. BRODERICK: Thank you.

Well, Nick is getting itchy over there. So I think what I\'ll do is turn
the podium back over to him and thank the panel members very much.

(Applause.)

MR. SABATINI: Thank you, gentlemen, for that very robust discussion on
safety and the bottom line.

It\'s time for a break. Please be back in your seats by 10:45 and we\'ll
continue with the next panel.

(Whereupon, the foregoing matter went off the record at 10:31 a.m. and
went back on the record at 10:55 a.m.)

MR. SABATINI:  If you could please take your seats, please. We\'d like
to start again, please. That seems to have done it. I guess they\'re all
accustomed to the wedding sound.

For those of you who may end up standing in the back, we have a full
front row here with so many empty seats, so please feel free to come
forward. So what do you think of that last panel?

(Applause.)

MR. SABATINI:  Infinitely superior to death by Powerpoint. Well, I
don\'t mean to put this next panel on the spot but, gentlemen, that
first panel has set the bar.

MODERATOR CHEW:  Thanks a lot.

MR. SABATINI:  Well, I aim to be helpful. What we\'d like to do with
this panel, and I will leave that up to Russ and his panel members here,
to provide some time for Q&As \[Questions and Answers\]. So, Russ, when
you feel it\'s time that you\'d like to do that, please feel free to do
that.

The next thing I\'d like to ask this panel is to consider that when you
use an acronym, since we have so many people here from so many different
parts of the world who may not be familiar with those acronyms, to
please describe it the first time you use it, and then feel free to slip
into the Lexicon of our world.

Okay. Without any further ado, this one is perhaps moderately
provocative, so Russ.

MODERATOR CHEW:  Thanks, Nick. And we\'ll certainly try to limit our use
of TLAs. Now that\'s Three Letter Acronyms. I\'m sorry. So we have a
very distinguished group on this panel that can help us take on the
questions with the wide area augmentation or WAAS, or the local area
augmentation system or LAAS. And I\'ll start on my left. It\'s Captain
Greg Crum from Southwest Airlines. He is the Vice President of Flight
Operations. Then we have Dave Lindskoog. Dave is the Vice President of
Flight Operations for ATA Airlines. And many of you probably already
know Phil Boyer, who is the President of the AOPA. That\'s an acronym,
so that\'s the Aircraft Owners and Pilots Association. And over on my
far right we have Mike Cramer of MITRE Corporation. Mike is the
principal engineer for Flight Management Systems Technologies there. And
Bob Racher from FedEx, and he is filling in actually for Don Barber, who
at the last minute due to a personal issue had to cancel, so we\'re very
happy to have Bob here. Bob is from FedEx. He\'s the Vice President of
Safety and Air Worthiness. Then we have Ken Higgins from Boeing. Ken is
the Vice President for Airplane Validation and Flight Operations, so
I\'m really pleased to have this group with me to address these issues
of WAAS versus LAAS. And I\'d just like to introduce the subject, just
to follow on to both the Secretary\'s and the Administrator\'s early
comments this morning.

I mean, I think if we look around the room, and certainly look around
the panel, most of us have worked very hard to bring this industry to
where it is today. That safety record is no accident. The safety record
was something that everyone had to work for, and I\'m glad we\'re there.
And over the last two or so decades, we actually tripled the size of the
system. And the next two or so, we\'re going to try to do that again. It
gets harder and harder as you do that, given where we are, so we really
do have our challenges set out for us.

Our challenge will be to produce even more service, while we achieve yet
ever higher levels of safety. And because safety is the most important
characteristics of the new air traffic organization or ATO. In fact,
it\'s so important, it actually defines the service itself, so if you
didn\'t need safety in air traffic services or aviation services, I
wouldn\'t be here. In fact, the whole organization wouldn\'t be here.

Now one of the comments that the Administrator made that I want to make
sure everyone understands, that separates us a little bit from the last
three or two decades from the next, is that while we\'re trying to
achieve higher levels of safety and efficiency, we have an
ever-increasing issue of affordability. The size of the infrastructure
that we now maintain that we tripled the size of, is starting to impact
our ability to field new services. And as she said, we don\'t turn
anything off. And that\'s a key question for this panel, and I think the
people in this room to think about.

Those budget challenges we have ahead are related to the future, because
the industry is restructuring. That restructuring is actually lowering
the unit amount of tax revenue that we get to help build the new system.
And the emerging needs are changing. It\'s not the system it used to be.
It\'s different areas, different kinds of service that are being asked
for. So while that industry restructuring is fueling the growth of the
future, it\'s also requiring us as a community to think about things
differently, because we have to change in a way that we didn\'t have to
change in the last 20 or 30 years.

Now one of the strategies that we have in the FAA is to try now to take
care of ourselves so that we can take care of our customers who take
care of the needs of the community. And that means we\'re looking at new
technology not only to provide new service, better service, safer
service, and more efficient service, but also more affordable service,
because I don\'t think anyone wants to pay even more than the additional
security taxes and things that are already being levied on the
customers, and on the community.

WAAS and LAAS provide potential opportunity for that, but only if WAAS
and LAAS replace something else that goes away. And so I think one of
the first questions for the panel is, and I\'ll start over here with
Southwest Airlines - what is the business case that you see for
Southwest Airlines that maybe we can all understand how that might play
into the entire infrastructure and the cost not only to you, but the
cost to the community, as well.

PANELIST CRUM:  Well, thank you for letting me go first here, Russ. I
appreciate that. First, I\'d like to compliment Tony on the panel
discussion. I thought that was outstanding, but the question you asked
me maybe could have been answered with some of the remarks that were
made on that first panel. I came in from the dark or from the cold in
1991 when I came offline and came into management at Southwest. Herb
quickly taught me what our commitment to safety was. He also taught me
what our business model was, and he also taught me a cost-benefit
analysis and justification case which I think I learned in college but
I\'d forgotten.

As a line pilot you want it now, or yesterday, so we had to learn - I
had to learn to start looking through the issues, and make sure that we
came up with good cost justification analysis and was able to spend our
dollars wisely.

Southwest has always been a strong proponent of safety. I think if you
looked at the cockpit of our airplanes, TCAS \[Traffic Alert and
Collision Avoidance System\] obviously was mandated, but we installed
enhanced ground prox, predictive and reactive wind sheer before it was
mandated. We\'ve added the Head\'s Up Guidance Display system, on board
performance computers, alternating landing lights and we have an
outstanding FOQA \[Flight Operations Quality Assurance\] and ASAP
\[Aviation Safety Action Program\] program that are housed right across
the hall from each other, which for any of you all who don\'t have both
programs, you\'re missing out on a lot of added safety information.

One of the strongest points I think that Herb also was able to get
across to me is our relationship with our Pilot Association. And we have
two members here, Captain Steve Swogger, and Captain Jeff Hefter, and
they operate as a part of our management team on a daily basis on all
the safety issues.

That being said, when it comes to LAAS or WAAS, it goes right back to
the comments that were made on Tony\'s panel. We\'re competing for
scarce dollars now. Anything that I try to sell to the company is
competing, has to benefit safety and efficiency, and the customer
service of the airline. We are competing. I don\'t care what anybody
says. We are competing against security dollars, maintenance mandates,
and with our track record as far as our safety commitment, we\'ll always
do the right thing.

The problem that we have right now, and we\'ve been discussing this for
at least the last five years, is I think we have a 100 piece puzzle, and
we\'ve got about 94 pieces in place, as far as what the next air traffic
control system, future air traffic control system is going to look like.
It\'s becoming very difficult to identify what those last five or six
pieces are going to be, what they\'re going to look like, how much
they\'re going to cost, what are the equipage issues. And with that in
mind, I think it\'s going to be very difficult to come up with a
positive cost benefit analysis and justification if we can\'t see what
that total picture is going to be. Maybe there\'s only one more piece to
put in the puzzle. Maybe there\'s all six pieces to put into it, but
we\'ve got to have a commitment from the FAA, from Boeing and my
compliments to Ken on certification of your GLS \[Global Launching
System\]. That was a great step forward. We\'ve got to have a commitment
from the overall community and Congress to commit to whatever this
picture is. And then we can go through and start through the
implementation and the transition process to whatever that system looks
like.

I think that John Kern, at the Joint Planning Development Office
\[JPDO\] is taking a giant leap forward trying to paint that picture,
trying to find out what this last pieces of the puzzle are. And we\'re
very excited about that initiative, so we\'re looking forward to seeing
what comes out of that.

Anything that we do, I don\'t think from our perspective, and I think
Dave agrees with me, can affect RNAV \[Area Navigation\], RNP \[Required
Navigation Performance\], time-based metering, surface management issues
or projects, but the other issue that I think we have to address is the
transition period, the implementation date for whatever this picture
looks like, is going to have to take into account the classic fleet that
we have flying out there. If you look at the Airline Transport
Association members and you look at the fleet and break that down, half
of our airplanes right now are what I consider analog classic airplanes,
so that is a major question that\'s going to have to be answered as to
the equipage issues associated with those airplanes.

Now with all that said, we are curious about LAAS. We think it might be
that one piece, one of those last five or six pieces of the puzzle, but
I think we need more information. I think we need some actual flying
experience, and I believe there\'s Air Micronesia effort afoot to try to
test out loss in a real-time scenario, and we would support that.

MODERATOR CHEW:  Greg, I appreciate that, because really one of the ??
as I moved and have taken on some of the issues for the FAA, I don\'t
find a universal consensus around LAAS or WAAS for the whole community,
and that does present us with a problem of how do we build a system that
has all 100 pieces of the future in it, because there isn\'t agreement
by the community exactly where that should be. The only agreement I tend
to get would be well, we want everything. And the problem is we can\'t
afford everything, so that\'s where these higher decisions come in. And
I appreciate that, especially coming from a profitable carrier these
days, which is somewhat unique. Let me ask Dave here, from ATA\'s
perspective the question of WAAS and LAAS, how that plays into a
business case for your airline, one or the other, or both, and what are
the sensitivities for you.

PANELIST LINDSKOOG:  Well, unfortunately I think it\'s probably best to
explain our views through the little window of each of our companies.
And while that sometimes appears self-serving, I think it just helps us
understand the issues. Greg just very eloquently, I think, illustrated
one of the big problems in the industry, and that is that as
technologies emerge, you have a whole range of equipment out there that
complies with that new technology to varying degrees, and there
certainly is a cost factor there, both from the government side that has
to implement these new systems, and from the user\'s side that has to
then activate them on their aircraft, put them in place and use them.

AT Airlines, timing is everything I guess. AT Airlines is fortunate in
that we re-fleeted most of our airline over a fairly short period of
time. And as a result, we just bought the latest technology and put on
the GNSS \[Global Navigation Surveillance System\], which of course
Southwest has done too in their later acquisitions. But our entire
narrow-body fleet is GNSS compliant, and we can fly an RNP today down to
the lowest certifiable levels.

So the business case part of that is not really a problem for us. But
we\'re certainly sensitive that it doesn\'t do us a bit of good to have
that equipment in place if it\'s not universally usable. Competitive
pressures in the industry today aren\'t going to let us just leapfrog
over each other. We have to all kind of find our way, and I think we
kind of meet ourselves sort of in the middle.

This question of LAAS versus WAAS is an awfully big thing to bite off
for an hour panel here. And while I believe that there are certainly
some very big changes that have to be made to handle this 30 percent
traffic increase over the next 20 years that the Administrator spoke of
this morning, we can\'t do that all in one big step.

I don\'t believe the question really is LAAS versus WAAS. I think it\'s
LAAS and WAAS, and I think it\'s not if, but when and how. Development
of major systems has to take place, and industry has to find its way to
use those systems, much like when we started doing. I wasn\'t around
when we started doing the ILSs \[Instrument Landing System\], but the
ILS was a perfect example of a technology which matured eventually to
Autoland CAT-III \[Category III\]. That didn\'t happen overnight, and
when it did not all the airlines could play. Now almost all of us can,
so I think the LAAS and WAAS debate is again very much ?? that\'s a good
model of how that works.

MODERATOR CHEW:  And you bring up an interesting point, because when I
ask someone for a business case, having come from a company that we
built lots of business cases, it was always the positive business case,
and then it was the negative business case. They both were valid. Right?

PANELIST LINDSKOOG:  Right.

MODERATOR CHEW:  But one felt better or looked better than the other. So
when I asked you about business cases, there is a kind of positive and
negative aspect to it. I assume that you were both talking about the
positive business case, not the one where I\'m going to shut up all the
ILSs next year and you have to buy it kind of stuff.

PANELIST LINDSKOOG:  Well, that will someday happen, I would imagine. I
mean, for instance, our 737s, we bought them because they\'re equipped
with the GPS system. None of them came equipped with an ADF \[Automatic
Direction Finder\] that\'s a whole new concept. Our own FAA
administrative group, and us too, both; I don\'t want to point fingers
at anybody, but we\'ve had trouble getting our heads around that. Can we
do an approach that has an ADF NDB \[Nondirectional Beacon\] in it,
because we don\'t have it? Well, yes, we can, but we have to find our
way to that.

A lot of changes of thinking are occurring here, but we don\'t even have
the receiver in the plane. It doesn\'t exist, so we\'ve already kind of
moved to that level in that particular fleet. And just the anxiety I
guess, if you will, that particular change raised in not only our own
flight management group, but on the line, as well, and with the FAA, I
think is a perfect example of how difficult the transition of our
thinking is going to be as we all work towards a different system.

MODERATOR CHEW:  Thanks, and let me go to one person who represents
thousands of individual business cases, personal ones - Phil.

PANELIST BOYER:  How do you get the ball scores and stuff in the cockpit
if you don\'t have an ADF?

PANELIST LINDSKOOG:  That\'s what ACARS \[Aircraft Communication
Addressing and Reporting System\] is for.

PANELIST BOYER:  You know, the segment I represent is general aviation
\[GA\]. I feel rather outnumbered here today. Assuming MITRE is in the
middle, it\'s about 5-1 if we were to do the WAAS versus LAAS. But we
agreed in our pre-meeting that that wasn\'t going to be the case. But I
do have the numbers on my side, 5,400 public use airports, 600 only used
by commercial carrier service, so that\'s about a 9-1 ratio. Airplanes,
we\'re about a 20-1 ratio. Once again, that\'s a blessing, and it\'s
also a curse.

How do you equip a fleet like that as you look at it from the FAA
standpoint, and then also how do you utilize that fleet? And I think a
lot of this is looking forward. I\'ve got a lot of battle scars. Three
billion dollars we\'re sitting here has gone into the WAAS program.
Numerous times where Congress was just about to cut it, some of you -
Peggy, I think you\'ll remember and others - meetings we held to try to
get things back on track with both the air carriers and general
aviation. And I said to Russ, we always look at something - what problem
are we trying to solve? I mean, that would then decide what we need,
what we\'re going to do with it, and how we\'re going to pay for it.

I would maintain the problem in general aviation that we\'re trying to
solve is how do we take care of a vast number of general aviation
airports that are becoming more and more utilized as people on this
panel begin to use the airports that were once just our\'s for their air
carrier service. And we can see, whether it be corporate, whether it be
air carriers, how we\'re being pushed into airports, and wonderful these
airports exist.

The Airport Improvement Program over time has built a tremendous
infrastructure of reliever airports. But if we look at those airports
equipped with precision approaches, they\'re only about 10 percent of
all our airports in this country. There are about 15,000 runway ends,
and about 5,000 equipped with any kind of approach at all.

First of all, I would maintain we have turned things off. There are no
bonfires on mountains any more. There are no light beacons shining away.
The radio range is gone, and it\'s a matter of when. We have a system in
place, as the administrator said, of July of \`03 of the WAAS system.
For one of the first times, I find the FAA ahead of the industry. I
mean, we were supposed to take a flight in my 172 at one of the six
airports only in GA, Frederick, Maryland equipped with an LPV approach,
so we\'re flying a glide slope-like approach, and that was going to be a
year ago. The industry itself is just on the edge of producing the
boxes. And do you think that Congress will be calling Mary and calling
Russ and saying I want a place name and ILS for my airport. Here\'s one
of the advantages. Well, we\'re not going to go with a million and a
half dollars to serve one runway end, but we will get you on a faster
track on the list of where we\'re plotting those approaches. And it\'s
chicken and egg.

I think our community is going to buy big time into this. First of all,
once they understand the acronym, WAAS, which I don\'t think at the
moment they do, much to our dismay when we\'ve been trying to get across
to them - this is coming, this is coming. Look how they\'ve embraced GPS
\[Global Positioning System\]. Granted a lot of these are VFR \[Visual
Flight Rules\], but a lot of our flights are VFR. Eighty percent of our
fleet has GPS, and all we have to do is get approaches to airports,
precision approaches or near precision-like minimums, flying a glide
slope and a localizer to a GA airport, rather than a circle to land
approach or an NDB or a VOR \[Very High Frequency Omnidirectional
Range\] approach with the precision that brings and the safety that
brings. And you\'re going to find the person, go to their CFO \[Chief
Financial Officer\] like you people have to, and that CFO is generally a
non-flying spouse who\'s part of a household who says yes, I will
approve that box for your airplane. And believe me, the back cover of
our magazine this last month was here\'s the product that\'s going to
bring you the vertical guidance to airports. So we\'re there. We\'ve got
to produce approaches. We can\'t just put them on top of approaches at
air carrier airports. We\'ve got to say this airport is one of those
15,000 unattended runway ends with any approach at all, let\'s do it.
But I think the problem we we're trying to solve as someone said on the
previous panel, is that more and more people are now driving Atlanta to
Savannah.

Well, let me tell you, since 9/11, since the lines at the airport, since
the whole confusion about air ?? more and more of my members are flying
Point A to Point B, and more and more fractional ownership is going in
that direction. And the panel this afternoon will talk about an air taxi
industry that will use those airports.

What NAVAID \[Navigational Aids\] is going to supply them the safety for
an all-weather approach environment, and right now it looks very plain
and simple. It\'s the one we\'ve invested the time and the money in, and
now we\'re just go to start equipping the airplanes to bring that
capability.

MODERATOR CHEW:  Yeah. I think that\'s a good point, is that the safety
of the precision approach is a very, very significant step in reducing
control flight accidents, and so what WAAS or LAAS brings, and it goes
beyond just more precision, more curved approaches that RNP and things
can be built that require navigation performance. It actually brings one
quantum leap in safety, especially for general aviation, which is
interesting.

Well, let\'s go to this side of the panel. And, Mike, from MITRE
Corporation\'s perspective, you\'ve heard both business case here from a
general aviation side. And as Phil said, we\'re just right on the edge
potentially of seeing some of the boxes produced and everything. And
we\'re still waiting to see that equipage, and at some point I really
would like to see that equipage so it makes it easier, but what\'s
MITRE\'s point of view with regard to that, seeing these two in balance
with each other?

PANELIST CRAMER:  Well, I think in order to get started on that kind of
a question, I\'d like to put it in a little bit of a context. Again, I
agree that with the safety aspects, certainly for all these unattended
runway ends at this point, there\'s a huge benefit there, and WAAS with
LPV approaches provides that capability. And it\'s also provided in the
air carrier industry and everywhere else by RNP and BARO VNAV
\[Barometric Vertical Area Navigation\], okay so that kind of equivalent
systems in that respect. They both attain about the same minimums, and
they benefit the two major constituencies.

So one of the questions that was hiding in there was LPV and RNP for
MITRE, and I think this is a nice way to slide into that question,
because it will point out some of the business case issues. The question
was should we just forget LPV and go RNP all the way, which that\'s a
little bit too strong because I tend to be on the side of saying we need
both. Again, there\'s always that we want it all.

MODERATOR CHEW:  Maybe we should define LPV and RNP.

PANELIST CRAMER:  LPV, well, it\'s basically ?? it gives you vertical
guidance and lateral guidance to a runway from a WAAS RNAV system. And I
want to separate the WAAS sensor from the RNAV capability, which is
what\'s building the path in space, because RNP systems do precisely the
same thing. They build the path in space, and they use a set of sensors
to fly to that path. WAAS creates that line in space one way, RNP
creates it a different way, but those are equivalent things. The sensor
is the difference. WAAS gives you more precision and integrity than GPS.
And in a RNP airplane, you get that from the integration of all the
systems with a standard GPS.

So that being said, it\'s not an either/or, and the investment that\'s
been made to this point, there\'s a major investment on FAA and
government\'s part for the WAAS infrastructure. There\'s a major
investment by the Boeings, and the Airbuses and the operators of those
airplanes in getting the integrated navigation capability that we call
RNP.

Those big investments have been and continue to be made. The piece
that\'s missing is on the WAAS side of that ledger, is the equipment,
which we just talked about is not in the field yet. Whereas, the
equipment for the air carriers and air transport industry is in the
field already. But commonly, they\'re both missing procedures. That\'s
the missing link for both systems. And if we get the procedures in for
all the various GA runway ends, we\'d incentivize those people to buy
the WAAS receivers, equip themselves. If we provide the RNP-type
procedures for the air carrier airports, we\'re going to not incentivize
them to buy what they\'ve already got, but we\'re going to hand them the
benefit that they were planning on when they bought the equipment in the
first place. So we\'ve got a lot of procedure development to do, and
that, I know, is a constraining factor in terms of the amount of money
that can be spent on these two technologies. So I think that the
procedure design being key, we know how to do them now, pretty much. The
question is turning the crank and getting them out there into the field.
And if there are ways to ?? and there are activities underway already to
make that process go slicker and smoother, and faster, a lot of
different ideas for how to do that.

So once you get those procedures out there and in place, then you\'ve
got one more benefit that comes, and that\'s the idea of divestiture of
the equipment, and that\'s on the FAA side of the ledger. Now we start
talking about the ADFs already not in his airplane, but it is in the
little guy\'s airplane. Well, now maybe that can go away, but on the
ground the NDB is going to go away. On the ground, the VORs can go away.
So just from the LPV and the RNP perspective, we\'re already looking at
getting rid of the NDBs and the VORs. Not talking about ILS, you have to
get into the last discussion there. So that was just some observations
along there.

MODERATOR CHEW:  So what\'s interesting about it, you mentioned two
things that are key. One is, the development of procedures to stimulate
the marketplace. But then you also talked about NDBs and shutting things
off, and I would ask Phil then, how do you constituents feel about
shutting off NDBs?

PANELIST BOYER:  Well, first of all, no one likes to make an ADF
approach. They\'ll figure any way around it that they possibly can,
except maybe to show your flight instructor you never forgot how to do
it. And truthfully, an ADF exists in most of our planes today, because
remember the main GA is flying VFR anyway. It exists in our airplanes
today for traffic reports when you land and you\'ve got to drive into
town and the ball scores. Really, no kidding, or maybe to entertain
somebody who is a little afraid while you\'re in the clouds and they can
play music. But there is no need for that box in most of our GA planes
today, except - and I want to give a little example - that we ought to
look at areas like Alaska or places where that frequency is used for
some kind of voice transmission, weather. Let\'s say Tweed\'s Route, et
cetera, and I think that\'s an easy one to solve. So I think the moment
?? but don\'t, for heaven sakes, and this is what happens with many of
our programs - we\'re going to have an approach here, so let\'s turn off
the LPV here now when it is only the approach. Well, now we have none.
And our only worry is that there will be a reasonable time that we can
say well, we\'re slated this year to get this approach, so we\'ll take
the LPV down the next year or the year after. And then the approach is
delayed, the budget isn\'t there, and yet the NDB might come down.
That\'s our scary thing because we\'ve seen it in a lot of programs.

We didn\'t make the implementation of the approach, but we\'re making
the decommissioning of the NAV, so let\'s just look at the trade-off
here. But I believe, particularly with NDBs, that you will get no
argument from the GA community as soon as you establish it. It\'s going
to do it rapidly. How fast did GPS take off? Almost instantly, because
the benefit was so high. And with the equipped airplanes now with GPS
and the modifications being put forth by the manufacturers will upgrade
common GARMIN 43530 for less than \$2,000 for WAAS. You\'re talking
about a large community already that given the opportunity to make
precision approach by satellites, or near precision, take the other way.

MODERATOR CHEW:  And I find that interesting given that I have noted
that it was surprising that this last year, it\'s not commonly known
that the FAA supports now over 14,000 approach procedures out there, and
it\'s growing because of all ?? we\'re developing new GPS-type
approaches by the hundreds every year. Every one of those approaches
have to be flight checked and tested on a periodic basis. And the fleet
of airplanes and the people that we have doing that the requirement on
them is growing. So that\'s where the turn-off and turn-on thing does
come into play, because while we try to shutdown more than 80 NDB
procedures last year, we had requests for more than we shut down. So
these are continuing issues that we probably need to take on.

Now let me shift a little bit over to LAAS, because you brought up ??
we\'ve been talking about WAAS here a little bit. I\'d like to get into
the LAAS issues before we open this up to Q&A \[Questions and Answers\],
because we talk about WAAS versus LAAS, but many of the things that we
will get with LAAS, we can get other ways today. And I\'m not talking
about the ILS CAT-II,CAT-III's that already exist but the head-up
displays \[HUD\] that Southwest has in their airplanes, could actually
achieve much of what LAAS would give the non-head-up display. And
there\'s a lot of unknown things, such as in fact, would LAAS or would a
head-up display preclude the need for some of the lighting systems which
are also part of the infrastructure. And let me ask Ken that question
since he most recently certified or involved in the certification of
LAAS.

PANELIST HIGGINS:  Well, a couple of things. One, of course head-up
displays do present additional capability to the airplane. However, on
the other side, contrasting that with the capability that LAAS brings, a
LAAS receiver or transmitter on the airport provides Category III
capability to every runway on the airport. Equipping one airport with
that LAAS transmitter provides that for every airplane who equips with
it. In fact, it\'s the entire fleet that we have produced over the last
five years could use that capability at that airport.

Equipping each and every airplane with a HUD take Southwest - that was a
very expensive upgrade, I would presume, to the tune of a couple of
hundred thousand dollars per airplane. Multiplying that times the 500
airplanes or so that Southwest has, you end up with a lot of money, and
at the current projected cost of the installation of a LAAS transmitter
at an airport of about \$1 million, you quickly come to the conclusion
that the quickest way to provide that capability and the least expensive
way to provide that capability is to go with LAAS.

MODERATOR CHEW:  Let me go back to Greg then. Does that match with your
impression of a business case of the airplane requirements that Ken
talked about, LAAS versus your head-up display?

PANELIST CRUM:  Yes, it does. And he\'s right-on with our business case
about the heads-up guidance display. That was David that talked about
receiving that briefing, and I\'ll be real honest. We could not come up
with a return on investment on that piece of equipment. We bought it
because of the added safety benefit that it brought to our airline, and
we also saw that there was potential future applications that could be
used, such as visual systems, synthetic vision. I mean, there\'s other
technologies out there that are going to become available to us. But
when you shoot 95 percent of your approaches, 95 percent of your
operations are in VMC \[Visual Meteorological Conditions\] conditions,
you\'re looking at a very small number of operations that require ??
well, CAT-III is probably less than a tenth of 1 percent, but we bought
into the CAT-III capability with the heads-up guidance display. And you
back yourself up to focusing in on how much money are you going to spend
for maybe 4 percent of your approaches. And when you\'re talking about
numbers - I\'ve heard \$200,000 an airplane. I don\'t know if that\'s
correct, but I do know Ken is very proud of his airplanes that he sells
to us. But when you\'re talking about that amount of money, and then you
take it times a multiplier, which is 400, 450 airplanes, and the
Americans, the Northwests of the world, all the major carriers, they\'re
looking at that same multiplier. In this environment today, that makes a
business case very difficult to come up with a return on investment that
we require internal to our company right now, so it\'s going to be hard.

MODERATOR CHEW:  Okay. So it would be hard ?? what you just said if I
heard it properly, was the head-up display is even harder to make a
business case for than the LAAS would be, but both are very difficult
because of the number of operations you would need to CAT III. Is that
correct?

PANELIST CRUM:  That\'s correct, but we\'ve already made the case for
the heads-up guidance display. That capability is in our entire fleet.
Now we\'re going to add an additional capability on, and it would be
very difficult to justify today in this environment that we\'re working
in.

MODERATOR CHEW:  Let me go to the cargo side of the industry. Bob,
you\'ve been listening to both the WAAS and LAAS. I know that FedEx has
been one of the more forward investing fleets certainly as a carrier.
Can you give any different perspective on this WAAS versus LAAS and
business case issue?

PANELIST RACHER:  Let me say first off, many of you I think know Don
Barber fairly well, and he would have given his right arm to be here
today, but unfortunately he was prevented yesterday morning. And he
sends his apologies for that, and he also sends his apologies for
sending me. But that said, you probably heard this expression, some of
you probably pay attention to it. At FedEx there\'s a thing that says
what interests my boss, fascinates me. So I\'m hopeful I\'m going to be
able to get through this with some comments.

But just to go back to what Greg was talking about with respect to ROIs
\[Report of Investigation\] and safety, et cetera, it\'s very difficult
to make those cases. You know, you get into two or three subjunctive
cases, a should, a would, and an if and a could, and you try and present
that to the finance people. And it becomes very difficult to line up all
those assumptions to make an ROI case. So we are much in the same
position as any other airline that we make safety judgments based upon
doing the right thing from a leadership perspective. And we\'re much the
same way. We made a decision to hold off on HUD for a bit of time so
that we could advance to HUD EVS \[Enhanced Vision Systems\]. And we
went through a risk management study at FedEx to take a look at what
technologies we could bring to bear on our safety program to help us in
the future, and took that to Mr. Smith. And he made the leadership type
decision because we could not build an ROI for that. And we decided to
make the rather large investment to take us to a HUD EVS environment.

MODERATOR CHEW:  HUD EVS being the head up display and Enhanced Vision
Systems.

PANELIST RACHER:  HUD and Enhanced Vision Systems, yes. And that\'s a
way down the pike. It\'s a long-term thing for us. There are more near
term things we are ready to invest in regarding the new version of the
runway area advisory system, RAAS, that will attach to EGPWS \[Enhanced
Ground Proximity Warning System\], and some other smaller technology
things that will help improve our safety program. So when it\'s
important, I think the leaders in the industry will make the investment,
will make the commitment.

We feel that way to a very large extent about LAAS. And we view LAAS as
essentially a strategic investment for the company, and it\'s based upon
the essence of our company, and that is time. We are time bound from the
moment we start our operations in the morning. And that goes because we
have a very large day sort nowadays. The time effects of how the air
traffic management system operates ripples into our system, and can
really, in fact, on a very bad day start to cripple us in the evening.
So as the NAS \[National Airspace System\] makes this transformation to
a performance-based system, we are very much hopeful that in the matter
of performance-based, that the issue of time and a required time of
arrival becomes one of the more paramount metrics in the system.

And it affects not just FedEx and UPS \[United Parcel Service\] and the
cargo integrators, it really affects the commercial airliners, as we\'ve
alluded to here today, that the passengers are making decisions out
there everyday. The statistics on on-time arrivals are out there for
them to use, and they will make bad decisions about what mode of
transportation to select. So it affects all of us, and I think in the
future as the capacity issue grows, time will become more and more
important to us.

So from our customer service perspective as a critical success factor to
our operation, we view LAAS as a strategic investment, and we\'re going
to go forward with not only the time and manpower to help with the
research on this, we\'re ready to make the investments that go along
with it.

Somewhere back in our history, we made the unfortunate mistake of having
a money-back guarantee. And I would advise the passenger carriers not to
go down that path, so we really do have time as a very critical part of
our arrival. So when we looked at LAAS, we looked at the capabilities
that it brought to the table. And much like the military has force
multipliers, we viewed LAAS as a capability multiplier. And not just on
the domestic system, also internationally.

And we never felt that LAAS had to be a ubiquitous thing, and we never
really felt that LAAS would be in conflict with WAAS because they both
have their purpose. LAAS can bring great benefit to the system at
reduced cost by using it in critical areas. I don\'t know how well
we\'ve explored those opportunities yet.

We also came to LAAS because we were working with NASA \[National
Aeronautics and Space Administration\] and on their surface management
system, and as part of our precision arrival approach, landing and
taxiing plans, the surface management system helps us, and LAAS will
help that move aircraft once they get onto the runway most efficiently
to where they need to be. And not only that, SMS \[Safety Management
System\] will backup and help you plan where you can bring these
aircraft into the area, so that they can most efficiently and
effectively get on the ground and get off the runway.

So LAAS to us became a capability multiplier because it handled so many
different aspects of the time equation for us. And then additionally, we
looked at the other advantages that LAAS brought to the table, which
have already been mentioned here with respect to approaches at different
runways.

We haven\'t yet mentioned its advantage in terrain, in hindered runways;
that is to say, I guess the best example is the Continental Micronesia
example where if you had an ILS you\'d be about 15 feet underwater, so
you have to have ?? a LAAS out there can do an awful amount of good for
the company.

Mountainous areas, again LAAS has the capability to be effective where
ILS approaches would not, so there are other aspects of that that are
out there. There are database issues out there. LAAS has the capability
to uplink information on aircraft, whereas many of our earlier aircraft
with early FMS's \[Flight Management System\] and even our later
aircraft don\'t have a generous amount of database capability, and would
be assisted greatly by having LAAS information uplinked to it when
needed, and departure information uplinked to it when needed, and
go-around information being readily available, as well, but only for
that particular approach.

These are noise and emissions capability multipliers there, and that\'s
?? noise and emissions granted are available. RNP navigation will give
you the ability to work on noise and emissions issues, but if you\'re a
classic and you don\'t have RNP, LAAS can help you work around those
issues, as well. And that\'s going to be important not only here in the
states, but elsewhere.

And again, to mention the international situation, there are
international airports that are going to be very critical to all of us
international operators, and LAAS has great benefit over there with
respect to the time issue, as well, and the capacity issue for going to
multiple runways.

So for us, I mean just to summarize, it really became a strategic issue,
and we felt it very important that going forward with the air traffic
management system that LAAS be an integral part of that. And we do have
great concern that LAAS under normal circumstances would compete well in
any resource allocation environment. But we have an unusually
constrained resource environment, but we should all remember, and Don
Barber likes to say this, there will be no forgiveness. If we don\'t
solve this problem at the end, there will be no forgiveness from the
powers that be. And LAAS, we feel is an integral part of that.

MODERATOR CHEW:  So I find it pretty interesting that the panel has
actually reflected the lack of consensus around the issues.

PANELIST HIGGINS:  Could I add one thing. He emphasized ?? everything
that he said, I\'m 100 percent in agreement in, but I\'d like to
emphasize the fact that LAAS works worldwide. Today we could stick one
of those things in a suitcase - in fact, one of my competitors has done
that - take it to China, and make it work, out of a suitcase, onto the
ground and make it work. So that\'s an extremely important item when you
talk about the global aspects of most of the large carriers.

The second thing I\'d like to emphasize is that WAAS for our current
production airplanes and for those of about five years past, will bring
no value. We can get to the same approach minimums that WAAS provides
with our airplanes today. So from that segment of the carrier market,
WAAS brings us effectively no value. And LAAS, on the other hand, does
bring value.

MODERATOR CHEW:  On the positive business case, so there are specific
cases that LAAS brings value to certain carriers. Other carriers, they
have a hard time, particularly ?? and we heard the last. If they\'re not
a global carrier, provides maybe even less value potentially on the
global side.

I like the fact that it\'s a universal type of design that could be
globally utilized, but it would have to be utilized on a positive
business case. We haven\'t really talked about the negative business
case, is that the reason that the airplanes today can do all the things
that LAAS produces - that WAAS would produce today is because of the
entire infrastructure that is currently there today. Is that correct?

PANELIST HIGGINS:  With GPS and our normal gyros we can do what WAAS
will provide in the future.

MODERATOR CHEW:  Okay.

PANELIST BOYER:  But, Russ, what we\'re talking about here is one tenth
of the airports, one twentieth of the airplanes, and GA isn\'t doing
that much flight abroad. And then we\'re down to admittedly 3 to 4
percent of the time we\'re making instrument approaches, and then how
many of those to CAT III.

The only thing I know about WAAS is if it\'s \$200,000 for just the
Head-up Display without the EDS \[Electronic Data System\] who in their
right mind with the average cost of a general aviation plane in the used
market being about 50 to 60 thousand dollars, is going to give you this
cockpit equipage to be able to fully utilize the system? So we\'re
really talking about two segments of aviation with quite different
needs. And this is a safety conference, a safety conference.

There are a lot of instrument approaches that are made by GA just to get
below the clouds - 800 feet, 700 feet, 600 feet. And just adding the
vertical component to those approaches makes those much safer, much more
visual. And as you upgrade to the new breed of GPS boxes with WAAS,
you\'re probably going to have a moving map as part of that integrated
avionics, which gives great situational awareness to those pilots in GA
airplanes.

MODERATOR CHEW:  Those are all good points. And we haven\'t talked about
one other question, and it surrounds both; the fact that WAAS and LAAS
are merely sensors, and that the issue that overlies both of those is
this notion of RNP. And because it appears now that different sensors
and different systems, like head-up displays, or inertial gyros, or
vertical guidance with neither, can give you all these different inputs.

You have an overarching issue of RNP which maybe can tie this all
together. So the question would be, instead of trying to come up with
LPV or WAAS, or LAAS approaches, should we undertake RNP as the
overarching type of procedure. And then let the sensors provide
something to the airplane, so the airplane knows whether it\'s capable
of flying those approaches or not. Let me go to MITRE first. Mike.

PANELIST CRAMER:  Oh, thanks. I think that it makes a huge amount of
sense to try to integrate these two methods of doing things in a
performance-based system like we\'re trying to build. We have what we
think are good criteria and good airplanes for the type of navigation
that can be laterally contained with linear surfaces, and vertically
contained with flying through the tunnel, if you will.

I think there\'s probably also a need to slope the sides of that tunnel
once in a while, and to narrow it down as you get closer to obstacles or
closer to the ground, or closer to an airport. The concept, the LPV
concept that WAAS uses does that in one way. What we haven\'t done yet
is taken the procedure design criteria for LPV approaches and the
criteria for RNP-type approaches, which are ?? and try to put them
together. We haven\'t tried that yet. There\'s been a lot of thought
gone into it by a lot of different people, but we ?? basically, RNP
turned our thinking around in a way. It changed our way of looking at
things.

We look now at an operation in an airport and a set of constraints that
we want to get into, and we build that tunnel to satisfy all those
constraints and get us down to that runway. And then we go and say okay,
whose systems qualify to stay in that box.

LPV approaches are predicated right now on a single sensor, the WAAS
sensor. So it\'s not integrated back into this performance-based thing
yet. It\'s like saying ILS approach, got to have the ILS. LPV approach,
got to have the WAAS.

Surely we can take that tapering tunnel concept and turn it into some
sort of a performance-based set of parameters, and weld it together with
the RNP methodology.

MODERATOR CHEW:  Actually, I\'m pleased you brought that up, because I
think Nick Sabatini has embraced that concept, and is working very hard
to try to figure out how we can build that differently. And we\'re
headed down that path, so I think you\'re on that.

Now unfortunately, we\'re running out of time, and I did want to take
Q&A from the audience, and give the panelists a chance to get some
really hard questions instead of the ones I gave them before I got here.

PANELIST LINDSKOOG:  Before you do that, let me just mention that in
this month\'s issue of \"Professional Pilot\", there\'s a real good
little pop quiz on this whole topic. It has a picture of an approach
chart with an LPV component. I found it educational, and I think it\'s
important that we all start talking RNP. I think it is the language of
the future for us in terms of navigation, whether it\'s a GA airplane or
a heavy transport. I think that\'s the language we\'re going to talk.

MODERATOR CHEW:  All right. Thanks. Why don\'t we call for questions.

MR. VANDEL:  Thank you. Bob Vandel, Flight Safety Foundation, and Bob
Racher, I\'d like to ask you a question. You made the case, and when we
look at the FedEx fleet, we tend to think of your big airplanes. But
when you think of LAAS, is the plan to, if the system comes to fruition,
to equip your feeder aircraft operation in the same manner?

PANELIST RACHER:  We haven\'t made a formal announcement in that regard,
but probably the most dangerous flying that we do is with the feeder
operation. Now it\'s hard to believe we get pilots to sign up to do
this, but it\'s night, it\'s instrument meteorological conditions, it\'s
mountainous, it\'s single pilot. It\'s a very challenging environment,
and these types of technologies would most certainly dramatically
increase the level of safety out there, so we\'re looking at it very
hard.

MR. HECK:  My name is Myron Heck. I\'m from the Aerospace Corporation. I
work on GPS III, and I would like to know if I can ask the Chairman of
the panel a question.

MODERATOR CHEW:  Sure.

MR. HECK:  Okay. Given the uncertainty about retiring equipment,
particularly landing system fixed ground equipment, as WAAS comes on
line, what would you think the FAA\'s position is going to be if the
next generation GPS has its own integrity monitoring, and has a high
precision signal. And, therefore, might put the issue of whether WAAS
can be retired into play. Does the FAA have any thoughts about what
might happen 15 years from now?

MODERATOR CHEW:  That\'s a very interesting question. I know the answer,
but I can\'t tell you. If you look at the FAA\'s plans, most of the
concrete plans are contained within the Operational Evolution Plan. And
the Operational Evolution Plan is more of a project plan.

Beyond that, there\'s a gap of 10 years to 20 to 25 years that the JPDO
is taking the issue of strategically what are the needs of the system
going to be. It\'s a little bit premature to talk about retiring a
system that we just certified and put in place last year, but the
strategy that we would undertake would be one that would represent the
most universal business case to all of the community. So if we talk
about shutting off a wide area augmentation system when Phil has just
gotten his constituency to equip to about 50 percent, and he\'s fond of
saying it takes 10 years for them to turn their equipage around, I think
those would all be factors into determining whether or not WAAS would
become a retired system in favor of an autonomous cockpit borne box.

But that exact issue is what we\'re facing with more of the legacy
systems that we have. Whether or not it\'s the number of procedures I
have, or the kind of sensors that are out there, the diversity of all of
the community and the customers that use the system is actually becoming
problematic for the system, not because the technologies are not sound,
but going back to the basic fundamental issue of I want more safety, I
want more efficiency, and I need more affordability. That's where there
wasn\'t such a diversity, and when the costs of these systems were such
that that we could put many diverse systems out, and shutdown bonfires,
and some of the radio aides.

We are being cornered by the sheer size of the system and the needs of
the diversity of the community, so I can\'t answer that specifically but
I will tell you that when we can get the needed consensus around when
things need to be retired, whether they\'re legacy systems or this brand
new system, that is a critical issue for the entire community that needs
to be launched now.

When we shut off becomes a negative business case, but is nevertheless a
business case for the community as a whole. And it\'s going to be
something that we, as a community, need to really address in a very
open, and a very honest way.

PARTICIPANT 3:  Good morning, Russ. I\'ve got a question for Kenny
Higgins. You made the assertion that LAAS, currently one unit could
provide Category III approaches at every runway end at an airport. What
are your thoughts on the ground infrastructure, like lighting system,
runway lighting system that taxi both surveillance and navigation in low
visibility weather. And also, is your LAAS actually certified for
Category III? If not, what are the prospects and the time frame for
Category III certification?

PANELIST HIGGINS:  Let\'s take your second question first. We believe
that there could be an operational certification for a PT-1, which is a
second generation beta LAAS station by 2008. And I say operational
certification because at that point you\'d have to wrap-around some
additional airplane capability into it to ensure integrity. Say again
your first question.

PARTICIPANT 3: Lighting systems.

PANELIST HIGGINS:  The lighting systems. You know, I think we have to go
back and look again at the requirement for lighting stations. Lighting
stations were developed in a time when roll-out guidance was not part of
the system, so today\'s airplanes with their ability to have touchdown
and full rollout guidance, number one, you begin to question whether
lighting even is a requirement any longer if you have rollout guidance.
I don\'t know the answers, but I would go back and question that.

The second thing is in the approach lighting area, if the weather is
really that bad by the time the approach lighting becomes effective,
it\'s behind you, so I think we would need to go back and look at the
basic requirements for lighting when it comes to operation in Category
III with rollout guidance capability that almost all large production
airplanes have at this time.

MODERATOR CHEW:  Is that an action item for Nick?

PARTICIPANT 3: The other question I had was taxiing, which is probably
the most hazardous operation in very low visibility weather. There\'s
surveillance issues and taxi navigation issues.

PANELIST HIGGINS:  Well, certainly I think that all of us having
precision position available, one to the crew, and two, it could easily
be made available to the people on the ground who are monitoring it,
would be part of the LAAS solution.

Now it\'s a longer term solution, but on our tech demonstrator of a
couple of years ago, we showed how such a taxi system could work. And,
of course, there are technical issues that we\'d have to solve, such as
surveys of airports, which is you have to have ?? in order to able to
make ?? you can know exactly what your position is, but if your airport
isn\'t accurately surveyed, that doesn\'t do you a lot of good. So yes,
I think that over the long term, taxi is part of the LAAS solution, and
we\'ll get there.

MODERATOR CHEW:  I think we have time for one more question.

MR. Gignac:  Yes. Steven Gignca with Bombardier. I was fortunate to be
up in Montreal with the Air Navigation Committee with the ICAO, and they
were talking along the same way as we are now. Is the ?? I guess my
question is to the panel, and to the FAA. Are you part of the sectorial
meetings that they are having? For example, if we make decisions,
obviously we can\'t make them unilaterally if we\'re dealing with other
aircraft coming into this country. If we start shutting off NDBs and
VORs, which we all agree to, how are we going to control that?

MODERATOR CHEW:  The answer is we are part of the meetings. We\'ve very
active in making sure that the compatibility of the system extends
beyond the borders of the United States.

The FAA is committed, and this is just a point of clarification. The FAA
is committed to local area augmentation, to pursuing that. And there was
a lot of misunderstandings around the funding reductions associated with
that system this last year. It wasn\'t to withdraw from local area
augmentation systems. It was to focus on the right issues.

We have integrity issues with local area augmentation that need to be
solved. And we need to direct our attention solely to that before we
deploy things, because we were deploying ?? well, we were planning to
deploy LAAS stations that potentially wouldn\'t give us any more than
WAAS would give us, so we really needed to undertake that issue. We
needed to take it to integrity for CAT II/CAT III.

We have an obligation to not only the community, but on the domestic
basis, we have an obligation to the international community on that
issue. We are fully committed to WAAS. What we don\'t understand yet is
what is the future of WAAS and LAAS individually or in combination;
hence, the reason for the panel, and a reason for I think coming
together and trying to answer and understand some of the hard questions
that come out of this. That, and all the ways that we collect
information from the community will help set the direction the FAA will
need to take with this issue. So I thank you for the question. I thank
the panel for participating and putting up with some of these questions
that I had to ask, and I guess everyone is going to get to have lunch.
Nick, are you going to release everybody here, give them directions.

MR. SABATINI:  Not yet. Again, this has been an outstanding panel. This
is a subject that we are wrestling with, and as it was mentioned
briefly, that there is an effort underway with FAA and industry members
to address the issue. How do we get WAAS and LAAS to serve the broad
community? How is that best done, because that\'s our interest - to
serve the broad community. When you think of it, augmentation is
augmentation. We have given it names. The signal itself doesn\'t know
it\'s called WAAS. It doesn\'t know it\'s called LAAS, so what do we
need to do from a technology point of view to perhaps bring that
together and serve the different needs of the different segments of this
industry?

I want to thank this wonderful body of gentlemen. Thank you. That was a
stimulating discussion. Thank you, Russ. That was beautifully done. And
lunch will be served in the Grand Dominion Salon, which is right behind
the registration desk. And please do take your materials with you as
this room will be set up very differently, and you won\'t find your book
where you left it, so please take it with you. Okay.

(Whereupon, the proceedings in General Session went off the record at
12:02 p.m.)