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28–521 PDF 2006

S. HRG. 109–501

FY 2007 FEDERAL AVIATION ADMINISTRATION

(FAA) BUDGET AND THE LONG–TERM

VIABILITY OF THE AIRPORT AND AIRWAY

TRUST FUND (AATF)

HEARING

BEFORE THE

SUBCOMMITTEE ON AVIATION

OF THE

COMMITTEE ON COMMERCE, 

SCIENCE, AND TRANSPORTATION 

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

MARCH 28, 2006

Printed for the use of the Committee on Commerce, Science, and Transportation

(

(II)

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

TED STEVENS, Alaska, Chairman 

JOHN MCCAIN, Arizona 

CONRAD BURNS, Montana 

TRENT LOTT, Mississippi 

KAY BAILEY HUTCHISON, Texas 

OLYMPIA J. SNOWE, Maine 

GORDON H. SMITH, Oregon 

JOHN ENSIGN, Nevada 

GEORGE ALLEN, Virginia 

JOHN E. SUNUNU, New Hampshire 

JIM DEMINT, South Carolina 

DAVID VITTER, Louisiana 

DANIEL K. INOUYE, Hawaii, Co-Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

BYRON L. DORGAN, North Dakota 

BARBARA BOXER, California 

BILL NELSON, Florida 

MARIA CANTWELL, Washington 

FRANK R. LAUTENBERG, New Jersey 

E. BENJAMIN NELSON, Nebraska 

MARK PRYOR, Arkansas 

LISA J. SUTHERLAND, Republican Staff Director 

CHRISTINE DRAGER KURTH, Republican Deputy Staff Director 

KENNETH R. NAHIGIAN, Republican Chief Counsel 

MARGARET L. CUMMISKY, Democratic Staff Director and Chief Counsel 

SAMUEL E. WHITEHORN, Democratic Deputy Staff Director and General Counsel 

LILA HARPER HELMS, Democratic Policy Director 

SUBCOMMITTEE ON AVIATION 

CONRAD BURNS, Montana, Chairman 

TED STEVENS, Alaska 

JOHN MCCAIN, Arizona 

TRENT LOTT, Mississippi 

KAY BAILEY HUTCHISON, Texas 

OLYMPIA J. SNOWE, Maine 

GORDON H. SMITH, Oregon 

JOHN ENSIGN, Nevada 

GEORGE ALLEN, Virginia 

JOHN E. SUNUNU, New Hampshire 

JIM DEMINT, South Carolina 

JOHN D. ROCKEFELLER IV, West Virginia, 

Ranking 

DANIEL K. INOUYE, Hawaii 

BYRON L. DORGAN, North Dakota 

BARBARA BOXER, California 

MARIA CANTWELL, Washington 

FRANK R. LAUTENBERG, New Jersey 

BILL NELSON, Florida 

E. BENJAMIN NELSON, Nebraska 

MARK PRYOR, Arkansas 

(III)

C O N T E N T S 

Page 

Hearing held on March 28, 2005 ............................................................................ 1

Statement of Senator Burns ................................................................................... 1

Statement of Senator Inouye .................................................................................. 2

Prepared statement .......................................................................................... 2

Statement of Senator Lautenberg .......................................................................... 44

Prepared statement .......................................................................................... 44

Statement of Senator Pryor .................................................................................... 40

Statement of Senator Stevens ................................................................................ 3

WITNESSES

Blakey, Hon. Marion C., Administrator, Federal Aviation Administration ........ 4

Prepared statement .......................................................................................... 7

Dillingham, Gerald L., Ph.D., Director, Physical Infrastructure Issues, U.S. 

Government Accountability Office ...................................................................... 26

Prepared statement .......................................................................................... 27

Zinser, Todd J., Acting Inspector General, Department of Transportation ........ 12

Prepared statement .......................................................................................... 14

APPENDIX

Response to Written Questions Submitted by Hon. Daniel K. Inouye to Hon. 

Marion C. Blakey ................................................................................................. 51

Response to written questions submitted by Hon. Frank R. Lautenberg to: 

Hon. Marion C. Blakey .................................................................................... 54

Gerald L. Dillingham, Ph.D. ............................................................................ 59

Todd J. Zinser ................................................................................................... 58

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FY 2007 FEDERAL AVIATION

ADMINISTRATION (FAA) BUDGET AND THE 

LONG–TERM VIABILITY OF THE AIRPORT 

AND AIRWAY TRUST FUND (AATF) 

TUESDAY, MARCH 28, 2006

U.S. SENATE, 

SUBCOMMITTEE ON AVIATION, 

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:05 a.m. in room 

SD–562, Dirksen Senate Office Building, Hon. Conrad Burns, 

Chairman of the Subcommittee, presiding. 

OPENING STATEMENT OF HON. CONRAD BURNS,

U.S. SENATOR FROM MONTANA 

Senator BURNS. We’ll call the Committee to order this morning. 

And we’re sorry, we probably told you the wrong place. But, thank 

you for coming this morning. 

I want to thank the panel for joining us today. This hearing is 

to kick off the oversight on the FAA reauthorization hearings 

scheduled for this year. 

I’d like to start by wishing my good friend and Ranking Member, 

Senator Rockefeller, a quick recovery. He’s in the hospital having 

minor back surgery. And I’ve been told there’s no such thing as 

minor back surgery, so we wish him well. And, of course, his staff 

is here, and very capable staff, and we look forward to his return. 

Today, we’ll review the Fiscal Year 2007 Federal Aviation Administration budget request, and also take a look at the long-term 

viability of the Airport and Airway Trust Fund, commonly known 

as the Aviation Trust Fund. 

The budget request for Fiscal Year 2007 is $13.7 billion, which is $562 million less than that enacted in 2006. This represents a 

serious cut to all portions of the FAA budget, except the operations 

account. And I don’t think I’m alone when I say there are members 

of this Subcommittee that are very concerned about some of the 

programmatic cuts proposed in the budget. Of special concern are 

the massive cuts in the AIP, or the Airport Improvement Fund. I 

find it very shortsighted to cut rural airport funding at a time 

when aviation is seeing record numbers of passengers and projected traffic numbers. Everywhere I go I ask controllers, I ask pilots about conditions. They indicate number increases in passengers and also an increase in traffic. It is a very, very real thing. 

To compound that, the AIP proposal is about a billion dollars below 

2

the level this Committee authorized for the program. This Committee has consistently tried to provide infrastructure funding, only 

to see it carved up by a budget proposal. 

This budget leaves me a little concerned that the current budgetary environment of the FAA will not have the funds necessary to 

plan for the next generation of air traffic management systems. 

Modernizing the new system is going to take innovation, spending 

control, and planning. And I’m afraid we’re not moving quickly 

enough or properly funding our aviation system. 

Modernizing our system will be the primary goal of the next FAA 

reauthorization bill. Modernization means we will need to take a 

serious look at the future of the Aviation Trust Fund. Currently, 

the Trust Fund revenues are increasing, but they will not be able 

to sustain us in our modernization plans. And I think that’s the 

question the FAA will soon have to answer, working with Congress. 

Is the Trust Fund providing the revenues necessary for true modernization and infrastructure growth of our system. 

Again, I want to thank the panel for coming today. And now I 

turn to my good friend from Hawaii, Senator Inouye, welcome, sir. 

STATEMENT OF HON. DANIEL K. INOUYE,

U.S. SENATOR FROM HAWAII 

Senator INOUYE. Why, thank you very much, Mr. Chairman. I 

don’t know what I can add to your statement. 

Senator BURNS. Senator Stevens? 

Senator INOUYE. I do have a full statement——

Senator BURNS. Oh, I’m sorry. 

[Laughter.] 

Senator INOUYE. I just want to make it part of the record. 

Senator BURNS. Oh, you want to make the statement part of the 

record. 

Senator INOUYE. Yes. 

Senator BURNS. Well, I appreciate your courtesy. 

[The prepared statement of Senator Inouye follows:]

PREPARED STATEMENT OF DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII

The Federal Aviation Administration’s (FAA) 2007 budget demonstrates a startling lack of vision. The Nation’s air passenger and cargo traffic is expected to triple 

over the next 20 years, yet remarkably, the budget does little to prepare for that 

enormous increase. This Administration has never been particularly adept at planning ahead, and the FAA budget is just the latest example. 

In fact, the FAA’s budget proposes nearly $1 billion in cuts to the Airport Improvement Program (AIP), the grant funding source for capital improvements and 

safety projects at U.S. airports. In other words, it cuts the resources specifically designated to help our airports accommodate the rapidly growing demand. At the proposed levels, major airports across the country would see a more than one-third reduction in their annual capital funding and small airports would have their funding 

eliminated. 

The Administration contends that this budget supports development of the Next 

Generation Air Transportation System, the centerpiece of the FAA’s modernization 

plan. However, according to the Department of Transportation Inspector General’s 

analysis, the FAA’s budget will only sustain the current system and will not support 

the integration of any new technology. 

Each one of us is on a plane every week. We speak to the airport directors in our 

states regularly. We know quite clearly what they are up against, and we experience 

it first hand. This FAA budget does not even begin to reflect the challenges our system is facing. 

3

Additionally, as we are all aware, the Nation’s economic competitiveness has elevated to the top of the Committee’s agenda over the last year. Aviation infrastructure and aerospace research have been key competitive advantages for the U.S. Our 

aviation system’s safety and efficiency have made it the envy of the world, and our 

advanced aerospace research has allowed us to stay ahead of our global competitors. 

Those advantages are eroding, and we are in real danger of losing our position 

as the world’s leader in aviation and aerospace. Not only is our air traffic system 

becoming overcrowded, the controllers who help guide our planes are beginning to 

retire in large numbers, and we do not, as of yet, have adequate replacements. Similarly, the proposed cuts to aerospace research demonstrate that the FAA is willing 

to cede our traditional advantage and renowned expertise. 

In passing Vision 100, several years back, we provided a blueprint for you to meet 

future challenges. This budget suggests that you are not following it. 

Making matters worse, the FAA has yet to negotiate an agreement with the air 

traffic controllers. I would like to see the parties resolve this matter voluntarily. 

Congress should not have to be the final arbiter. 

1 appreciate that the Federal budget is tight, but the President must also understand that the current financial situation is largely a crisis of his own making. Not 

long ago, we were actively reducing the deficit, while still fulfilling critical obligations that furthered the public good. Now, we are constantly looking for places to 

cut the budget, often at the expense of projects that are widely recognized as necessary. 

We need to build a modern, National Airspace System (NAS) that meets the 

public’s growing demands, and it will require vision and resources. Since the Administration has yet to provide either, it is up to Congress to deliver both.

Senator BURNS. Senator Stevens? 

STATEMENT OF HON. TED STEVENS,

U.S. SENATOR FROM ALASKA 

The CHAIRMAN. Mr. Chairman, I also second the statement that 

you’ve made. I do think, however, we should be quite aware of the 

fact that there’s an increasing number of aircraft entering this system. And that will be accelerated as these new small jets—I call 

them the ‘‘mosquito fleet’’—start entering general and private aviation for the business world. This system has to be prepared. So, 

we’re going to work with the FAA. 

On the other hand, I’ve got to say, recognizing the costs of the 

war on terror, every department has had cuts, and these cuts are 

tough, and it is hard for us to determine how the FAA will survive 

with those cuts. I think we all have to sit down and make certain 

that the allocation of the funds that come before the Appropriations 

Committee is a fair, balanced one, as far as all of the systems. And 

this is one of the key systems of our country. And, of course, in my 

state 70 percent or more of the cities can be reached only by air. 

Now, we, of all Americans, depend upon this system. And I look 

forward to working with all of you to make certain that it will 

work. 

Thank you. 

Senator BURNS. And thank you, Senator Stevens. And your full 

statement will be made part of the record. 

The CHAIRMAN. That was my full statement. 

Senator BURNS. Oh, that was your full statement? 

[Laughter.] 

Senator BURNS. Last night, I introduced the President, and he 

made the statement last night that to listen to Conrad Burns speak 

makes him a Shakespeare. 

[Laughter.] 

The CHAIRMAN. Who? 

4

Senator BURNS. The President. 

[Laughter.] 

Senator BURNS. OK? 

Director Blakey, thank you for joining us this morning. And we 

look forward to your statement. 

STATEMENT OF HON. MARION C. BLAKEY, ADMINISTRATOR, 

FEDERAL AVIATION ADMINISTRATION 

Ms. BLAKEY. Thank you, Mr. Chairman. Chairman Stevens, Senator Inouye, it’s a true pleasure to be here. And I hope you all will 

pass on our best wishes for a speedy recovery to Senator Rockefeller, as well. 

I do want to thank you for this opportunity to address the Committee on what I think is a very important topic. Your request for 

a discussion of the budget and the viability of the Trust Fund 

comes at a most opportune time. As always, safety remains our 

number-one priority, and this is a barometer, I believe, of our success. 

As you know, the trends in commercial and general aviation 

show consistent improvement. In terms of sheer numbers alone, 

over 2 billion passengers have traveled in our system in the last 

3 years. Two billion. That’s about seven times the population of 

this great Nation. Without question, it’s an impressive safety 

record. But, tragically, during that same period of time, we lost 33 

people, also in accidents. The diligence of an entire aviation community makes this possible—pilots, mechanics, inspectors, controllers, engineers, and technicians. 

With that said, we are equally diligent about conducting the 

business of government and overseeing aviation. We serve both the 

passenger and the taxpayer. That’s why Congress mandated that 

we, the FAA, must realign our operations and manage more like 

a business. We are eager to rise to that challenge. 

The tangible results of the FAA’s efforts over the past 3 years are reflected in our Fiscal Year 2007 budget request of $13.7 billion. It 

upholds our commitments to increase the safety, capacity, and efficiency of the system. But, even so, aviation finds itself at a time 

that’s both precipitous and precarious. 

The President’s budget for 2007 addresses our needs in the short 

term, but the larger issue, the Aviation Trust Fund, is a constant 

reminder that significant challenges loom on the horizon. That’s 

why we must move quickly to establish a funding mechanism for 

the FAA that’s reliable and consistent, a funding stream tied directly to the actual cost of what it takes the Federal Government 

to serve the business of aviation. 

At the forefront is a predicament of enormous consequence. The 

FAA’s funding now is beholden to the Airport and Airway Trust 

Fund, which was established all the way back in 1970. The Trust 

Fund receives revenue from a number of sources—aviation excise 

taxes, including a domestic segment tax, an international passenger tax, commercial and aviation fuel tax—but the primary 

source of income for the FAA’s operations and capital accounts is 

a 7.5 percent ticket tax on the price of commercial airline tickets. 

As the price of those tickets fell, competition increased, but our revenue stream suffered. 

5

I think a picture can be worth the proverbial thousand words, so 

indulge me for a couple of moments here just illustrating this. 

As you can see from this chart, our revenues simply cannot keep 

up. As recently as 2000, the Trust Fund revenue was sufficient to 

cover the entire FAA budget. That’s on the far left side over there, 

where you see the lines intersecting. But not anymore. Over the 

last 5 years, a widening gap has resulted in the need for greater 

Trust Fund—General Fund contributions or drawing down the 

Trust Fund, or both. 

The future looks equally dim. The next chart shows that tying 

the plan to pay for FAA operations to the Trust Fund injects substantial uncertainty into our planning process. The green line 

shows what we expected the future of the Trust Fund to be back 

in the year 2000. The premise was based on the industry’s $8 billion profit that year. Remember that? 

The premise, unfortunately, was wrong. 9/11, the subsequent 

wave of bankruptcies, the dip in ticket prices couldn’t be forecast 

by anyone, nor were they. In short, the volatility of the Trust Fund 

pre-empts any long-term planning. Even though the Trust Fund 

revenues show slight recovery, it’s still about $3 billion below what 

we forecast in 2000. And the bigger problem is this—the shortfall 

for the entire period of 2001 to 2007 will likely total $20 billion. 

As you know, regardless of the state of the Trust Fund, the 

FAA’s workload continues to rise. The next chart is a relatively accurate shorthand method of showing how much the FAA’s workload 

is on the increase. Departures are a major driver. And, as you can 

see, they’ve been on the rise for 15 years. I draw your attention to 

the red line, which shows the volatility of the Trust Fund during 

that same period. Regardless of the revenues’ peaks and valleys, 

the workload is steadily on the rise. History shows that whether 

revenue goes up or revenue goes down, the workload does not decrease. 

No matter what the revenue picture looks like, all of the taxes 

that fuel the Trust Fund will expire on September 30, 2007, and 

the Administration is finalizing a proposal to address these challenges. The time to act is now. If we don’t, we’re going to be unable 

to establish a realistic funding scheme that will address the potential for gridlock. If we don’t act, the hard drive of aviation will spin 

more and more slowly, except rebooting aviation and the system in 

which it operates will not happen at the mere press of a button. 

On this issue, there’s no middle ground. There’s no real safe haven 

for inaction. 

As you well know, the post-9/11 aviation industry has undergone 

enormous change. The market now features a move away from the 

wide-bodied jet to a greater number of smaller jets, which carry 

fewer seats and discount ticket prices, to boot. The math here is 

simple. The passenger numbers continue to increase. Forecasts anticipate 1 billion passengers by 2015. We are already at 739 million. That’s above 9/11 levels. Low-cost airlines and regional jets 

have taken an ever-increasing share of the market. The workload 

increases, but, because of cheaper tickets, the revenue to the Trust 

Fund has not increased commensurately. 

The Administration has been taking steps to address this situation. Under the leadership of Secretary Mineta, the FAA has been 

6

moving toward operating more like a business. Our business plans 

mirror the industry we serve. We’ve organized our entire air-traffic 

services department, cutting multiple levels of senior management, 

reducing our executive ranks by 20 percent. We’ve streamlined operations, eliminating and consolidating administrative staffs and 

our accounting departments. We’ve also completed the largest 

nonmililtary A–76 program in the history of the Federal Government, reducing the number and cost of our Automated Flight Service Stations while increasing technology and service to the public—

better service, lower cost, saving $1.7 billion over 10 years. And we 

continue to negotiate in good faith with our controllers union. 

You have my firm commitment that we cannot, and will not, sign 

a contract we cannot afford. Operating more like a business will 

help us operate more efficiently, but we still need to pay for the 

next generation air transportation system. With the number of passengers continually on the rise, we know with certainty that the capacity of the system is reaching its limits. The technology used by 

airlines and businesses is moving forward with great speed, as 

well. Very light jets, the ‘‘mosquito fleet’’ that Chairman Stevens 

refers to, personal taxis, they are soon going to start being delivered, be in hangars around the country. At a cost of a little more 

than $1 million apiece, these jets will expand the service of aviation to airports well outside the majors that now dominate our 

transportation industry. We forecast that 100 of these very light 

jets will be delivered this year, ramping up to 500 per year by 

2010. And that’s just the beginning. The next generation air transportation system must accommodate business jet and regional jet 

fleets that are significantly larger than levels at the turn of the 

century. The U.S. business jet fleet, by 2008, will be approximately 

45 percent larger than 2000 levels. The regional jet fleet will be 

three and a half times bigger. 

That brings us to the question which is most difficult to answer, 

how do we pay for it? Right now, our revenues have no direct relation to the cost it takes to run things and invest in the future. As 

I’ve said before, we might as well link our revenues to the cost of 

a gallon of milk. But, hyperbole aside, if the revenue stream bears 

little relation to actual cost, we’re stuck on a treadmill that leads 

absolutely nowhere. The unfortunate truth is that the system continues to fully tap the resources we have. 

The Secretary has convened six Cabinet-level agencies to put together the next generation air transportation system. Unless a consistent and cost-based revenue stream is established to pay for it, 

the effort’s likely going to be for naught. As it is, the agency is 

heading toward a balancing act among competing resources. Do we 

cut back on air traffic services? Do we slow the course of modernization? Do certification efforts for the new aircraft take a slow 

roll? In short, it’s robbing Peter to pay Paul. And that’s untenable. 

But it’s not as farfetched as it’s likely to be. That’s why we 

reached out to Wall Street, to industry, to our stakeholders, obviously to you all, our legislative leaders, searching for ways to address the Trust Fund issue. 

Our draft proposal is being finalized right now. Our goal is to 

create a funding structure that creates a clear link between our 

revenue stream and the cost of providing services. We intend to 

7

recognize the unique features of different FAA services and different aviation user groups, taking into account all the input we’ve 

received, as we develop a financing structure that’s sustainable and 

supports the development of the next generation system. As we do 

this, we’ll make every effort to balance, effectively and efficiently, 

the way the system is used and by whom. 

In closing, let me, again, emphasize the need for a stable, consistent funding stream. I define ‘‘stability’’ as revenue driven by the 

same factors that drive our costs. Simply put, our revenue and our 

costs need to be on the same platform, moving in the same direction. Unless and until that happens, we’ll be moving in a direction 

that neither the FAA nor the industry wants to go. We’ll be heading for a destination our economy can’t afford. 

Thank you very much. 

[The prepared statement of Ms. Blakey follows:]

PREPARED STATEMENT OF HON. MARION C. BLAKEY, ADMINISTRATOR, FEDERAL

AVIATION ADMINISTRATION

Chairman Burns, Senator Rockefeller, Members of the Subcommittee: 

I welcome the opportunity to be here today, along with my colleagues from the 

Inspector General’s Office and the Government Accountability Office (GAO), to discuss the state of the Federal Aviation Administration’s (FAA) financial health, specifically our budget for Fiscal Year 2007 and the condition of the Airport and Airway 

Trust Fund (AATF or Trust Fund). The financial health of the Aviation Trust Fund 

is closely linked to the stability of the aviation industry. I understand that today’s 

hearing will lay the foundation for a hearing in several weeks where future funding 

options for the FAA will be addressed in detail. I look forward to returning and discussing the specifics of the Administration’s proposal. 

First let me briefly express appreciation for the dialogue that has begun with our 

stakeholder community. Over the past year, under Secretary Mineta’s leadership, 

we have conducted a broad outreach to the aviation community to explore funding 

options that would be in the long-term best interest of the traveling public, the aviation industry and the FAA. We held a public forum last April and have conducted 

numerous group and individual briefings with our stakeholders. To inform the dialogue we published detailed industry activity data as well as a set of principles 

which we thought should underlie and guide the discussion. In my view the 

thoughtful comments we have received have greatly informed our decision making. 

We at the FAA have listened intently and have benefited from a wide range of expert views. 

As I’ve often stated over the past year during our outreach, our belief in the need 

for funding reform for the FAA is not fundamentally about generating more money 

for the FAA. It is about creating a more rational, equitable and stable system that 

provides appropriate incentives to users and to the FAA to operate more efficiently 

and facilitates modernization of the aviation system on an assured and predictable 

basis. 

Fiscal Year 2007 Budget Proposal 

I would like to address the FAA’s budget in the near term. As you know, the FAA 

operates 24 hours a day, 7 days a week, 365 days a year. We run a multi-billion 

dollar air traffic control system that in FY 2005 served 739 million passengers and 

over 39 billion cargo revenue ton miles of freight. We operate and maintain a system comprised of more than 70,000 facilities and pieces of equipment. There are 

FAA-operated or contract towers at 500 airports, and we are also responsible for inspection and certification of about 220,000 aircraft and 610,000 pilots. We have 

some 43,000 dedicated government employees working to serve the traveling public 

and the businesses that depend on the air transportation system. 

When Congress mandated the FAA to realign our operations and manage more 

like a business, we rose to the challenge. The FAA’s efforts over the past three years 

have paid real dividends, not just to the flying public but to the taxpayer as well. 

By implementing improved management tools, including better cost-accounting systems and instituting a pay-for-performance program, we have been able to make 

better use of our resources. The tangible results are reflected in our FY 2007 budget 

8

request of $13.7 billion. The request upholds our commitments to increase the safety, capacity, and efficiency of the national aviation system. The FY 2007 budget provides $8.4 billion for our Operations account and reflects 

the rising labor costs and challenges the FAA faces. This year, we completed the 

largest A–76 competition in government and will see the first installment of cost 

savings—$66 million—in FY 2007. This contract not only saves money; it also commits the vendor to modernize and improve the flight services we provide to general 

aviation pilots. The agency’s emphasis on bottom-line results has not been easy. The 

FAA has slashed costs where possible and slowed the rate of growth of our labor 

costs through productivity improvements. We also continue to apply effective management and financial principles to our labor negotiations. The simple fact of the 

matter is that we cannot and will not sign a contract that the taxpayer cannot afford. Since 1998, the first year of the current NATCA contract, the increasing imbalance in compensation between NATCA and the rest of the agency has cost the taxpayer $1.8 billion. Neither the FAA nor the taxpayer can afford a repeat performance. As a result, future labor agreements will be fair, affordable and protect management’s rights. We have been negotiating with NATCA for more than eight 

months, and I am hopeful that we will be able to reach a voluntary agreement, particularly now that both sides have been working with the help of a Federal mediator 

during the last few weeks. Both sides recently agreed to a short extension of the 

mediation, and I anticipate this will come to closure shortly, hopefully by a voluntary deal. 

Long-term affordable pay structures are only a part of the equation. In addition, 

we are taking steps to achieve savings of 10 percent by FY 2010 in controller staff 

costs through productivity improvements. We achieved the first 3 percent of this 

goal in FY 2005 and, overall we avoided approximately $23 million in costs last 

year. This fiscal year and in FY 2007, we project a minimum of a 2 percent productivity improvement each year. 

We expect a continuous wave of controller retirements over the next 10 years, as 

72 percent of our air traffic controllers become eligible to retire. Bringing aboard 

new controllers is a complex process and it takes several years to train a controller. 

Our budget request supports our hiring needs for both air traffic controllers and 

safety inspectors. 

For Facilities and Equipment (F&E), we are requesting $2.5 billion to improve 

and modernize the airspace system. We are also scrutinizing our capital investments; revisiting business cases and weeding out programs whose benefits no longer 

justify the costs; and we are increasing our emphasis on programs that will save 

the agency money. 

We are making similar inroads with equipment. In FY 2005, we removed 177 

navigation aids from service, which saved the taxpayer about $2.7 million. This 

year, we plan to remove 100 more, followed by another 100 in 2007. We are taking 

steps to save wherever possible. In fact, our five-year strategic plan, the FAA Flight 

Plan, sets cost savings and productivity improvement goals for all organizations in 

the agency. 

Our resources and activities are closely linked with the dynamic industry we oversee and serve. The pace and depth of change in aviation is unparalleled. Business 

models evolve as rapidly as the technology changes: markets once dominated by 

wide body aircraft are now giving way to smaller jets. Entrepreneurs now are marketing microjets, which may one day become the ‘‘personal taxi’’ of the sky. Fractional ownership is making it easier for businesses to own and operate aircraft. 

Even with the financial shake-up in the airline industry, all major forecasts 

project that the demand for air travel will outstrip existing capacity. After a very 

slight decline in projected operations at airports with FAA or contract towers, we 

forecast an average annual growth of two percent and forecast a three percent annual growth for en route operations (from 2005–2017). Air travel now exceeds preSeptember 11 levels and remains on track to carry more than 1 billion passengers 

by FY 2015. 

The future portends a wide range of aircraft with divergent infrastructure, air 

traffic management, regulatory, and procedural requirements. We must be prepared 

to support a system that includes the A380 and the microjet (and everything in between). We must be able to support airlines, large and small, national and regional. 

Recognizing that aviation represents about nine percent of America’s Gross Domestic Product, we must provide this infrastructure in time to keep the U.S. economy 

growing while controlling the costs of that system. 

Safety 

Safety remains our number one priority and our number one success story, with 

the trends in both commercial and general aviation showing consistent improveVerDate 0ct 09 2002 13:56 Aug 01, 2006 Jkt 028521 PO 00000 Frm 00012 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\28521.TXT JACKF PsN: JACKF
9

ment. The safety record we have achieved for air carriers is a remarkable accomplishment, which our entire workforce—inspectors, engineers, technicians, and controllers—shares with the broad aviation community. Over the past four years, 3 billion people have traveled safely in the air transportation system—that’s ten times 

the population of the U.S. 

The FY 2007 budget reflects the agency’s steadfast commitment to safety. Out of a total request of $13.7 billion, about 70 percent, or $9.6 billion, will contribute to 

our efforts to improve our already historic safety record. This includes further 

progress in reducing commercial and general aviation fatality accidents, the numbers of runway incursions, and HAZMAT incidents. Our overarching goal is to measure and achieve the lowest possible accident rate, while constantly improving safety. 

Grants-in-Aid to Airports 

In today’s challenging budget environment, we have been forced to take a long 

hard look at our funding requirements. Our FY 2007 budget request for Grants-inAid to Airports is $2.75 billion which is lower than recent authorized and enacted 

levels. Nevertheless, under our proposed budget, FAA will be able to support all 

high priority safety, capacity, security and environmental projects. There will be 

adequate funds to meet all current and anticipated Letter of Intent (LOI) commitments, which relate to high priority, multi-year projects within the national system. 

The President’s Budget includes support of major capacity projects such as the Chicago O’Hare redesign, new runway at Washington Dulles International Airport and 

major projects at Atlanta-Hartsfield International. We will also be able to fund 

projects to meet the FAA’s Flight Plan goal for improving runway safety areas 

(RSAs), help airports meet their Part 1542 security requirements, and continue 

work on phased projects. 

Technology for the future 

We are laying the foundation for our future with a commitment to increasing the 

system’s capacity to accommodate the air transportation system’s predicted growth. 

We will meet these future needs by harvesting new technologies that will support 

the Integrated National Plan for the Next Generation Air Transportation System 

(NGATS). This Plan, submitted to Congress in December 2004, brings together six 

cabinet-level groups in the Joint Planning and Development Office (JPDO) to eliminate duplication and wasted resources. The Plan is a roadmap that will leverage 

Federal funds and allow us to provide the national aviation system that can handle 

the safety, capacity and security needs of the future. 

For the FAA, the Plan has already been integrated into our budget. Our 2007 

budget begins to build this new infrastructure by, for example, supporting two 

promising technologies: Automatic Dependent Surveillance-Broadcast (ADS–B) and 

System Wide Information Management (SWIM). The capabilities of ADS–B are already proven in the field. ADS–B provides: (1) automatic broadcast of aircraft position, altitude, velocity, and other data; (2) enhanced ‘‘visibility’’ of aircraft and vehicle traffic for pilots and air traffic controllers; and (3) use of Global Positioning Systems, allowing us to reduce our reliance on ground-based infrastructure. SWIM 

makes advanced information distribution and sharing capabilities possible. Every 

year, FAA builds applications for air traffic management systems that require 

unique interfaces between the new application and existing systems. SWIM will replace those unique interfaces with a reusable interface and provides many operational benefits. 

The above overview of our FY 2007 budget is how we propose to meet the challenges over the near term for the FAA, and also provide for the long-term with our 

Integrated National Plan for NGATS. At the same time, we are also planning for 

the next reauthorization of our programs and how those programs will be funded. 

Critical to that endeavor is an examination of the status and outlook of the Airport 

and Airway Trust Fund and what that means for the FAA’s long term financial picture. 

The Airport and Airway Trust Fund 

The Airport and Airway Trust Fund was created in 1970 to provide a dedicated 

source of funding for the aviation system. Before there was a Trust Fund, a 5 percent tax on passenger airline tickets, a general aviation fuel tax, and a tire and tube 

tax were deposited in the General Fund. Today Trust Fund revenues are generated 

by a combination of taxes that were last authorized in 1997: a domestic passenger 

ticket tax of 7.5 percent of the price of a ticket, a domestic flight segment tax of 

$3.30 per segment per passenger, an international departure/arrival tax of $14.50 

per international passenger, an Alaska/Hawaii departure tax of $7.30 per passenger 

traveling between these states and the continental U.S., a 6.25 percent waybill tax 

on domestic cargo and mail, a general aviation (GA) jet fuel tax of 21.8 cents per 

10

* The uncommitted balance consists of surplus revenues in the Trust Fund against which no 

commitments, in the form of budget authority, have been made. This measure provides the most 

widely-accepted estimates of the amount of money available in the Trust Fund for new appropriations for aviation purposes. 

gallon, a GA aviation gasoline tax of 19.3 cents per gallon, and a commercial fuel 

tax of 4.3 cents per gallon. The domestic segment tax, international departure/arrival tax, and Alaska/Hawaii tax rates are indexed to the Consumer Price Index and 

have increased each year for the last four years, but the airline ticket tax is a fixed 

percentage of the ticket price, so it is dependent on changes in airline ticket prices 

rather than general inflation. These taxes and fees are scheduled to expire in September 2007, which also coincides with the end of the current authorization for FAA 

programs under Vision 100. 

Each year, the FAA is funded by annual appropriations drawn both from the 

Aviation Trust Fund and from the General Fund. There has been a long history of 

funding a portion of the FAA’s operating costs out of the General Fund due to recognition that aviation provides benefits to the non-traveling public and to our economy as a whole. However, the ratio of General Fund versus Aviation Trust Fund 

financing has varied over the years. The General Fund share of total FAA appropriations has been as high as 59 percent (in FY 1984) and as low as zero (in FY 

2000). The trend, however, is not in question. On average over the last 15 years, 

the portion of operating costs coming from the General Fund has declined steadily. 

In FY 2005, about 20 percent of the FAA’s total budget came from the General Fund 

and 80 percent from the Trust Fund; this year it’s 18 percent and 82 percent, respectively. 

In recent years, appropriations from the Trust Fund have been funded not only 

from the annual revenue going into the fund and interest posted to the Trust Fund, 

but also from drawing down the AATF’s balance, which was over $7 billion as recently as 2001. A gap exists when you compare the revenue going into the Trust 

Fund with the level of our costs, and this gap is quickly eroding the Trust Fund. 

Since the start of FY02, the uncommitted balance * of the Trust Fund has declined 

by more than $5.4 billion, or an average of 28 percent per year. When there is no 

relationship between the level of revenue being raised to the costs being funded 

from the Trust Fund, factors such as fluctuating ticket prices that do not raise 

enough revenue, volatile demand so there are fewer passengers paying for travel, 

and fundamental changes in the airline industry such as the decreasing size of aircraft being used for commercial transport, lead to a revenue shortfall that has been 

funded by drawing down the Trust Fund balance. With the increasing pressures on 

the budget to fund military and national security needs, the Trust Fund remains 

a critical necessity in closing the funding gap. Last year (FY05), the uncommitted 

balance at the end of the fiscal year was $1.9 billion and, this fiscal year, the President’s budget projects that it will dip to approximately $1.7 billion at the end of the 

fiscal year. 

The FY 2006 projected level of the uncommitted balance is sobering because it 

leaves only a small ‘‘cushion’’ in the Trust Fund balance. In addition, our ability to 

rely on an increased General Fund contribution to bridge any gap is in question due 

to competing budget pressures as well as the effort to reduce the Federal deficit. 

As we look to the future, we see a complicated air traffic control system and workload. As noted above, scheduled commercial passenger demand, which dipped severely in the wake of 9/11, exceeded pre-9/11 levels last year reaching a record 739 

million passengers, up from 690 million in FY 2004. We expect that domestic passenger totals will continue to grow at approximately three percent per year with the 

international sector growing five percent per year. 

Low-cost carriers and regional carriers (using smaller jets) are continuing to redefine the market. Revenue passenger miles (RPM) for the regional carriers are expected to grow almost seven percent per year, and we forecast annual RPM growth 

of almost eight percent for low-cost carriers. We forecast that regional carriers will 

increase their share of the U.S. domestic market from 22 percent last year to more 

than 25 percent by 2017. In FY 2005, commercial activity at 23 of our 35 major airports exceeded FY 2000 (peak) activity levels. Las Vegas (37 percent); Ft. Lauderdale (33 percent); Salt Lake City (30 percent); and Minneapolis (30 percent) experienced the greatest increases in operations. 

It is of course very good news for the aviation industry that demand is back, but 

it is back in different ways than before. While low fares are good news for the passenger, they spell trouble for the Trust Fund with its heavy reliance on the ticket 

tax as its primary source of revenue. Approximately 50 percent of the Trust Fund 

revenue currently comes from the 7.5 percent tax on domestic airline tickets. 

11

Industry changes also have implications for the FAA’s workload. The airlines are 

trying to control costs by using increasing numbers of smaller aircraft. This trend 

adds to the workload of air traffic controllers without increasing tax revenue commensurately. Regional jets normally carry fewer passengers than the larger airliners, so the movement toward smaller passenger aircraft contributes to the decline 

in the Trust Fund revenue per flight. If an airline carries a given number of passengers (paying the same fares) on two regional jets instead of one larger jet, ticket 

tax revenue does not change, but controller workload approximately doubles. Our 

latest forecasts indicate that the growth in the number of smaller aircraft is expected to continue, driving down the average number of seats of a domestic aircraft 

through 2011. Plainly, our revenue is not tied to the cost of the service, which 

means that there is no nexus between actual workload and how it’s paid for. 

Increased air traffic operations are not the only source of increased workload for 

the FAA. In recent years the industry has also seen more new entrant carriers. 

While this is good news for competition, it also has workload implications for our 

agency. Right now, there are 10 applications in the queue awaiting review and certification by our safety staff, and each of these new operators will bring additional 

pilots and crew into the system. Also, with regard to our airport grant program, Vision 100’s increase in funding for the Airport Improvement Program (AIP) coupled 

with a new entitlement formula apportionment for non-primary airports increased 

our workload in processing grant applications by fifty percent. 

Knowing what is happening with Trust Fund revenues and how the changes in 

the aviation industry affect our workload is only part of the equation. We know we 

must also continually work very hard to control our costs—to make changes and become more efficient, more business like. We are changing the agency’s structure 

with a major shift to a performance-based organization, and, as I noted above in 

discussing our budget proposal, making tough choices with our funding. We have 

implemented a cost accounting system in the ATO that provides our managers and 

executives with the information they need to identify and eliminate wasteful spending, hold or reduce operating costs, and better link financial performance to mission 

objectives. That cost accounting system is being extended throughout the FAA this 

year to help us better assess and control our costs. 

I’ve already mentioned our cost savings measures by the ATO, our challenges 

with our labor negotiations and with future controller hiring. We are also faced with 

an aging and deteriorating inventory of facilities and equipment. The average condition of the FAA’s 21 en route air traffic control centers is poor and getting worse 

each year. As this Committee well knows, modernization of the air traffic control 

system is critical if the agency is to keep up with what aviation brings tomorrow. 

The price tag for these facilities and equipment alone is $2 billion per year in capital funds just to maintain current services. 

In addition to maintaining the current infrastructure, the JPDO is planning for 

the emergence of the next generation of the air transportation system out to 2025, 

charting the course for satellite based navigation, handling new aircraft classes, ondemand services, and the increasing growth in air traffic. However, the move to a 

modern, efficient and technology-driven aviation system is going to require sustained, multi-year investments. We will need to invest resources in order to make 

the transition to a new system that will significantly reduce operating costs and better serve our customers in the long run. 

What I have outlined above—the condition of the Aviation Trust Fund in the context of the growth in demand and industry restructuring, and the fact that FAA’s 

future funding requirements will significantly outpace revenue from aviation 

taxes—clearly highlights a couple of issues. During the most recent reauthorization 

cycle for the current aviation excise taxes (1996–1997), Congress allowed the authority for those taxes to expire twice, which resulted in a $5 billion loss in revenue to 

the Trust Fund. We cannot afford to let that happen again. Two, the FAA needs 

a stable source of funding that is based both on our costs and the services we provide so that we can meet our mission in an extremely dynamic business environment. Airline ticket prices are not related to any real measure of productivity for 

the FAA. Regardless of how many operations we run through the national airspace 

system or how quickly we can certify new aircraft products and technologies, or how 

we continue to drive down the already low accident rate, the primary source of 

Trust Fund receipts is linked to the price of a ticket. That approach will not sustain 

us into the future. 

Tying funding to the cost of providing service protects both FAA and the customers who use FAA services by not subjecting our ability to provide a certain level 

of service to unrelated factors like ticket prices. A stable, cost-based revenue stream 

can also ensure funding for long-term capital needs. We also believe that a costbased revenue structure would provide incentives to our customers to use limited 

12

resources efficiently and to the FAA to operate efficiently, as stakeholder involvement can help us ensure that we are concentrating on services that the customer 

wants and is willing to pay for. 

Conclusion 

We believe that the revenue stream that currently funds the FAA is not tied to 

the cost of the services and that there is a need for funding reform. FAA’s workload 

continues to increase. The current system, largely based on the ticket tax, provides 

no nexus between the actual workload of controlling flights and providing other 

services and how they are paid for. It is time for change. 

Mr. Chairman, ten years after the NCARC recommendations, we are tackling 

probably the hardest part of reform: how the aviation transportation system will be 

financed in the next decade and beyond. Our proposal for funding reform for the 

FAA is now under review within the Administration. As I noted at the outset, it 

is the product of extensive public outreach, analysis, and a lot of creative thinking. 

It will propose a cost-based funding structure which will ensure that our costs and 

revenues are aligned and that our stakeholders are treated equitably. The details 

will come soon in the form of a legislative proposal, which I hope will be the basis 

for ongoing dialogue with this Committee and others in Congress, our colleagues in 

the aviation community, and the public. 

I look forward to the debate and expect that the discussions will be frank, open 

and spirited. We have an opportunity in the near future for positive change, to correct the faults of the current system that threaten our ability to meet future demand. Change is always unsettling and difficult and requires patience and hard 

work, but to be ready for tomorrow we must begin today. It is the only way that 

we will be able to continue to operate and maintain the world’s safest system with 

the capacity our economy needs. 

That concludes my testimony. I would be happy to answer any questions you may 

have.

Senator BURNS. Thank you. 

Now we’ll hear from Todd Zinser, Acting Inspector General, Department of Transportation. Thank you for joining us this morning. 

STATEMENT OF TODD J. ZINSER, ACTING INSPECTOR 

GENERAL, DEPARTMENT OF TRANSPORTATION 

Mr. ZINSER. Thank you, Mr. Chairman and Members of the Subcommittee. We appreciate the opportunity to testify today on FAA’s 

2007 budget and the state of the Aviation Trust Fund. 

An important point we’d like to make this morning, Mr. Chairman, is that FAA’s 2007 budget focuses mainly on the status quo, 

in keeping things running. Right now, this Committee does not 

have a good handle on FAA requirements with respect to what is 

needed for the next generation air traffic system. This will be a 

critical issue for this Subcommittee and FAA as deliberations begin 

over the next reauthorization. 

For FY 2007, the agency is requesting $13.7 billion, which is 

$561 million less than last year’s appropriation, and nearly $1.5 

billion less than the authorized amount. FAA’s overall budget has 

remained relatively flat over the past 4 years, but, compared to last 

year, there are big differences in the distribution of that request. 

The operations account is up 3 percent over last year, while the 

capital and airport accounts are down 2 and 22 percent, respectively. I’d like to highlight some of the key issues within those 

three accounts. 

First, operations, FAA’s biggest account, and over 60 percent of 

the budget. FAA is requesting $8.4 billion for 2007 operations, $262 

million more than last year. We see two big challenges here. First 

is completing contract negotiations with NATCA. The talks are 

down to some of the most difficult issues, including pay. Ideally, in 

13

the end, the contract will be mutually agreed to, affordable, and result in much-needed productivity gains for FAA. 

The second challenge in the operations account is addressing a 

surge in controller retirements. FAA estimates over 70 percent of 

the existing controllers will leave the FAA over the next 10 years. 

FAA’s December 2004 report is a good first step, but it has two 

major gaps. 

One is, it doesn’t have an estimated price tag. Hiring and training 12,500 new controllers will be an expensive proposition, especially since it takes new controllers between 2 and 5 years to become fully certified. 

Two, the plan doesn’t address hiring and staffing by location. 

There are over 300 FAA-operated air traffic control facilities, many 

with significant differences in the complexity of the operations, 

which, in turn, drive the cost of operating those facilities. Without 

such facility-by-facility numbers, FAA will lose a significant opportunity for productivity gains and cannot reliably project its operation cost for the future. 

For 2007, FAA is requesting $2.5 billion for its F&E account, 

which is about 50 million less than last year. This is also the 

fourth consecutive year that F&E requests are below authorized 

levels. The majority of FAA’s capital account now goes for keeping 

things running, not new initiatives. FAA has deferred or canceled 

a number of projects as funding for F&E remained flat. Many of 

the ongoing efforts are maturing and completing them within cost 

and schedule is critical to allow room in the budget for future initiatives. Two projects worth noting are ERAM and FTI. 

ERAM is intended to replace host computers at en route centers. 

It is one of the most expensive and complex acquisitions in FAA’s 

portfolio, with an acquisition cost of $2.1 billion. This year is critical for ERAM, because FAA will spend a million dollars a day on 

the program. But, more importantly, if it’s not kept on track, there 

will be a cascading impact on FAA’s ability to deliver future systems. This is a critical watch item. 

We have concerns about the FTI program and whether or not it 

can be completed on time. FAA’s FTI program is an effort to replace and reduce the cost of FAA’s entire telecommunications systems. It has an estimated life-cycle cost of $2.4 billion through 

2017. We recently issued a draft report on FTI and consider it a 

high-risk program. Only months after being rebaselined in December 2004, the program began falling behind its installation schedule and has not recovered. Projected savings are diminishing as we 

speak, and the program needs to get on track. 

The biggest reduction in FAA’s 2007 request is in the airports account. At $2.7 billion, the 2007 budget request is $764 million less 

than 2006, and $1 billion less than the authorized amount. The 

bulk of the planned reductions, $624 million, will occur in formula 

grants. With this decrease in available AIP funds, FAA will need 

to better manage airport grants. One area we recently examined is 

how airports dispose of land acquired for noise abatement. We 

found that FAA could recover $242 million at just the 11 airports 

we looked at. 

Let me conclude this morning, Mr. Chairman, with three observations about the Trust Fund and the General Fund. 

14

First, Trust Fund revenues have actually been increasing, and 

now exceed pre-September 11th levels, and 2007 Trust Fund revenues are projected to be $11.7 billion. Second, however, FAA’s 2007 

budget request exceeds the projected revenues by $2 billion, and 

FAA estimated, in 2007, that the General Fund will contribute $2.9 

billion, or 21 percent of its total budget. That amount is similar to 

what’s been contributed by the General Fund over the last 3 years. 

Third, the uncommitted balance in the Trust Fund has been depleted, going from $7.3 billion in 2001 to a projected $1.7 billion in 

2006, and may no longer be a viable option as a stopgap measure 

or buffer for FAA funding needs. It is clear that other options need 

to be considered. But a much better understanding of FAA’s requirements for the next generation air traffic control system is also 

needed. The recent report to Congress by the Joint Program and 

Development Office was silent on complex implementation issues 

and how much funding will be needed, and when. This will be a 

central issue in discussions about how best to finance FAA and the 

shape, size, and direction of the Agency’s capital needs for years. 

That concludes my statement. I would be happy to answer any 

questions, Mr. Chairman. 

[The prepared statement of Mr. Zinser follows:]

PREPARED STATEMENT OF TODD J. ZINSER, ACTING INSPECTOR GENERAL, 

DEPARTMENT OF TRANSPORTATION

Mr. Chairman and Members of the Subcommittee: 

We appreciate the opportunity to testify today regarding the Federal Aviation Administration’s (FAA) Fiscal Year (FY) 2007 budget and the state of the Aviation 

Trust Fund. Financing FAA is one of the most important issues facing the Department, Congress, and the aviation industry. It is particularly important in light of 

the fact that the current FAA authorization—Vision 100—and the current ticket 

taxes expire in 2007. 

Our office has an extensive body of work regarding cost control and financial 

issues within FAA. For example, in 1999 we reported that persistent cost growth 

in the agency’s operating account was ‘‘crowding out’’ critical capital investments in 

air traffic modernization and capacity-enhancing projects within the existing revenue base. This is still a concern today. 

First, it is important that we recognize that FAA oversees the safest aviation system in the world. Prior to December 2005, when a Southwest Airlines aircraft skidded off the runway at Chicago Midway and struck a car killing a child in the vehicle, there had not been a large commercial air carrier fatal accident in this country 

in 4 years. Notwithstanding that tragic accident, the United States has maintained 

a remarkable safety record considering the many changes occurring within the industry, including financial uncertainty and rebounding air traffic. 

In terms of traffic, FAA estimates that between FY 2004 and FY 2005 domestic 

passenger enplanements have risen about 7 percent (from 628 million in 2004 to 670 

million in 2005). FAA also estimates that international passenger enplanements 

have risen about 12 percent over this same time frame (from 61 million in 2004 to 

69 million in 2005). By 2015, FAA estimates that 1 billion passengers will board 

planes (both domestically and internationally) each year. 

Although traffic is up, network air carriers continue to suffer huge losses as a result of soaring fuel costs and their high cost structures. Last year, eight air carriers 

were in bankruptcy, which represented about 35 percent of available capacity. 

Today, four remain under bankruptcy protection, representing about 17 percent of 

available capacity. But all the network carriers continue to work aggressively to 

move away from high cost structures by reducing in-house staff, renegotiating labor 

agreements, and increasing the use of outside repair stations. 

It is against this backdrop that we would like to discuss FAA’s FY 2007 budget 

request. An important message of our testimony this morning, Mr. Chairman, is 

that FAA’s FY 2007 budget primarily focuses on short-term requirements, such as 

sustaining existing systems and equipment. 

15

The long-term initiatives to address future capacity and the funding mechanisms 

necessary to implement them have not yet been defined. That is a critical issue for 

this Subcommittee and FAA as deliberations begin concerning FAA’s next reauthorization and alternative methods for financing FAA. 

Today, I would like to focus on two issues:

• Progress and challenges within FAA’s three major accounts—Operations, Facilities and Equipment (F&E), and the Airport Improvement Program (AIP), and

• Observations on the current funding mechanisms for FAA.

FAA’s FY 2007 Budget Request 

Like the air carriers, FAA is in a tough financial environment and, like most Federal agencies, is facing the realities of an austere budget environment. Over the past 

4 years, FAA’s overall budget has remained relatively flat—between $13.7 billion 

and $14.3 billion. For FY 2007, FAA is requesting $13.7 billion, which is $561 million less than last year’s appropriation. However, there are significant differences 

in the distribution of FAA’s FY 2007 budget request among the agency’s various accounts. As shown in Table 1, the Operations account increased a little over 3 percent from last year’s appropriations while the other 3 accounts were reduced. The 

F&E account is 2 percent less than last year, and the AIP account is almost 22 percent less than last year. Compared to the authorized levels in Vision 100, the budget 

request is $1.48 billion less—primarily in the AIP and F&E accounts.

Table 1: Comparison of Recent FAA Enacted Budgets and FY 2007 Requested and 

Authorized Levels ($ in millions) 

FY 2004 FY 2005 FY 2006 FY 2007

(request) 

FY 2007

(authorized) 

Operations $7,479 $7,707 $8,104 $8,366 $8,064

F&E $2,871 $2,525 $2,555 $2,503 $3,110

AIP $3,382 $3,497 $3,514 $2,750 $3,700

RE&D $119 $130 $137 $130 $356

Total $13,851 $13,858 $14,310 $13,749 $15,230

What we observed in 1999 continues to happen today. With FAA’s overall budget 

remaining relatively flat, the increasing cost of FAA’s operations continues to ‘‘crowd 

out’’ investments in FAA’s capital and airport accounts. For example, between FY 

2004 and FY 2007, FAA’s overall budget decreased by about $100 million. However, 

during that period, FAA’s operating costs increased by $887 million while FAA’s 

F&E and AIP accounts were reduced by $368 million and $632 million, respectively. 

Operations 

FAA is requesting $8.4 billion for its FY 2007 operating budget, which is about 

$262 million above last year’s enacted amount of $8.1 billion. The Air Traffic Organization represents $6.7 billion or nearly 80 percent of that request. The operations 

account is the largest portion of FAA’s budget, representing nearly 61 percent of the 

agency’s FY 2007 request, whereas FAA’s capital and airport account represent 18 

and 20 percent respectively. 

Since FY 1996, the first year of personnel reform, FAA’s operating costs have increased from $4.6 billion to $8.4 billion requested for FY 2007, an increase of over 

80 percent. Controlling operating cost growth remains a significant challenge for 

FAA—one that Administrator Blakey and her staff have consistently demonstrated 

a clear commitment to addressing. 

Progress This Past Year. We would like to point out two notable accomplishments 

FAA made this past year to better manage its operating cost growth. First, FAA 

completed the A–76 process for its flight service functions. On October 4, 2005, employees of 58 flight service stations transitioned from Government service to the contractor—Lockheed Martin. FAA estimates that outsourcing this function should save 

the agency more than $1.7 billion over the next 10 years. We plan to begin a review 

of this transition later this year to ensure that services continue to meet user needs 

and that the estimated savings are being realized. 

In August 2005, FAA also completed deployment of its labor distribution system, 

which is critical for getting a handle on the actual costs and productivity of the Air 

Traffic Organization’s employees—FAA’s largest workforce. Labor distribution is the 

process of associating labor cost directly with activities and services by requiring 

employees to record their time worked on specific activities. The system is a critical 

16

component of FAA’s cost accounting system, which was mandated by Congress in 

1996. 

Clearly, those efforts represent progress on the part of FAA toward its goal of becoming a performance-based and cost-driven organization. However, getting significant reductions in operating costs is difficult since over 70 percent of FAA’s operating costs are made up of employee salary and benefits. 

Some stakeholders, including FAA’s own Management Advisory Committee, have 

advocated taking dramatic steps to reduce the agency’s costs, such as consolidating 

numerous facilities throughout the country and increasing outsourcing efforts. But 

those are complicated and difficult undertakings that require the collaboration of 

FAA’s many stakeholders and may be the subject of further discussions during deliberations over the next reauthorization. 

Challenges This Coming Year. FAA faces several challenges this year that have 

implications for the agency’s ability to live within its proposed FY 2007 operating 

budget. Those include completing negotiations for a new contract with controllers, 

addressing the expected surge in controller attrition, and maintaining a sufficient 

number of safety inspectors. FAA will also need to determine how to address the 

1-percent Government-wide rescission for its FY 2006 appropriations.

• Completing Negotiations Over a New Contract with Controllers. A major challenge that FAA is currently facing is completing negotiations over a new collective bargaining agreement with the National Air Traffic Controllers Association 

(the union representing FAA’s largest bargaining unit). A primary principle for 

FAA going into the negotiations was that it could not afford a new agreement 

similar to the existing agreement. According to FAA, the existing agreement 

cost the agency $1.1 billion over the first 3 years of the contract. FAA has proposed several significant changes including hiring new controllers under a new 

pay system with pay bands that are less than the current pay system for controllers. 

Formal negotiations began in July 2005 and as of March 10, 2006, the parties 

had either agreed to or withdrawn 121 of 152 articles. However, the remaining 

31 unresolved articles are some of the most difficult issues, including pay, annual leave, and work rules. FAA and the union recently agreed to mediation 

and extended the latest round of talks. That is an encouraging sign. 

There is a lot at stake. The outcome of the current negotiations has significant 

implications for FAA’s future operating costs. It will also set the stage for labor/

management relations between the agency and the union over the next several 

years. Clearly, it is in the best interest of all stakeholders to complete the negotiations.

• Addressing the Expected Surge in Controller Attrition. Another challenge facing 

FAA is the hiring and training of nearly 12,500 new controllers through FY 

2014 as controllers hired after the 1981 strike begin retiring. In December 2004, 

FAA issued the first in what will be a series of annual reports outlining FAA’s 

plans for addressing that challenge. In our opinion, the plan is a good first step 

in that it lays out the magnitude of the issue and establishes broad measures 

for meeting the challenge. However, as we reported in May 2005, subsequent 

reports will need further details about the plan in two key areas. 

First, FAA’s initial report did not identify how much the plan will cost to implement. The cost of hiring and training 12,500 new controllers will be substantial, 

particularly since it currently takes new controllers 2 to 5 years to become fully 

certified. During that time, FAA incurs the cost of the trainee’s salary and benefits as well as the cost of the salary and benefits of the certified controllers who 

instruct them one-on-one. The outcome of the negotiations with the controllers 

union will have a significant impact on the costs of the plan as well. 

Second, the plan does not address hiring and staffing needs by location. Without 

this information FAA cannot have confidence in the number of controllers it 

needs. That level of detail is critical because there are over 300 FAA-operated 

air traffic control facilities—many with significant differences in the levels of air 

traffic they manage and the complexity of operations they handle, which are 

factors used to set controller salaries at individual locations. 

We recommended that FAA address these issues in its next report to Congress, 

and establish baseline metrics for numerous productivity gains it plans to 

achieve over the life of the 10-year plan. FAA agreed with our recommendations 

and expects to issue its next report in April. 

Identifying ways to reduce the costs and time of hiring and training new controllers will be an ongoing and critical issue for FAA for years to come. FAA 

will need to consider all opportunities to improve its hiring and training process. For example, in December 2005, we reported that FAA could reduce the 

17

time and costs of training new controllers by making certain educational requirements a prerequisite for candidates before they are hired. FAA agreed with 

our recommendation to evaluate this concept and has convened a task force to 

study the feasibility, with an expected completion date of October 2006.

• Maintaining a Sufficient Number of Safety Inspectors. While replacing retiring 

controllers is a critical issue for FAA, it is also important to maintain a safety 

inspector workforce sufficient to achieve the agency’s mission of safety oversight. In June we reported that while FAA has made progress in moving to a 

more risk-based approach to safety oversight, FAA inspectors could not effectively use the systems to monitor the rapidly occurring changes within the industry. 

In FY 2007, FAA’s budget calls for an increase of 116 safety inspectors. However, it is unlikely that staffing gains over the next few years will be enough 

to offset the number of safety inspectors eligible to retire in coming years. For 

example, this year, 28 percent of the current inspector workforce (1,008 of 

3,628) will be eligible to retire. By 2010, however, half of the safety inspector 

workforce (1,820 of 3,628) will be eligible to retire. In our opinion, until its riskbased approach to safety oversight is effectively targeting resources to the areas 

of greatest risk, FAA needs to carefully evaluate its inspector staffing levels to 

sustain sufficient oversight in light of the potential attrition within that workforce.

• Addressing the FY 2006 Government-wide Rescission. Another challenge facing 

FAA this year is the 1-percent Government-wide rescission for FY 2006. The rescission will require FAA to cut about $82 million from its operating account. 

While the agency is still determining how to incorporate the cut, FAA has included a long list of possible reductions in its FY 2007 budget request. Those 

possible reductions include deferring seven new starts for contract towers until 

2007, reducing training for technical workforces, reducing overtime, continuing 

attrition in non-safety staff positions, and reducing expenditures in infrastructure support and maintenance, among many others. 

However, FAA is also considering reducing the planned number of controllers 

and safety inspectors it plans to hire in 2006, which could affect safety or operational efficiency. For example, in the FY 2006 Conference Report on the Department’s appropriations, Congress provided FAA with a $12 million increase 

to fund additional safety inspectors. 

FAA has informed us that instead of increasing inspector staffing by 238 in FY 

2006, it may only add 87. FAA needs to carefully evaluate this position given 

the changes in the industry and increased inspector workload demands. 

FAA is also considering reducing funding for various airspace redesign projects. 

As we noted in May 2005, airspace redesign efforts are important to enhance 

the flow of air traffic, reduce delays, and get the most benefits from new runways. FAA is still considering how it plans to address the cuts, but with the 

fiscal year now half over, decisions need to be made and articulated to Congress.

Facilities and Equipment 

FAA’s capital account—or the F&E account—is the principal vehicle for modernizing the National Airspace System. It represents about 18 percent of the agency’s 

FY 2007 budget request. For FY 2007, FAA is requesting $2.5 billion for the Facilities and Equipment account, which is $50 million less than last year’s appropriation. This is the fourth consecutive year that funding requests for the capital account are below authorized levels called for in Vision 100. 

As illustrated in Figure 1, only about 55 percent of FAA’s FY 2007 request for 

F&E (or $1.4 billion) will actually go for acquiring air traffic control systems, the 

remainder will be spent on personnel, mission support, and facilities.

18

1OIG Report Number AV–2005–061, ‘‘Report on the Status of FAA’s Major Acquisitions: Cost 

Growth and Schedule Delays Continue to Stall Air Traffic Modernization,’’ May 26, 2005. OIG 

reports and testimonies can be found on our website: www.oig.dot.gov. 

As we have noted in the past, the majority of FAA’s capital account now goes for 

keeping things running (i.e., sustainment), not new initiatives. A review of the top 

10 projects by dollar amount in the FY 2007 request shows that while some projects 

will form the platforms for future initiatives, the bulk of funds are requested for 

projects that have been delayed for years as well as efforts to improve or maintain 

FAA facilities or replace existing radars. Enclosure 1 provides information on the 

top 10 projects in FAA’s FY 2007 budget request. 

Over the last several years, FAA has deferred or cancelled a number of projects 

as funding for the capital account has remained essentially flat. This includes efforts 

for a new air-to-ground communication system, controller-pilot data link communications, and a new satellite-based precision landing system. FAA has also postponed making decisions on projects like the billion dollar Standard Terminal Automation Replacement System. These are some of the reasons why there is so much 

discussion about the next generation air traffic management system. 

Notwithstanding a lack of clarity with respect to the cost and schedule of the next 

generation system, FAA is requesting F&E funds for two projects that are considered ‘‘building blocks’’ for the next generation system. These are not new programs 

per se and have been under development or been funded in previous budgets.

• Automatic Dependent Surveillance-Broadcast (ADS–B) is a satellite-based technology that allows aircraft to broadcast their position to others. In FY 2007, 

FAA is requesting $80 million for this satellite-based technology. In prior budgets, ADS–B was funded under the Safe Flight 21 initiative which demonstrated 

the potential of ADS–B and cockpit displays in Alaska and the Ohio River Valley. FAA expects to make a decision about how quickly to implement ADS–B 

and at what cost later this year.

• System Wide Information Management (SWIM) is a new information architecture that will allow all airspace users to securely and seamlessly access a wide 

range of information on the status of the National Airspace System and weather 

conditions. It is analogous to an Internet system for all airspace users. FAA is 

requesting $24 million for this program in FY 2007.

Progress and Challenges with Key Air Traffic Control Modernization Projects. We 

are not seeing the massive cost growth and schedule delays we have seen with FAA 

major acquisitions in the past. This is due to this Administration’s efforts to take 

a more incremental approach to major acquisitions and decisions to defer several 

complex and challenging efforts. Last year, we reported that 11 of 16 major acquisitions accounted for a cost growth of $5.6 billion. 1 Most of this cost growth occurred 

before the establishment of the Air Traffic Organization. It was also a reflection of 

efforts to re-baseline programs, which identified costs that had been pent up for 

years, and not reflected in prior cost estimates. 

Many efforts are maturing and completing them within existing cost and schedule 

parameters is critical to allow room for future initiatives. Only one initiative, FAA 

Telecommunications Infrastructure, has the potential to reduce FAA’s operating 

costs which is a top priority within the agency. There are a number of programs 

that require attention.

• En Route Automation Modernization (ERAM) is intended to replace the Host 

computer network—the central nervous system for facilities that manage highVerDate 0ct 09 2002 13:56 Aug 01, 2006 Jkt 028521 PO 00000 Frm 00022 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\28521.TXT JACKF PsN: JACKF

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19

altitude traffic. FAA is requesting $375.7 million for ERAM, which is this program’s peak single year funding level according to FAA’s Capital Investment 

Plan. With an acquisition cost of $2.1 billion, this program continues to be one 

of the most expensive and complex acquisitions in FAA’s modernization portfolio. The monthly burn rate for ERAM will increase from $28 million a month 

in FY 2006 to $31 million per month in FY 2007. This year is critical for ERAM 

because the system is scheduled to come out of the lab environment and begin 

real world testing. Cost increases or schedule slips with ERAM will have a cascading impact on other capital programs and directly affect the pace of efforts 

to transition to the next generation system.

• FAA Telecommunications Infrastructure (FTI). FAA is requesting $28 million for 

its effort to replace its entire telecommunications system for air traffic control. 

In a recently issued draft report to FAA, we concluded that FTI is a high-risk 

program—with a lifecycle cost estimate of $2.4 billion ($310 million estimated 

acquisition costs and $2.1 billion estimated operations costs) through 2017—five 

years longer than originally planned. We also concluded that FAA is unlikely 

to meet its December 2007 revised completion date. In fact, only months after 

being re-baselined in December 2004, the program began falling behind its site 

acceptance schedule (which is primarily the installation of FTI equipment) and 

has not recovered. 

After site acceptance, three other critical steps are required to transition FTI 

services into the NAS and begin achieving cost savings. FTI is not likely to be 

completed on time because FAA has not developed a detailed, realistic master 

schedule for all critical steps, including identifying when each service will be 

accepted, when services will be cut over to FTI, and when existing (legacy) services will be disconnected. Further, until FAA develops a realistic master schedule, it will be difficult to obtain a binding commitment from the FTI contractor 

to complete the transition by December 2007. 

Because the primary purpose of the FTI program is to lower operating costs, 

which depend on deploying the system on schedule, expected benefits from reducing operating costs are eroding. For example, FAA did not realize $32.6 million in reduced operating costs in FY 2005 that it expected due to the limited 

progress made in disconnecting legacy circuits. Additionally, unless FAA accelerates FTI service cutover and legacy circuit disconnect rates substantially (almost 10-fold over FY 2005), the agency will not realize about $102 million in 

estimated cost savings for FY 2006.

• Advanced Technologies and Oceanic Procedures (ATOP). FAA is requesting $31.3 million for ATOP. ATOP is a new automated system for managing oceanic 

air travel. FAA is now using ATOP in New York and Oakland full time, and 

Anchorage began initial operations earlier this month. Experience thus far indicates that ATOP can reduce flight times and has significant productivity benefits for controllers. We note that software development for ATOP has proven far 

more difficult and time-consuming than expected. FAA has increased the value 

of the fixed-price contract several times to keep the effort on schedule and is 

using more non-fixed-price elements of the contract, which are at higher rates 

than what was established at contract award. FAA needs to establish metrics 

for ATOP’s productivity enhancements that will help the agency determine how 

many controllers it needs at facilities that manage oceanic traffic.

• Terminal Modernization and Aging Displays. The cost to complete terminal 

modernization remains an unknown, long standing issue. FAA is now requesting $93.5 million for terminal automation in FY 2007. Facing cost growth of 

over $2 billion for the Standard Terminal Automation Replacement System 

(STARS), FAA changed its approach to terminal modernization and created a 

new effort, called Terminal Automation Modernization/Replacement (TAMR). 

Based on TAMR results, FAA decided to upgrade the displays at four sites and 

replace the entire system at five small sites. This leaves over 100 sites that still 

need modernization. 

Of particular concern is the replacement of aging displays at four large terminal 

sites, such as Chicago and Denver. As we noted in November 2004, recurrent 

problems with the aging displays have safety implications. FAA decided to 

award a competitive contract to replace the displays. FAA has not yet issued 

the proposal to replace these displays, but expects to complete this effort by 

2008 and is exploring ways to expedite the deployment.

FAA Must Strengthen Controls Over Support Service Contracts. FAA needs to 

strengthen its controls over its support service contracts to eliminate overspending 

and ensure that quality services are being procured. In FY 2005, FAA invested 

about $750 million in F&E funds for acquiring support services. About $300 million 

20

of these services were obtained under three multiple-award ‘‘umbrella’’ procurement 

programs, under which companies are pre-qualified to perform individual tasks. We 

reviewed one of these procurement programs and found that it was not meeting 

FAA’s needs for rapid acquisitions, quality services, or fair prices. We found the 

agreement was not structured to take advantage of innovative procurement techniques and contained no incentives for suppliers to save costs. 

Contracts awarded under this program were also poorly managed. For example, 

87 of the 114 contracts awarded under the agreement were either sole-sourced or 

based on one bid. Our review of 10 sample contracts found that if all options were 

exercised, FAA would have spent at least $12 million and possibly up to $22 million 

more on these contracts alone than if it acquired these same services through one 

of FAA’s other contracting vehicles. 

FAA agreed with our recommendation to terminate the program and is in the 

process of implementing corrective actions to strengthen its controls over support 

service contracts. The Administrator has issued instructions that FAA take a fundamental look at its controls to avoid unnecessary payments for these services. New 

controls are being added, including amending policies to require competitive bidding 

on all support service contracts of $1 million or more and requiring the Deputy Administrator’s approval before allowing awards with fewer than three bids. 

Clearly, these are steps in the right direction—the key now is follow through. 

Moreover, given the current budget environment, we believe that better management of support service contracts represents an important area for potential savings. 

The Joint Program and Development Office and the Next Generation Air Traffic 

Management System. Major questions facing the Congress and the aviation community focus on how quickly and at what cost FAA can transition to the next generation air traffic management system to meet the forecasted demand for air travel. 

FAA’s Joint Program and Development Office (JPDO) was mandated by Congress 

to develop a vision for the next generation air traffic management system and align 

the research efforts of several Federal agencies. FAA is requesting $18 million specifically for the JPDO through the Agency’s Research, Engineering, and Development account. 

The capital requirements and timeframes for implementing the next generation 

system remain unknown. Although the JPDO recently provided a progress report 

to the Congress, it was silent on complex implementation issues about how much 

funding will be needed and when. We understand that FAA plans to convene workshops with industry to help determine the requirements and cost of the next generation system. This will be a central issue in the discussion about how best to finance 

FAA and the shape, size, and direction of the capital program for the next decade. 

Also, to move forward FAA will have to decide what modifications to existing efforts 

are needed and which ones need to be accelerated or cancelled. 

Airport Improvement Program 

After several years of funding increases for AIP, FAA is proposing a reduction in 

AIP funding for the second year in a row. FAA’s FY 2007 request of $2.7 billion is 

$764 million less than last year’s appropriation and nearly $1 billion less than 

called for in Vision 100. FAA’s FY 2007 budget request results in a 23 percent reduction in airport grants from last year’s appropriation. The bulk of the planned reductions ($624 million) will occur in ‘‘formula’’ grants as illustrated in Table 2.

Table 2: Reduction in AIP Formula Grants FY 2006 versus FY 2007 ($ in Thousands) 

FY 2006 

Enacted 

FY 2007 

Estimate $ Reduction % Reduction 

Primary Airports $887,980 $496,000 $391,980 44.1

Cargo Service Airports $119,851 $92,651 $27,200 22.7

Alaska Airports $21,345 $10,673 $10,672 50.0

States (General Aviation) $684,863 $489,724 $195,139 28.5

The significant reduction to those grants occurs because of special provisions of 

FAA’s current authorization. Those provisions require that whenever AIP funding 

is $3.2 billion or more, as has been the case in recent years, grant funding levels 

were calculated based on the individual formula and that amount was then doubled. 

However, since this year’s request is less than $3.2 billion, grant funding levels are 

calculated based on the formula alone and are not doubled. 

With the decrease in available AIP funds, FAA needs to better manage airport 

grants. One area we examined was how airports disposed of land acquired for noise 

21

mitigation purposes. Based on a review of 11 airports, we found that FAA could recover an estimated $242 million for the Trust Fund or for other noise mitigation 

projects with improved oversight of noise land and its disposal. Each of the 11 airports in our review had AIP-funded noise land, ranging from nominal acreage at 

several airports to hundreds of acres at others, that either was no longer required 

for noise compatibility purposes or did not have a documented need for airport development. Given the current budget environment, we believe this is another area 

for potential savings. 

In addition to AIP funds, 326 of the larger U.S. airports collect passenger facility 

charges (PFCs) to finance capital projects. FAA estimates that airports will collect 

$2.5 billion in PFCs during 2006. Currently, PFCs are capped at $4.50 per segment 

of flight (a maximum of $18.00 on a round trip). The current cap on PFCs is an 

important matter for this Committee and has significant implications for major airport’s capital expenditure plans. For example, one major airport—Chicago O’Hare—

based part of its financing plan for expanding the airport on a PFC increase from 

the current maximum of $4.50 to $6.00 per segment. How airport projects are funded and the level of the PFC charge will be important issues as the Congress decides 

how to best finance FAA. 

Observations on FAA’s Current Funding Mechanisms 

The Airport and Airway Trust Fund was created in 1970 to provide a dedicated 

revenue source for funding aviation programs. Initially envisioned as a means to 

fund the infrastructure and modernization needs of the National Airspace System, 

the Trust Fund also pays for large portions of FAA’s operating budget and for one 

time items such as security funding after the September 11th attacks. 

After several years of decline, Trust Fund revenues are increasing and now exceed 

pre-September 11th levels. As shown in Figure 2, in FY 2005 the Trust Fund collected $10.7 billion in revenue, the second consecutive year Trust Fund revenues 

have increased. FAA estimates that revenues will increase to $11.1 billion in FY 

2006 and $11.8 billion in FY 2007.

There are several reasons for this increase. First, airfares are slowly rising. According to the Air Transportation Association, the average cost of a ticket for a 

1,000-mile flight increased from $108.70 in September 2004 to $117.90 in September 

2005, an increase of over 8 percent. In addition, the number of people flying has 

increased substantially over the past year. In its recently released aviation forecast, 

FAA estimates that domestic passenger enplanements rose an estimated 7 percent 

between FY 2004 and FY 2005, and international passenger enplanements have 

risen an estimated 12 percent over this same time frame. 

These changes have resulted in more passengers paying higher airfares, increasing collections of the 7.5 percent ticket tax. FAA estimates that collections of this 

tax rose from $4.6 billion in FY 2004 to $5.0 billion in FY 2005. In addition, increasing domestic and international passenger traffic have resulted in higher segment 

and international tax collections. FAA estimates that segment tax collections rose 

from $1.7 billion in FY 2004 to $1.9 billion in FY 2005, while international tax collections rose from an estimated $1.4 billion in FY 2004 to an estimated $1.8 billion 

in FY 2005. 

Even though Trust Fund revenues are returning to levels seen in FY 2000, they 

have not kept pace with FAA’s budget. For FY 2007, FAA’s budget request exceeds 

projected Trust Fund revenues by nearly $2 billion. In addition, FAA’s current 4-

year authorization (Vision 100) calls for higher funding levels of modernization 


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projects than has been enacted in recent years. These authorized levels are also significantly higher than Trust Fund revenues. As shown in Figure 3, FAA’s authorized spending level for FY 2007 is more than $3.4 billion higher than projected 

Trust Fund revenues.

General Fund Contribution. Historically, the General Fund has been used to 

make-up some of the difference between Trust Fund revenues and FAA’s budget and 

many would argue that it is appropriate for the General Fund to play a part in 

funding FAA. As shown in Figure 4, FAA estimates that the General Fund will contribute $2.9 billion toward FAA’s FY 2007 total budget, or about 21 percent of the 

request. This amount is similar to what has been contributed in the previous three 

FAA budgets.

However, the Federal Government is operating in a deficit environment and is 

seeking ways to reduce discretionary spending. This year’s 1-percent across-theboard spending reduction is a result of this environment, and FAA may not be able 

to rely on the General Fund to subsidize larger parts of its budget not covered by 

the Trust Fund. 

Uncommitted Balance of the Trust Fund. In the past, differences between FAA’s 

budget and the Trust Fund revenues and General Fund contribution have been 

made up by drawing down the Trust Fund’s uncommitted balance. But those actions 

have depleted that balance. As shown in Figure 5, between the end of FY 2001 and 

the end of FY 2006, the uncommitted balance of the Trust Fund has gone from $7.3 

billion to a projected $1.7 billion. Over the next several years, using the uncommitted balance of the Trust Fund to make up differences between the Trust Fund revenues and General Fund contributions may no longer be a viable option as a stopgap measure. The low uncommitted balance would also provide no buffer for FAA’s 

budget should the excise taxes lapse, as was the case in 1997.


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As we face the next reauthorization, it is clear that other options need to be considered. Both Secretary Mineta and Administrator Blakey have begun discussions 

with FAA’s stakeholders about alternative methods for financing FAA. However, as 

discussions regarding the next reauthorization begin, a much better understanding 

of FAA’s requirements for the next generation air traffic control system is needed. 

Although FAA’s JPDO recently provided a progress report to Congress, it was silent 

on complex implementation issues and how much funding will be needed and when. 

This will be a central issue in discussions about how best to finance FAA and the 

shape, size, and direction of FAA’s capital needs for the next decade. 

That concludes my statement. I would be happy to answer any questions that you 

or other members of the Committee might have. 

ENCLOSURE 1

Fiscal Year 2007 10 Largest F&E Projects 

Project FY 07 Request 

($ in Millions) Comments 

ERAM $375.7 En Route Automation Modernization: Replaces the Host 

computer hardware and software, including the Host 

back-up system and associated support infrastructure at 

20 air route traffic control centers. 

Terminal ATC Facilities Replacement 

$124.0 The air traffic control towers (ATCT) and terminal radar 

approach control (TRACON) facilities that cannot meet 

present day requirements are being identified for replacement. The proposed list of projects for FY 2007 will 

be based on FAA’s Facilities Master Plan for infrastructure replacement and improvement. 

WAAS $122.4 Wide Area Augmentation System: Provides the augmentation needed to make the GPS satellite signal fully usable 

for en route, terminal and non-precision approaches. We 

note that WAAS will primarily benefit general aviation 

users because commercial airliners already have onboard capabilities similar to WAAS. 

ADS–B National 

Implementation 

$80.0 Automatic Dependent Surveillance-Broadcast: An air-toair/air-to-ground communications, navigation, and surveillance technology that relies on GPS to broadcast the 

positions of properly equipped aircraft and surface vehicles. 

TFM-Infrastructure 

Modernization 

$78.9 The Traffic Flow Management (TFM) system provides direct mission support to FAA by ensuring efficient flow of 

air traffic through the National Airspace System. 

ASDE–X $63.6 Airport Surface Detection Equipment-Model X: Provides 

surveillance equipment to help prevent runway incursions at airports. 

ARTCC Modernization $51.0 Part of FAA’s continued efforts to modernize and sustain 

the 21 Air Route Traffic Control Centers (ARTCC), and 

the San Juan and Guam Combined Center Radar Approach Control facilities in order to minimize delays or 

outages caused by infrastructure failure. 


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Fiscal Year 2007 10 Largest F&E Projects—Continued

Project FY 07 Request 

($ in Millions) Comments 

Terminal Modernization and 

Aging Displays 

$93.5 Standard Terminal Automation Replacement System 

(STARS): Replaces controller and maintenance 

workstations with color displays, processors, and computer software at terminal air traffic control facilities. 

Facing cost growth with STARS, FAA changed its approach to terminal modernization limiting STARS deployments to analyze its options beyond the initial deployment phase for STARS and created a new effort 

called Terminal Automation Modernization/Replacement 

(TAMR). 

Airport Traffic Control Tower/

TRACON Facilities-Improvements 

$44.2 To upgrade and improve aging ATCT/TRACON facilities 

and equipment to provide an acceptable level of service 

and to meet current and future operational requirements. This program also improves the capability of facilities to withstand a seismic event in accordance with 

FEMA and DOT directives. 

ASR–11, ASR–7 & 

8 Replacement 

$44.1 Airport Surveillance Radar-11: Replaces aging analog 

radar with digital radar at small terminal facilities.

Total $1,077.4

ENCLOSURE 2

Related Office of Inspector General Reports 1998–2005

Operations 

FAA Has Opportunities To Reduce Academy Training Time and Costs by Increasing Educational Requirements for Newly Hired Air Traffic Controllers—AV–2006–

021, December 7, 2005

Audit of the Management of Land Acquired Under Airport Noise

Compatibility Programs—AV–2005–078, September 30, 2005

Chicago’s O’Hare Modernization Program—AV–2005–067, July 21, 2005

Report on Controller Staffing : Observations on FAA’s 10-Year Strategy for the 

Air Traffic Controller Workforce—AV–2005–060, May 26, 2005

Airspace Redesign Efforts Are Critical To Enhance Capacity but Need Major Improvements—AV–2005–059, May 13, 2005

FAA Administration and Oversight of Regionally Issued Contracts—AV–2004–

094, September 28, 2004

FAA’s Actions To Address Leave and Overtime Abuse at Five Locations—AV–

2004–081, September 9, 2004

Short- and Long-term Efforts to Mitigate Flight Delays and Congestion—CR–

2004–066, June 17, 2004

Opportunities To Improve FAA’s Process for Placing and Training Air Traffic Controllers in Light of Pending Retirements—AV–2004–060, June 2, 2004

Using CRU–X To Capture Official Time Spent on Representational Activities—

AV–2004–033, February 13, 2004

FAA’s Management of Memorandums of Understanding with the National Air 

Traffic Controllers Association—AV–2003–059, September 12, 2003

Safety, Cost and Operational Metrics of the Federal Aviation Administration’s 

Visual Flight Rule Towers—AV–2003–057, September 4, 2003

FAA’s Oversight of Workers’ Compensation Claims in Air Traffic Services—AV–

2003–011, January 17, 2003

FAA’s National Airspace System Implementation Support Contract—AV–2003–

002, November 15, 2002

FAA’s Air Traffic Services’ Policy of Granting Time Off Work To Settle Grievances—CC–2002–048, December 14, 2001

Automated Flight Service Stations: Significant Benefits Could be Realized by Consolidating AFSS Sites in Conjunction with Deployment of OASIS—AV–2002–064, 

December 7, 2001

25

Compensation Issues Concerning Air Traffic Managers, Supervisors, and Specialists—AV–2001–064, June 15, 2001

Technical Support Services Contract: Better Management Oversight and Sound 

Business Practices Are Needed—AV–2000–127, September 28, 2000

Contract Towers: Observations on FAA’s Study of Expanding the Program—AV–

2000–079, April 12, 2000

Staffing: Supervisory Reductions Will Require Enhancements in FAA’s Controllerin-Charge Policy—AV–1999–020, November 16, 1998

Personnel Reform: Recent Actions Represent Progress but Further Effort Is Needed To Achieve Comprehensive Change—AV–1998–214, September 30, 1998

Acquisition and Modernization 

FAA’s En Route Modernization Program Is On Schedule But Steps Can Be Taken 

to Reduce Future Risks—AV–2005–066, June 30, 2005

Status of FAA’s Major Acquisitions: Cost Growth and Schedule Delays Continue 

To Stall Air Traffic Modernization—AV–2005–061, May 26, 2005

Report on Terminal Modernization: FAA Needs To Address Its Small, Medium, 

and Large Sites Based on Cost, Time, and Capability—AV–2005–016, November 23, 

2004

Observations on FAA’s Controller-Pilot Data Link Communications Program—

AV–2004–101, September 30, 2004

FAA’s Advanced Technologies and Oceanic Procedures—AV–2004–037, March 31, 

2004

FAA Needs To Reevaluate STARS Costs and Consider Other Alternatives—AV–

2003–058, September 10, 2003

Status of FAA’s Major Acquisitions—AV–2003–045, June 27, 2003

Integrated Terminal Weather System: Important Decisions Must Be Made on the 

Deployment Strategy—AV–2003–009, December 20, 2002

FAA’s Progress in Developing and Deploying the Local Area Augmentation System—AV–2003–006, December 18, 2002

Follow-up Memo to FAA on STARS Acquisition—CC–2002–087, June 3, 2002

Letter Response to Senator Richard Shelby on FAA’s Advanced Technologies and 

Oceanic Procedures (ATOP)—CC–2001–210, April 12, 2002

Status Report on the Standard Terminal Automation Replacement System—AV–

2001–067, July 3, 2001

Efforts to Develop and Deploy the Standard Terminal Automation Replacement 

System—AV–2001–048, March 30, 2001

Aviation Safety 

Review of Air Carriers’ Use of Non-Certified Repair Facilities—AV–2006–031, December 15, 2005

FAA Safety Oversight of an Air Carrier Industry in Transition—AV–2005–062, 

June 3, 2005

Report on New Approaches Needed in Managing FAA’s Hazardous Materials Program Federal Aviation Administration—SC–2005–015, November 19, 2004

Report on FAA Controls Over the Reporting of Operational Errors—AV–2004–085, 

September 20, 2004

Review of Air Carriers’ Use of Aircraft Repair Stations—AV–2003–047, July 8, 

2003

Operational Errors and Runway Incursions—AV–2003–040, April 3, 2003

Air Transportation Oversight System (ATOS)—AV–2002–088, April 8, 2002

Oversight of FAA’s Aircraft Maintenance, Continuing Analysis, and Surveillance 

Systems—AV–2002–066, December 12, 2001

Further Delays in Implementing Occupational Safety and Health Standards for 

Flight Attendants Are Likely—AV–2001–102, September 26, 2001

Despite Significant Management Focus, Further Actions Are Needed To Reduce 

Runway Incursions—AV–2001–066, June 26, 2001

These reports can be reviewed on the OIG website at http://www.oig.dot.gov.

Senator BURNS. Thank you very much. 

26

Now we’ll hear a statement from Dr. Gerald Dillingham, director 

of physical infrastructure for the GAO. And thank you for coming 

this morning. 

STATEMENT OF GERALD L. DILLINGHAM, PH.D., DIRECTOR, 

PHYSICAL INFRASTRUCTURE ISSUES, U.S. GOVERNMENT

ACCOUNTABILITY OFFICE 

Dr. DILLINGHAM. Thank you, Chairman Burns, Chairman Stevens, Senator Pryor. 

My testimony this morning is in response to your request that 

the GAO undertake an analysis of the financial viability of the 

Aviation Trust Fund to support FAA’s budget request under Vision 

100 authorization and the President’s 2007 budget proposal. Historically, annual revenues going into the Trust Fund have fluctuated, but generally they have exceeded the amount appropriated 

from the Trust Fund for FAA’s budget. However, for each of the 

past 5 years, Trust Fund revenues have been below the level forecasted by FAA. As a result, the uncommitted balance of the Trust 

Fund has been used to substitute for the revenues that were forecasted, but did not materialize, to fund the FAA. This has caused 

the uncommitted balance to decline. By the end of 2006, we expect 

that the uncommitted balance will have declined by about $5.6 billion, or 77 percent, since FY 2001. This trend of declining Trust 

Fund balances is particularly important if actual revenues are 

lower than forecasted revenues due to unforeseen events, such as 

another 9/11 terrorist attack, a pandemic, or even a lapse in the 

aviation taxes. If there is a revenue shortfall and there is no uncommitted balance, either FAA would have to reduce spending or 

Congress would have to appropriate additional money from the 

General Fund. 

Our work shows that if Congress continues to follow the Vision 

100 formula for FY 2007, there will be little change in the uncommitted balance, which is forecasted to be about $1.7 billion at the 

end of this year. If, instead, Congress adopted the President’s budget proposal for 2007, the fund’s uncommitted balance is expected to 

rise to about $2.7 billion. This higher uncommitted balance would 

occur, because the President’s budget calls for an appropriation 

from the Trust Fund which is about a billion dollars less than 

under Vision 100. The largest share of this spending reduction 

comes from the AIP program. 

Mr. Chairman, I want to underline the fact that these Trust 

Fund projections are very much dependent upon achieving forecasted traffic levels and airfares. We note, however, that in each 

of the last 5 years, FAA has overestimated the revenues expected 

to go into the Trust Fund. During 2003 and 2004, the actual revenues fell short of forecasted revenues by almost a billion dollars 

each year. 

Mr. Chairman, as the Administrator said in her statement, we 

recognize that one of the difficulties in making more accurate forecasts is because when FAA makes the forecast that’s contained in 

the President’s budget, it is based on information available in the 

first quarter of the preceding year. To take this possibility of revenue shortfalls into account, we conducted a sensitivity analysis in 

which we examined the viability of the Trust Fund assuming 5 and 

27

1 Unless otherwise specified, all dollar amounts in this testimony are in nominal dollars and 

all data discussed and presented are on a fiscal year basis. 2The Trust Fund’s uncommitted balance represents money against which there is no outstanding budget commitment or budget authority to spend. 

10 percent less than forecasted tax revenues. The results of that 

analysis shows that if the revenues are 5 percent lower than the 

projected levels for both 2006 and 2007, the Trust Fund’s uncommitted balance would fall to less than $1 billion dollars under both 

the President’s proposal and the Vision 100 authorization by the 

end of FY 2007. If revenues are 10 percent lower than projected for 

those 2 years, the uncommitted balance would reach zero by the 

end of FY 2007 under Vision 100, and about $500 million under the 

President’s budget proposal. 

The question that remains is how revenues beyond 2007 compare 

with projected costs for the development, operation, and maintenance of the Nation’s ATC system. As has been pointed out by the 

previous witnesses, FAA will incur significant costs to maintain 

and modernize the current ATC system and create the infrastructure that will be the basis of the next generation air traffic control 

system. 

Mr. Chairman, we believe that the discussion about how to fund 

FAA beyond 2007 must focus not only on providing a funding regime in which revenues are better aligned with FAA costs, the discussion should also focus on cost control, air traffic facilities, and 

regional office consolidation, as well as continuing improvement in 

the FAA’s management of operations. 

At the request of this Committee, we are currently examining a 

variety of potential funding options and a range of possible costsaving opportunities. We expect to report to you on these analyses 

in the coming months. 

Thank you, Mr. Chairman. 

[The prepared statement of Dr. Dillingham follows:]

PREPARED STATEMENT OF GERALD L. DILLINGHAM, PH.D., DIRECTOR, PHYSICAL

INFRASTRUCTURE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

Mr. Chairman and Members of the Subcommittee: 

We are pleased to be here today to discuss the financial viability of the Airport 

and Airway Trust Fund (Trust Fund) and the President’s proposed 2007 budget for 

the Federal Aviation Administration (FAA). Over the course of FAA’s last two authorizations, FAA’s appropriations increased from $9.8 billion in Fiscal Year 1999 

to $14.3 billion this Fiscal Year (2006), and Fiscal Year 2007 is projected to be $15.2 

billion. 1 In this testimony, we will present the results of our analysis of the uncommitted balance 2 of the Trust Fund and related issues as requested by this Committee. 

FAA is currently funded by a combination of Trust Fund revenues derived from 

excise taxes levied on a variety of aviation activities and from General Fund revenues. The Trust Fund’s uncommitted balance depends on the revenues flowing into 

the fund and the appropriations made available from the fund for various spending 

accounts. Policy choices, structural changes in the aviation industry, and external 

events have affected revenues flowing into and out of the fund. For example, the 

uncommitted balance has been declining in recent years because Trust Fund revenues for the last 5 years have been less than FAA’s forecasted levels. Our analysis 

includes scenarios in which Trust Fund revenues continue to fall short of forecasted 

levels. Under these scenarios, the Trust Fund balance continues to decline, and in 

one scenario, the balance reaches zero by the end of 2007. We believe these scenarios raise concerns because in the past the Trust Fund’s uncommitted balance 

was used to offset lower-than-expected Trust Fund revenues and decreased General 

Fund contributions. FAA could help address these concerns by continuing to look 

for ways to improve efficiency and reduce costs. However, the zero-balance scenario 

28

would most likely have implications for the Congress in funding FAA programs. In 

addition, we believe that the information about the financial viability of the Trust 

Fund will be critical to congressional decision making regarding appropriations for 

FAA’s 2007 budget. 

The Trust Fund was established by the Airport and Airway Revenue Act of 1970 

(Pub. L. 91–258) to help fund the development of a nationwide airport and airway 

system and to fund investments in air traffic control facilities. 

It provides all of the funding for FAA’s capital accounts, including: the Airport Improvement Program (AIP), which provides grants for construction and safety 

projects at airports; the Facilities and Equipment (F&E) account, which funds technological improvements to the air traffic control system; and the Research, Engineering, and Development (RE&D) account, which funds continued research on aviation safety, mobility, and environment issues as well as the FAA’s portion of the 

Joint Planning and Development Office. In addition, at various times during its history, the Trust Fund has funded all or some portion of FAA’s operations. In 2005, 

expenditures from the Trust Fund were made among the four accounts shown in 

figure 1.

To fund these accounts, the Trust Fund is credited with revenues from a variety 

of excise taxes related to passenger tickets, passenger flight segments, international 

arrivals/departures, cargo waybills, and aviation fuels. These taxes are scheduled to 

expire at the end of 2007. Including interest earned on its balances, the Trust Fund 

received $10.8 billion in 2005. Table 1 shows the distribution of Trust Fund revenues for 2005 by source.

Table 1: Sources of Trust Fund Revenue, Fiscal Year 2005 (Dollars in millions) 

Revenue source Amount Percent 

Passenger ticket tax $5,161 48

Passenger flight segment tax 1,900 18

Cargo tax 461 4

Fuel tax 971 9

International departure/arrival tax 1,922 18

Interest 440 4

Refunds * (101) (1)


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Table 1: Sources of Trust Fund Revenue, Fiscal Year 2005 (Dollars in millions)—

Continued

Revenue source Amount Percent 

Total $10,754 100

Source: GAO analysis of FAA data. 

* Refunds include: refund of aviation fuel other than gas (noncommercial), refund of aviation gasoline (noncommercial), and other refunds/credits. 

Although expenditures from the Trust Fund exceeded revenues in 2005, since the 

Trust Fund’s creation in 1970, revenues have in aggregate exceeded spending commitments, resulting in a surplus or an uncommitted balance. At the end of 2005, 

the Trust Fund’s uncommitted balance was about $1.9 billion. 

Policy choices, structural changes in the aviation industry, and external events 

have affected revenues flowing into and out of the fund and have caused some aviation stakeholders to speculate about the fund’s financial status. Some aviation 

stakeholders have said that there is a reason to be concerned about the financial 

condition of the Trust Fund because in recent years, revenues have not kept pace 

with funding commitments and the uncommitted balance has been used to close the 

gap. Other aviation stakeholders state that the fund is healthy because revenues 

are currently increasing and are expected to continue to increase. 

The focus today is the Trust Fund’s revenues and balances over the past few 

years; the projected near-term future of the Trust Fund, considering the President’s 

2007 budget request for FAA; and policy decisions that may affect longer-term Trust 

Fund balances. The scope of our work and the specific methodology are discussed 

at the end of my statement. 

Recent Trends of the Trust Fund and the Effect on the Fund’s

Uncommitted Balance 

Revenues Have Generally Increased with Some Fluctuations 

The Trust Fund’s uncommitted balance depends on the revenues flowing into the 

fund and the appropriations made available from the fund for various spending accounts. The amount of revenue flowing into the Trust Fund has fluctuated from year 

to year but has generally trended upward, as shown in figure 2. Some of the fluctuation has resulted from changes in economic conditions, but some has been due to 

other factors. For example, during 1981 and 1982, revenues (including interest) 

flowing into the fund averaged about $629 million—the lowest amount in the fund’s 

history—because of a lapse in the collection of aviation taxes. In 1999, revenue flowing into the fund totaled about $11.1 billion, the largest amount in the fund’s history.

However, after revenues peaked in 1999, the amount of revenue flowing into the 

Trust Fund decreased in each of the next 4 years, reaching a level of about $9.3 

billion in 2003. A number of factors contributed to this decrease. For example, within the airline industry, the growth of the Internet as a means to sell and distribute 


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3Generally, legacy carriers are those network airlines whose interstate operations predate airline deregulation of 1978 and that have adopted a hub-and-spoke network model. 4 In a majority of years since its inception, the Trust Fund has funded some portion of FAA’s 

operations.

tickets, the growth of low-cost airlines, and fare reductions by legacy carriers 3 all 

transformed the industry and led to lower average fares. These lower fares have resulted in lower ticket taxes and less revenue going into the Trust Fund. In addition, 

in the same time period, a series of largely unforeseen events, including the September 11, 2001, terrorist attacks, war in Iraq and associated security concerns, the 

Severe Acute Respiratory Syndrome (SARS), and global recessions seriously affected 

demand for air travel, resulting in a decrease in airline industry and Trust Fund 

revenue. 

Since the beginning of 2004, however, Trust Fund revenues have been increasing. 

In fact, revenues from tax sources in 2005 were nearly as high as in 1999, although 

total revenues were still below peak level because less interest was earned due to 

a lower Trust Fund balance. 

Expenditures from the Trust Fund Have Also Generally Increased 

Similar to the revenue picture, the annual amount of expenditures from the Trust 

Fund also has generally increased since the fund’s inception, but with some fluctuation. One source of fluctuation has been that the share of FAA operations paid by 

the Trust Fund has varied over time. 4 Figure 3 shows how expenditures from the 

fund have changed over time and how they have compared with revenues. In some 

years, they have exceeded revenues, but in other years they have been less than 

revenues. 

Appropriations from Trust Fund Are Now Linked to Projected Revenues 

In the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century 

(AIR–21), the Congress created a link between Trust Fund revenues and appropriations from the fund to try to ensure that all fund receipts, including interest, were 

committed to spending for aviation purposes on an annual basis. According to a provision of AIR–21, which was continued in the Century of Aviation Reauthorization 

Act (Vision 100)—FAA’s current authorizing legislation—total appropriations made 

available from the fund in each fiscal year shall equal the level of receipts plus interest in that year, and these appropriations can be used only for aviation investment programs, which are defined as FAA’s capital accounts plus the Trust Fund’s 

share of FAA operations. Further, the level of receipts was specified to be the level 

of excise taxes plus interest credited to the fund for a fiscal year as set forth in the 

President’s budget baseline projection for that year. 

Trust Fund’s Uncommitted Balance Has Been Declining in Recent Years 

As shown in figure 4, with the exception of its first four years, the Trust Fund 

has ended each year with an uncommitted balance; however, the amount of the uncommitted balance has fluctuated substantially over time, generally increasing 

when Trust Fund revenues exceed appropriations from the fund and decreasing 


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5FAA has developed econometric forecast models and established a forecast process that attempt to anticipate changes that may affect the future direction of the aviation industry. Using 

this forecast process, FAA annually provides 12-year forecasts of aviation demand and activity 

measures that are used for aviation-related personnel and facility planning. FAA also occasionally sponsors workshops that focus on the forecasting process and ways to improve the reliability 

and utility of forecasting results. Some errors in forecasting can be attributed to unanticipated 

external events and their impact on activity (e.g., terrorism, the outbreak of SARS, rapid rise 

in oil prices); others can be attributed to errors in the assumptions (e.g., passenger trip length, 

seats per aircraft, economic growth) behind the forecasts.

when they are less than appropriations. As noted in the figure, the uncommitted 

balance has decreased substantially in recent years. The Trust Fund’s uncommitted 

balance peaked at over $7 billion in 1991, 1999, and 2001. In contrast, because of 

lapses in the taxes that accrue to the fund, at the end of 1982, the uncommitted 

balance was about $2.1 billion, and at the end of 1997, it was about $1.4 billion. 

Specifically, the Trust Fund’s uncommitted balance decreased from $7.3 billion at 

the end of 2001 to $4.8 billion at the end of 2002 and has continued to decrease 

since then, reaching about $1.9 billion at the end of 2005. However, the rate of decrease has slowed; in 2005, the uncommitted balance decreased by about $500 million, after falling by at least $900 million in each of the previous 3 years.

The uncommitted balance has fallen in recent years because Trust Fund revenues 

have fallen short of forecasted levels by over $1 billion in 3 out of the last 4 fiscal 

years. For example, in 2001, the difference between forecasted revenue and actual 

revenue coming in to the Trust Fund was $383 million less than expected. In 2002, 

the difference jumped to $2.3 billion due to the impact that unanticipated external 

events such as the September 11, 2001, terrorist attacks had on the aviation industry. Residual effects and other factors such as the war in Iraq and the SARS outbreak lasted through 2003 and 2004, with each year’s actual revenues coming in at 

least $1 billion below forecasted revenues. 

As mentioned above, under Vision 100 and its predecessor, AIR–21, appropriations made available from the Trust Fund are based on forecasted revenues. 5 Thus, 

if actual revenues approximate forecasted revenues, there should be no substantial 

change in the uncommitted balance. However, as shown in figure 5, for each year 

beginning with 2001, actual revenues, including interest, have been less than forecasted, so that in each year since then, the uncommitted balance has fallen. 


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32

Fund’s Uncommitted Balance Is Projected to Be Positive through 2007 but 

Depends on Realization of Forecasted Passenger Traffic Levels and

Airfares 

Based on its revenue forecast and appropriations for 2006, FAA forecasts that the 

Trust Fund’s uncommitted balance will decrease by the end of 2006 to about $1.7 

billion. FAA forecasts that if, for 2007, the Congress continues to follow the Vision 

100 formula for linking budget resources made available from the fund to expected 

revenues, then there will be little change in the uncommitted balance—$1.7 billion—during that year. If, instead, the Congress adopts the President’s budget request for FAA for 2007, FAA forecasts that the fund’s uncommitted balance by the 

end of 2007 will rise to about $2.7 billion. This higher forecasted uncommitted balance occurs because the President’s budget calls for an appropriation from the Trust 

Fund that is about $1 billion lower than the Vision 100 formula. In addition, compared with Vision 100, the President’s budget calls for a reduction in the appropriation to FAA from the General Fund of about $500 million. Thus, in total, compared 

with Vision 100, the President’s budget calls for a reduction of about $1.5 billion 

in FAA’s appropriation. Figure 6 shows the forecasted year-end uncommitted balance under both scenarios through 2007.


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While the President’s budget calls for making a smaller appropriation available 

from the Trust Fund than under Vision 100, largely due to reductions in the AIP, 

it calls for greater reliance on the Trust Fund to fund FAA’s operations. Vision 100 

uses the formula created in AIR–21 to determine how much funding for FAA operations should come from the Trust Fund, but the President’s budget proposal does 

not use this formula. Under Vision 100, the formula makes the amount of Trust 

Fund revenue that will be authorized for FAA operations and RE&D in a given year 

equal to projected Trust Fund revenues (as specified in the President’s budget) 

minus the authorizations for the capital accounts (AIP and F&E) in that year. Thus, 

under Vision 100, the Trust Fund is projected to support $4.6 billion of FAA’s operations, or 57 percent. In contrast, the President’s budget specifies a set amount of 

Trust Fund revenue to be used for FAA operations. Therefore, if Congress enacts 

the President’s budget request for FAA, the Trust Fund would provide $5.4 billion 

for FAA’s operations in 2007, or 65 percent of its total estimated cost for operations. 

Although the Trust Fund is projected to have a surplus at the end of 2007 under 

each of the expenditure proposals, this projection depends to a significant extent on 

achieving forecasted commercial passenger traffic levels and airfares, as they have 

the largest impact on the amount of revenues flowing into the Trust Fund. We recognize that it is difficult to anticipate future events that may significantly affect the 

demand for air travel, particularly since FAA makes a forecast that is contained in 

the President’s budget based on information available in the first quarter of the preceding fiscal year. However, our analysis shows that for each of the last 5 years, 

FAA’s projected revenue forecast for the President’s budget was higher than the actual amount of revenue received, as shown in figure 5. 

Given the differences in recent years between the forecasted revenue and actual 

amount of revenue received, we conducted sensitivity analyses to estimate what 

would happen to the Trust Fund’s uncommitted balance if Trust Fund revenues in 


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34

6We did not conduct a sensitivity analysis beyond 2007 because both the current FAA authorization and the excise taxes that fund the Trust Fund are scheduled to expire at the end of 

2007, making it difficult to project the long-term financial outlook of the Trust Fund. 7We note that the Trust Fund projections for 2008–2011 contained in the President’s budget 

show a large increase in the fund’s uncommitted balance, reaching $15.5 billion by the end of 

2011. Officials at the Office of Management and Budget told us that the underlying assumption 

2006 and 2007 fall below the levels that FAA projected in March 2006. 6 For example, table 2 shows the projected Trust Fund balances under Vision 100 and the 

President’s proposal and the impact if revenues, for whatever reason, are 5 percent 

or 10 percent less than currently projected. If revenues are 5 percent lower than 

projected, which they were in 2001, the Trust Fund would have a small but positive 

uncommitted balance under both expenditure proposals—Vision 100 and the President’s budget proposal. However, if the revenues were 10 percent lower than projected, as they were in 2004, the uncommitted balance would drop below half a billion dollars under the President’s proposal and would fall to zero by the end of 2007 

under Vision 100. 

We believe these scenarios raise concerns because, in the past, the Trust Fund’s 

uncommitted balance was used to offset lower-than-expected Trust Fund revenues 

and decreased General Fund contributions. FAA could help address these concerns 

by continuing to look for ways to improve efficiency and reduce costs. However, the 

zero-balance scenario would most likely have implications for Congress in funding 

FAA programs. 

To keep the Trust Fund from declining, the Congress could use an alternate basis 

for authorizing and appropriating money out of the Trust Fund that does not rely 

on the revenue forecast in the President’s budget. One alternative that would still 

maintain the link between revenues and spending would be for appropriations from 

the Trust Fund to be based on the actual Trust Fund revenues from the most recent 

year for which data are available. That would mean, for example, that the Congress 

would appropriate for 2007 the Trust Fund revenues received in 2005. Although 

that would make it less likely that the Trust Fund balance would decline further, 

it could also mean that a smaller appropriation would be made available for aviation. Whereas Trust Fund revenues in 2005 were about $10.8 billion, the President’s 

budget for 2007 forecasts Trust Fund revenues of about $11.8 billion. 

Future Policy Decisions Will Affect the Trust Fund Balance beyond 2007

Future policy decisions concerning spending for aviation will affect the Trust 

Fund balances beyond 2007. If General Fund appropriations for FAA’s operations 

are maintained at recent levels, future projected Trust Fund revenues under the 

current tax structure may be insufficient to pay for the expenditures that FAA says 

are needed to maintain and modernize the current system. According to FAA, its 

aviation infrastructure is aging, and replacing it will cost $32 billion. Even more, 

Trust Fund revenues would be needed to pay for those expenses if General Fund 

appropriations for operations are reduced. Insufficient Trust Fund revenues could 

result in critically needed capacity-enhancing air traffic control modernization investments being deferred or canceled at a time when commercial activity is returning to or exceeding pre-September 11 levels. 7


328gao7.eps
35

for the commitment of budget resources from the fund that yields this projection is based on 

Administration policies for reducing—or limiting the increase in—nondefense, nonhomeland security discretionary spending. Thus, the projection does not account for challenges particular to 

any agency, such as FAA’s projected increase in workload or future air traffic control modernization spending. Accordingly, we think the $15.5 billion projection is of limited value. 8The President’s Fiscal Year 2007 budget requests $80 million for the Automatic Dependent 

Surveillance-Broadcast system to replace antiquated radars and outmoded technology. The 

budget also requests $24 million to begin developing System Wide Information capabilities that 

will make advanced information distribution and sharing capabilities possible. 9 In order to address these matters and to better understand the costs and benefits of NGATS, 

JPDO has asked the NGATS Institute to host a forum in the spring of 2006, so that the critical 

assumptions and uncertainties underlying any cost-benefit effort can be scrutinized and validated. In addition, further detailed studies will focus on the near-term costs and benefits that 

will be used to inform agency planning activities over the next 5 years. JPDO will then expand 

its cost analysis to consider the expected total systems costs for NGATS. 

Funding Will Be Needed for the Next Generation Air Transportation System 

In addition to costs projected just to maintain FAA’s current system, additional 

capital expenses are on the horizon to modernize the system. Vision 100 directed 

the administration to develop a comprehensive plan for a Next Generation Air 

Transportation System (NGATS) that can accommodate the changing needs of the 

aviation industry and meet air traffic demands by 2025. The act chartered the Joint 

Planning and Development Office (JPDO) within FAA to coordinate Federal and private-sector research related to air transportation. FAA leads the interagency effort 

that leverages expertise and resources within the Departments of Transportation, 

Defense, Homeland Security, and Commerce as well as at the National Aeronautics 

and Space Administration and the White House Office of Science and Technology 

Policy. The Congress appropriated $5 million to FAA in seed money in 2005, and 

appropriated $18 million to FAA for JPDO in 2006, while additional funding and 

in-kind support comes from the participating agencies. For 2007, the President’s 

budget requests $18 million for JPDO critical system engineering and planning efforts for NGATS, as well as funding for two NGATS systems at a combined cost of 

$104 million. 8

JPDO published the Integrated Plan for the Next Generation Air Transportation 

System in December 2004, but the plan did not specify what new capabilities would 

be pursued or how much they would cost to implement and maintain. Vision 100 

also directed that an annual progress report, including any changes to the Integrated Plan, be submitted at the time of the President’s budget request. In March 

2006, JPDO published its 2005 Progress Report to the Next Generation Air Transportation System Integrated Plan and reported it is working to identify the longer-term 

costs. JPDO conducted a financial analysis of the air traffic management portions 

of NGATS, including examining the existing 2025 operational vision, to understand 

the hardware and software components that may be required to implement NGATS. 

However, because of the high level of uncertainty in some areas and a significant 

number of assumptions in others, JPDO reported more work is required before this 

analysis can be useful and credible. 9 A clear understanding of proposed future capabilities for NGATS (and how they will be paid for) will be important as the Congress 

prepares to reauthorize FAA programs and explores financing mechanisms. 

Continued Efforts for Cost Control Are Necessary 

While FAA has made great efforts in its cost-control program, cutting costs will 

remain a challenge for FAA well into the future. In 2005, FAA outsourced its flight 

service stations to a private contractor, resulting in total savings estimated at $2.2 

billion. Also in 2005, FAA put in place a number of cost-control initiatives that affected smaller programs and that, if successful, will generate smaller levels of savings. We are reviewing options to fund FAA, at the request of this Subcommittee, 

and we will address this issue in detail later this year. 

Although FAA has initiated several of these cost-control measures, these initiatives alone cannot reduce expenses enough to free up sufficient Trust Fund revenues 

to pay for the expenditures that FAA says are necessary to maintain and modernize 

the current airspace system, let alone finance future NGATS initiatives. Through 

the reauthorization process, the Congress will determine both the level of appropriations for aviation and the way in which that commitment will be funded. Congressional decisions pertaining to the link between annual Trust Fund revenues and appropriations made available for aviation programs, as well as the method for funding the Trust Fund, will continue to influence future Trust Fund balances. 

To assess the current financial status and projected financial viability of the Airport and Airway Trust Fund, we obtained financial data from FAA and interviewed 

FAA officials familiar with the information. To assess the comparisons of Vision 100 

36

with the President’s budget, we analyzed the legislation and the Administration’s 

2007 budget proposal. We used a sensitivity analysis to project what would happen 

if Trust Fund revenues in Fiscal Years 2006 and 2007 were 5 percent and 10 percent lower than the levels projected by FAA in March 2006 under each of these proposals. Accordingly, our findings on the financial outlook of the Trust Fund are 

based on GAO projections, not FAA’s. We performed our work in February and 

March 2006 in accordance with generally accepted government auditing standards. 

Mr. Chairman, this concludes my prepared statement. At this time, I would be 

pleased to answer any questions that you or other Members of the Subcommittee 

may have.

Senator BURNS. Thank you. We appreciate the work that you do. 

We’ve been joined by Senator Pryor from Arkansas. And, Senator 

Pryor, do you have a statement or——

Senator PRYOR. No, thank you. 

Senator BURNS. We’ll go into our questions. And I appreciate the 

testimony from all of you. 

Ms. Blakey, FAA has forecast dramatic growth in the aviation industry. And I just want us to start off with the question, if we have 

increased load factors—in other words, the passengers are coming 

back—and yet, we depend on that 7.5 percent for the majority of 

the lion’s share of your support in the—of this department, has 

those increased riderships had any effect on the revenue that 

comes into the FAA? 

Ms. BLAKEY. Certainly as the numbers of passengers go up, we 

see increased revenue. The question, of course, is what will happen 

with ticket prices, because when those prices begin to fall, obviously there’s an offset there, and we’ve watched ticket prices falling 

dramatically——

Senator BURNS. In other words the——

Ms. BLAKEY.—over the last few years. 

Senator BURNS.—the increase in load factors hasn’t taken up the 

slack for the loss of the price of a ticket. 

Ms. BLAKEY. No. We do think there’s going to be a bit of an uptick this year in the price of tickets, maybe as much as 10 percent. 

But, then we think it’s going to start dropping again. So, it’s a very 

volatile thing, and it really doesn’t relate to the workload. 

Senator BURNS. How can we justify the $765 million cut to the 

AIP program, then? 

Ms. BLAKEY. Mr. Chairman, it’s a very, very tight budget environment. I will have to just start right there. Because I think that 

we see over the last 5 years that there has been very substantial 

investment in the airport community. And last year we pointed out 

that the airport community’s own assessment projecting future investments—this is a report called the NPIAS, which looks at all 

kinds of capital investments—was down about 15 percent. We also 

saw that private investment out there, in terms of bond issuance, 

et cetera, was down in the airport arena. This year, it is not as 

clear as that. We see about a 3 percent uptick in that same measurement. 

But the fact of the matter is, there has been very substantial investment, and the funds are very much needed in other aspects of 

aviation investment. 

Senator BURNS. When I look at this—and, of course, your request 

for the cuts that are being indicated now by the President’s budgVerDate 0ct 09 2002 13:56 Aug 01, 2006 Jkt 028521 PO 00000 Frm 00040 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\28521.TXT JACKF PsN: JACKF
37

et—do you go down to OMB and try to make your case that this 

is not a good idea? 

Ms. BLAKEY. Senator, as you can appreciate, we have robust debates within the Administration, talking about relative needs. 

There’s no question about the fact that healthy investment in airports is critical to our Nation’s economy. I think the question is at 

what pace. And at this point, given competing needs, that’s where 

these decisions get sorted out. 

Senator BURNS. Mr. Dillingham, you’ve done good work and reviewed the AIP program over the years. Give me your bottom line. 

What do you think the effect of that is going to have on the system? And how do we approach this? Do we approach it from a revenue side, or is there any room for efficiency and efficiency savings? 

Dr. DILLINGHAM. Mr. Chairman, I want to start with reiterating 

what the Administrator just said, that after 9/11 there was a slowing of need for infrastructure, the passenger level was down, and, 

therefore, there were not that many requests for AIP money. And 

that’s sort of reflected at this point. Also, what we found in our 

analysis is that in a couple of cases the AIP program has been used 

almost as a contingency fund. And, by that example, I mean, that 

right after 9/11 about a half a billion dollars was taken from the 

AIP program for security purposes. And as recently as last year, 

there was another hundred million or so taken to use for Katrina 

relief. 

So, I think in the short term, the AIP request is probably around 

the right mark, at this point. But, again, I emphasize that this is 

probably in the short run, rather than in the longer term, because 

traffic is increasing. And, as the Administrator said, they’re seeing, 

now, an uptick in requests for AIP funds. And, as always, the priorities across the Nation in the budget are such that, tough choices 

have to be made. 

Senator BURNS. Thank you. 

Senator Stevens? 

The CHAIRMAN. Thank you very much, Mr. Chairman. 

It will surprise no one that I want to get a little provincial here 

today. But, as I said, we have 241 different little villages that, of 

them, 159 can be reached only by air. Under this proposal, the 

funding for those small airports is zero. We have the largest cargo 

landing airport in tonnage, in the country, I believe, now, at Anchorage. And the funding for cargo airports is reduced by $27.2 

million. Now, that is one function that earns money. And yet it has 

seen a substantial reduction. 

The Capstone and weather camera functions of Alaska, which 

are part of the safety system we started when we first started reviewing safety in Alaska, we found that one out of 11 pilots in 

Alaska die. And we have turned around the death rates. And we 

turned around the crash rates. It is safer now to fly in Alaska than 

it is in most parts of the country. But this budget reduces, by $23.3 

million, the funding for the Alaska Weather and Capstone. We had 

a $5 million contribution to the Aviation Safety Program in Alaska. 

That is zeroed out. 

One of our volcanoes is spewing out as I speak, and Alaska Observatory funding for the FAA functions associated with that, 

which is the—really, the wind profiling and to determine where the 

38

ash goes when the volcanoes go up—and we have more volcanoes 

in Alaska than any other State of the Union. We, as you know, almost lost a Korean liner, because they did not know where the ash 

was. We have not had any such incident, although we’ve had several volcanoes erupt since that time. That contribution of FAA has 

been zeroed out. 

And we have waited in line to be—have the LORAN–C upgrades. 

Strangely enough, although they’re the most functional and the 

most—we depend on them more than anyone, the LORAN–C upgrades that have not been completed are in Alaska. These are the 

last stations to be upgraded. Once again, our stations were last in 

line, and now that function is zeroed out. 

I have reason to believe that this budget was prepared before the 

fight over earmarks was started. And I’m certain that people at the 

budget, and perhaps even in the FAA, thought that this former 

Chairman of the Appropriations Committee, and now Chairman of 

Commerce, would find ways to restore those moneys. It appears 

now that’s going to be almost impossible. 

Now, my question to you is, How do we function in Alaska, 

where there are no trains, there’s one train, but into those villages, 

no trains, no buses, no taxis, no access, except by air—how do we 

function in Alaska, which is one-fifth the size of the United States, 

if the bulk of the cuts of the FAA are assessed to Alaska? 

Ms. BLAKEY. Well, I can promise, Mr. Chairman, there is certainly no intent that the bulk of the cuts, in any way, would be assessed to Alaska, because I cannot think of a state in the Nation 

where aviation is more critical. Montana, of course, certainly, 

Chairman Burns, is also one that depends a great deal on aviation. 

And we’re acutely conscious of the fact that the program that you 

mentioned, Capstone, has been a tremendous success. In fact, I 

think——

The CHAIRMAN. It’s now being demonstrated worldwide. And 

I——

Ms. BLAKEY. Yes. 

The CHAIRMAN.—flew on one of the first Capstone missions, to 

determine if that’s—but, again, I have no way to explain this to my 

people, other than to say, well, I think they expected me to put 

them back in as we adjusted the budget. But that, as I said, under 

the current circumstance, I think, is next to impossible this year. 

Ms. BLAKEY. Well, what I would point out is this. On the airport 

funding, despite the fact that the funding under the formulas that 

are there for the AIP program currently, the small nonprimary airports do not receive passenger entitlement funds like they have in 

the past. They’ve, on average, gotten about $900,000 over the last 

5 years. And this year that would not be the case under the existing formulas. 

I would also point out, however, they are eligible for discretionary funding. And, certainly, where there is great need, I would 

expect, from a safety standpoint, that will be a top priority from 

our standpoint. We’re anticipating that the AIP funds will be able 

to cover all of those requests that go to critical safety needs, as well 

as the existing letters of intent and commitments that we have 

made. 

39

On Capstone, what I would also point out is, of course, there is 

funding in the budget for Capstone. We do consider it a very successful program, with a 40 percent reduction in the fatal accident 

rate in Alaska. So, the intent is to sustain that program and move 

it along, while at the same time, we are moving toward national 

deployment of ADSB. And there is the intent to ultimately merge 

those programs. So, some of this goes to transition periods, as well. 

As you know, there has not been a request in the budget for 

LORAN–C for a number of years, and it has been something that 

has been put in by Congress each year. You’re quite right that it 

has been previously dealt with by an earmark. But the budget request on LORAN–C is consistent with previous years. 

What I can——

The CHAIRMAN. It’s zero. 

Ms. BLAKEY. Yes, exactly. Well, that’s where it has also been in 

previous——

The CHAIRMAN. That was——

Ms. BLAKEY.—Presidents’ budgets. 

The CHAIRMAN.—depending on those of us who came from areas 

where they had to have LORAN–C upgraded, moving money 

around and putting money in every year. Now, as I tell you, I don’t 

think that’s possible here. But the real problem that I have is that 

when you look at this budget—you don’t see it from my eyes, but 

I remember sitting at the Commerce table with Senator Cannon, 

when he was chairman. He wanted to do away with the CAB. I opposed that. Under the CAB, the CAB mandated that these small 

villages be served. Now it’s no longer a mandate. We have Essential Air Service programs. It’s another budget. But it, too, has been 

cut back. Each one of those airports has an entitlement of $150,000 

a year, because the flight service station was closed, all other aspects of assistance to that area was closed. And each one of them 

was deemed essential to survival. And yet, every one of those small 

villages has been deleted now, in terms of that small payment of 

$150,000, which is used to maintain and keep those airports open. 

They’re the only access to the outside world. The only. As a matter 

of fact, we just finished, this last year, getting lights on some of 

them and they’re dark half of the year. 

Now, I find it very difficult to deal with this issue under the current anti-earmark syndrome. I, frankly, don’t know what the Committee’s going to do yet, but I know, when we get to the floor, people are going to say, ‘‘There you go again, you’re earmarking.’’ We 

had to earmark every year, because we were left out. And, as you 

say, for the LORAN–C, zero all the way back. But I can’t remember 

a budget that didn’t have some money for LORAN–C upgrades. 

And now, as we get to the point—we’re last—as we get to the point 

where the last to be upgraded are in Alaska, the zero can’t be filled 

in. And you can’t fund it because of this penchant against congressional earmarks. 

So, I really don’t know how to handle this. And I urge you—I 

urge you to go back. We’re going to have to get a budget amendment so that these are not earmarks. These people made the assumption that I would change that, as I have for years. And it’s 

a distressing situation to be in. I do understand the overall budget 

situation, but I don’t understand small amounts like this being deVerDate 0ct 09 2002 13:56 Aug 01, 2006 Jkt 028521 PO 00000 Frm 00043 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\28521.TXT JACKF PsN: JACKF
40

leted. The total to keep Alaska safe would be less than, I think, 

about $30 million. But enough said. 

Thank you, Mr. Chairman. 

Senator BURNS. Senator Pryor? 

STATEMENT OF HON. MARK PRYOR,

U.S. SENATOR FROM ARKANSAS 

Senator PRYOR. Thank you, Mr. Chairman. 

And I must echo some of the same concerns that Senator Stevens 

has about the budget and zeroing out some programs that really 

help rural America. 

Administrator Blakey, let me ask you about the next generation 

air transportation system. There are various estimates on this. And 

I’ve heard estimates as high as $40 billion over the next 20 years. 

As I understand it, FAA has not made an estimate on it. Do you 

have an estimate on the cost of that today? 

Ms. BLAKEY. No, we do not. As you can appreciate, this is something that is fairly complex, with a lot of variables. We tried this 

last year, in fact, to do what I would call a low-fidelity analysis. 

And it turned out that there were enough unknowns and variables 

that the numbers really weren’t reliable. What we have done, 

though, Senator Pryor—and I think you’ll take encouragement out 

of this—is, we’re looking to the industry to work with us on this, 

to the experts in the academic fields, as well. And we have pulled 

together an investment analysis meeting at the end of this next 

month, where we will be spending 2 days going over the various 

figures and estimates on this. A lot of it depends on things that are 

outside of our control. How fast will the industry want to equip? 

There are billions and billions of dollars involved. What is the costbenefit there? And what makes sense? 

Depending upon the schedule and how you approach it, the variables are very significant. But what we’d like to do is come up with 

three buckets, if you will. The first would be an estimate for the 

next 5 years, which I think we can work to get, with some degree 

of high accuracy. The next would go out another 10, and then to 

the end of what we are projecting the schedule for this, which is 

2025. 

Senator PRYOR. OK. Let me also say, I’m glad to know meetings 

are continuing, but do you have a sense of when you’ll have a complete plan? I mean, do you have a sense of when you’ll come back 

to the Congress with a plan? 

Ms. BLAKEY. This is really not like building a power plant. This 

is something where you’re going where no one’s gone before and 

you’re projecting new systems here that really do change—in fact, 

transform—the entire system, not just in terms of air traffic control, but the way we approach security. It is developing weather 

systems that really don’t exist right now. Some of this is technology 

that is very predictable. Some of it has not been developed in any 

way. And because of those kinds of things, it’s not really like ‘‘name 

a number’’ and we’ll know it with any kind of exactitude. 

This year, what we are striving to do is to nail down the enterprise architecture, how all these pieces will fit together, and a 

broad concept of operations. If we and industry can agree on that 

with the other parts of government—remember, Department of DeVerDate 0ct 09 2002 13:56 Aug 01, 2006 Jkt 028521 PO 00000 Frm 00044 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\28521.TXT JACKF PsN: JACKF
41

fense and Homeland Security have a big stake in this—if we agree 

on this, it will give us a lot greater degree of being able to project 

these costs, near term. 

Senator PRYOR. OK. 

Ms. BLAKEY. And I think that will be reliable. 

Senator PRYOR. How much of this factors into your concern that 

you talked about a few moments ago, about the revenue stream? 

Because it sounds like the next generation project is an open-ended 

question, and you have no idea what it will cost. And, therefore, 

I would think it would be hard to say if the revenue stream you 

have today would be adequate to even get close to covering that. 

Ms. BLAKEY. Well, since the revenue stream we have today is not 

tied, in any way, to costs, I would guarantee you that the way we 

are approaching it right now is going to be highly unpredictable 

from that standpoint. What we are looking to do, of course, is a 

way of paying for operational costs and capital investments in the 

future that is tied to cost, is predictable, and has a high degree of 

involvement with the stakeholder community. So, they’re a part of 

the kinds of decisions about cost benefit. Is it worth it to move at 

this pace, with these kinds of investments, with the concomitant 

investments, from the airlines and others in the system? I think 

that kind of decisionmaking is going to give a very good, reliable 

way of paying for these costs. Some of it will also depend on structure. If you’re doing it on a pay-as-you-go basis, as opposed to looking at capital investments the way the corporate community does, 

it obviously will have real impact on how much it costs. 

Senator PRYOR. All right. Let me ask a question regarding the 

FAA budget. There’s money in the budget to consider the consolidation of some air traffic control facilities. What is your opinion regarding consolidation? What is the criteria that you look at when 

you’re thinking about consolidating various facilities? And, second, 

is there a list yet of targeted facilities for consolidation? 

Ms. BLAKEY. Basically, what we try to do is look at the questions 

of where we are going to have needs for new construction, new towers, new TRACONs. What makes sense as you are planning these 

major investments in new facilities? And what kind of growth do 

you see in that area, in terms of air traffic? What will the needs 

be? You try to do that, vis-a`-vis the costs of installing the technologies and the number of people you will need. If you do it on 

a consolidated basis, obviously there are economies of scale in pulling facilities together, in being able to use technology in one installation rather than in multiple installations. And you also can potentially use your workforce on a more efficient basis. It also provides some benefits to the workforce, because there are opportunities for controllers to move up, in terms of complexity and management of traffic. So, there are a number of advantages. And you 

have the potential to reuse existing facilities for other kinds of 

needs. 

So, those are the kinds of benefits, versus the cost of relocation, 

the cost of building a larger facility, rather than keeping the existing structures. And that’s done on a very individualized basis. And, 

no, there is no set list where we have a group of facilities that we 

are committed to closing. What we’re trying to do is, on a smart 

basis, look at each one of these facilities and do that analysis. And 

42

then we, of course, will be sharing that analysis with affected districts and with Members who are representing those districts in 

those States. 

Senator PRYOR. And what’s the timeline on sharing that information with the districts and with the representatives that represent 

those districts? 

Ms. BLAKEY. We’re beginning to do it right now——

Senator PRYOR. OK. 

Ms. BLAKEY.—as a matter of fact. As you could appreciate, construction’s ongoing, and there are a number of towers that are 

planned as new construction that are stipulated in the budget from 

Congress. 

Senator PRYOR. Is it safe to say that communities feel more comfortable with air traffic control located in their community? I guess, 

though, what I’m hearing you say is, where the air traffic control 

facility is isn’t as important as just making sure you have a stateof-the-art facility, because they can regulate air traffic hundreds of 

miles away. Is that fair to say? 

Ms. BLAKEY. Basically, remember that what we’re talking about 

here, largely, are the radar control facilities, the TRACONs, which 

have no windows. So, when you think of it in those terms, it really 

doesn’t matter where the TRACON is located. And some of the new 

technology that has been developed, and that the taxpayers invested in heavily, the STARS system, for example, allows you to 

operate facilities within a 300-mile radius on a remote basis, which 

works very well. So, there’s a lot of that, that can be done. Towers 

remain towers at those airports, but the issue of how you control, 

with radar control, is where you really can see that there is not a 

material difference to the community whether it is done there or 

at another location. 

Senator PRYOR. Thank you, Mr. Chairman. 

Senator BURNS. Ms. Blakey, while we’re going along that 

timeline of reports and everything, as you know we’re going to 

move into reauthorization. And the proposal was to come back to 

us with whatever you would like to see in it. When will you have 

your idea of how you want this bill reauthorized and what you 

would like to see in it? 

Ms. BLAKEY. Mr. Chairman, no one wishes more than I do in this 

room right now that I had a precise answer for you. I will tell you, 

though, that we are working very hard on this. And I fully expect 

that the Administration’s proposal will reach the Congress this 

spring. It is complex. And we’ve tried very hard to factor in a lot 

of input from the various stakeholders, this Committee, and this 

Congress. So, I hope that when we present the proposal, the nature 

of it will show that the time and the work that’s gone into it was 

worth it. 

Senator BURNS. All of you might want to take a shot at this one. 

We passed a highway bill. It contains a change in collection of fuel 

taxes for business and general aviation operators in that bill. 

Under the provision, when the fuel is initially purchased it is deposited in the Highway Trust Fund. Only when an operator applies 

to the IRS for a refund does the 21.9 cents transfer from the Highway Trust Fund into the Aviation Trust Fund. Now, we’re hearing 

Montana constituents say that the process is very burdensome. 

43

And I’m drafting legislation now to alleviate that problem. But it 

might also be made as a permanent solution when we reauthorize 

FAA. 

I’ve got some concern about that. And do you want to share your 

ideas on how we handle that and how we can streamline that process? 

Mr. Zinser, do you have an idea on that? 

Mr. ZINSER. Yes, sir. Mr. Chairman, I think that that change was 

trying to address an issue of fuel tax diversion, where there is a 

problem with people buying the fuel tax-free for aviation purposes, 

but then diverting the fuel to on-the-road use. And, as a result of 

that, they committed a fraud and beat the Trust Fund out of 

money. And I think that was the purpose of the change in the rule 

there. 

In terms of fixing it for the burdensome aspects of administering 

that, we haven’t looked into that. We’d be happy to look at that 

and see what kind of burdens are being placed on the general aviation users. 

Senator BURNS. Should that whole mechanism be changed? Mr. 

Dillingham, do you have a view? 

Dr. DILLINGHAM. Again, Mr. Chairman, we have not looked at 

that, either. But, generally, opposition is, if there is a way to 

streamline a process and make it less burdensome, we would be in 

support of that. And, again, if you need our assistance with this 

issue, just please let us know. 

Senator BURNS. Have you not made any recommendations with 

the knowledge you have now? 

Dr. DILLINGHAM. No, sir, we haven’t. 

Senator BURNS. This coming year, what issues, programs, do you 

think we should keep a close eye on, and why? And I’m going to 

ask both of you to respond to those. What areas are you mainly 

concerned about? 

Mr. Zinser? 

Mr. ZINSER. The areas that we’re mainly concerned about are in 

the F&E account with the two programs that I mentioned in my 

statement. The ERAM program, which is modernizing the en route 

center air traffic control system is important to watch. We issued 

a report last year and made recommendations to strengthen the 

program. We think that FAA is doing a good job on ERAM. However, they are ramping it up and it’s coming out of the lab and 

being tested in the field. FAA will be spending a million dollars a 

day on ERAM. And if this program doesn’t work right, it’s going 

to have an effect on FAA’s ability to deliver future systems. 

We also have concerns about the FTI program. It’s the only program in FAA that is designed to reduce operating costs. Initially, 

the FAA projected that by modernizing their telecommunications 

systems, they’d save $800 million over 10 years. FTI was 

rebaselined in December 2004, and projected savings are down to 

$600 million, and they’ve spread them out 5 additional years. 

Right now, the program’s not on track. We’ve issued a draft report, and FAA and the Department are taking it seriously. If the 

program gets back on track, FAA can still save some money. 

Senator BURNS. When do you expect that report to be completed? 

44

Mr. ZINSER. We are waiting for FAA to get back to us with their 

formal response. And I think the date that we’re expecting that is 

early April. 

Senator BURNS. Do you want to respond to the original question, 

Dr. Dillingham? 

Dr. DILLINGHAM. Well, Chairman Burns, I think it’s only fair to 

put the other side of the equation up. We, also, are concerned with 

some of the F&E programs, as the DOT IG has suggested. But I 

think the other side of the coin is that we need to recognize that 

over the past 2 years the FAA has done—made tremendous strides 

in achieving its F&E goals, and has met their schedules and costs 

for those 2 years, which we think is a very good sign that things 

are changing. I think a lot of effort will be involved in trying to get 

ready for the next reauthorization. The issues that the Senators 

have raised this morning with regard to the cost for NGATS and 

things related to it. 

Senator BURNS. Senator Lautenberg, welcome to the Committee——

STATEMENT OF HON. FRANK R. LAUTENBERG,

U.S. SENATOR FROM NEW JERSEY 

Senator LAUTENBERG. I thank you. 

Senator BURNS.—up here in the middle of the day. 

Senator LAUTENBERG. And I commend you for holding this hearing. We face lots of problems that we’re concerned about. And I ask 

consent that my statement—opening statement——

Senator BURNS. Without objection, it’ll be made part of the 

record. 

Senator LAUTENBERG. OK. 

[The prepared statement of Senator Lautenberg follows:]

PREPARED STATEMENT OF HON. FRANK R. LAUTENBERG,

U.S. SENATOR FROM NEW JERSEY

Mr. Chairman, 

Thank you for holding this important hearing. 

Mr. Chairman, the President’s budget calls for us to continue cutting aviation infrastructure funding—this time by more than 800 million dollars. Instead of laying 

the groundwork for a safe future for aviation, the President’s short-sighted budget 

proposal would undermine our ability to travel safely and efficiently. 

We all know that our highways are crowded. The same is true of our airspace. 

How many times have we been forced to sit in airplanes that waited an hour or 

more to take off ? Sometimes the wait takes longer than the flight itself. 

We can’t create more airspace. The only way to handle more aviation traffic is 

to upgrade the equipment that is used by air traffic controllers on the ground. 

The Bush Budget proposal wouldn’t move us forward—it would take a step backward. Some would blame budget pressures in aviation on the pay of air traffic controllers. But the fact is, we are already at terrible risk of not having enough controllers to operate the system safely. Because the Bush Administration has been dragging its feet when it comes to hiring new controllers, we are in a position where 

3,200 controllers could retire today—almost 20 percent of the workforce. 

Mr. Chairman, you can’t just get air traffic controllers off the street—it takes, on 

average, four years to train a controller. 

The Administration projects that air passengers and cargo will triple by 2025. The 

result could be a nightmare of unbearable aviation delays. This could have a crippling effect not only on the aviation industry, but on commerce in our Nation. 

The Bush Administration recently proposed a new aviation security tax increase 

that would hit family travel especially hard. The Senate adopted my amendment to 

the Fiscal Year 2007 Budget Resolution to strip out this unfair proposal, and I hope 

45

my colleagues on this Subcommittee will support my efforts as the resolution goes 

to conference. 

Thank you, Mr. Chairman.

Senator LAUTENBERG. I’m glad to see our Administrator and our 

other distinguished witnesses here today. 

I suffer from a disease called ‘‘delay while traveling.’’ And since 

I fly frequently——

Senator BURNS. Is that contagious? 

Senator LAUTENBERG. I think so. 

[Laughter.] 

Senator LAUTENBERG. Yes, it’s spread around the country, there’s 

no doubt about it. 

[Laughter.] 

Senator LAUTENBERG. Sometimes the flight that I take back up 

to the New Jersey/New York region has a longer waiting time on 

the ground than it has flying time. And that’s often at departure, 

as well as landing. 

Senator BURNS. I’ll loan you my pickup. You can drive it, you 

know. 

[Laughter.] 

Senator LAUTENBERG. I’ll borrow your horse, instead. 

[Laughter.] 

Senator LAUTENBERG. Enough of this personal stuff. Excuse us 

for the alacrity. 

Administrator Blakey, we’ve talked lots of times over the years 

about functioning at Newark and the air traffic safety around airports. And you know that I sit in the second seat often enough to 

be a nuisance, but how many more air traffic controllers do you 

think we need to move air traffic safely at Newark Airport? Do you 

have any idea? 

Ms. BLAKEY. Senator, I haven’t looked at the exact numbers on 

Newark very recently, so I won’t try to hazard a number, but I’d 

be happy to get with you. 

Senator LAUTENBERG. Yes, please do. 

Ms. BLAKEY. As you know, right now we are, for the most part 

across the country, staffing at about the level where we feel we are 

both—certainly accomplishing the safety mission, without question, 

and also have the kind of staffing that is handling the traffic. Traffic is a bit down right, as may not be apparent at Newark, because 

you’re flying in——

Senator LAUTENBERG. It’s not apparent at all, yes. 

Ms. BLAKEY.—some of the most congested airspace of the country. But, overall, our staffing is right about the level it needs to be. 

We’re staffing up in the en route centers more, because that’s 

where we see that we have greater needs. But I’ll be happy to get 

with—you a figure——

Senator LAUTENBERG. Please——

Ms. BLAKEY.—on Newark. 

Senator LAUTENBERG.—please look at that, because I keep seeing 

reports that we are not fully staffed. And when we anticipate, as 

a national concern, retirements——

Ms. BLAKEY. Yes. 

Senator LAUTENBERG.—and the time needed for training and recruiting and so forth, do you think we have enough people to take 

46

care of that? Because a little over a year ago you said that 1,248 

controllers would be—need to be hired in Fiscal 2007. But I think 

the President’s request differs, and he’s only looking at—about a 

hundred less, about 1,136, compared to the 1,248 objective that 

you’ve laid out. How many air traffic controllers do you intend to 

hire in the next year? 

Ms. BLAKEY. Basically, the way we are approaching this is with 

a dynamic that obviously has to adjust as a number of variables 

change here. The numbers that you’re referring to were generated 

in the controller staffing plan that we issued about a year—more 

than—well more than a year ago, and were based on three forecasts ago. So, that tells you there’s a question of trying to keep 

these things up to date. As you know, we also, of course, are going 

for greater productivity enhancements so that we are able to, in 

fact, achieve productivity levels that we had not been able to previously. So, all of those variables come into play. 

We will be issuing a new controller staffing plan. And we have 

adjusted our timing on that so it comes out right after the new 

forecast. We’ve just had a forecast, as you may know, that came out 

about a month ago. And so, we are looking to have a new controller 

staffing plan on the street, which will have numbers that are much 

more closely correlated to the best estimates we have. 

What I can tell you is this. We are looking at net increases over 

and above the retirements that we are having, because we do need 

to overlap a larger number of controllers with those in the towers 

and TRACONs that are going to be leaving, so they can train up 

and move out. And the figures are going to reflect net increases as 

we move along. 

Senator LAUTENBERG. Well, I don’t know how we account for the 

traffic delays and, at the same time, assure ourselves—or support 

the notion that traffic is down. There is something wrong someplace. There are constant delays. And here, almost every one of us 

travels long distances, or gets on an airplane, to get home or to get 

around the country. Delays are interminable. It’s constant. And 

when we face the prospect, Dr. Dillingham, of the light jets, I think 

the figure is estimated to be 5,000 over the next 10 years, and 

we’ve produced separations, and we look at a heavier workload for 

controllers—I don’t understand where it’s all going to go. The sky, 

as you folks know, is finite. And if we add that number of new craft 

there, and flights that I travel on seem to be fairly well filled, but 

the delays, again, are constant, how do we adjust to that condition? 

Is this not really the case, that delays are being reduced? 

Ms. BLAKEY. Actually, Senator, I would comment on this. The 

delays abound. So, this is a nationwide problem right now. The unfortunate thing is, you’re experiencing what a number of people 

are, believe me. I mean, if you’re flying in some of the most congested airspace we have, which the East Coast is, there’s no doubt 

about the fact that we are, at this point, packing a lot of aircraft 

into the upper level airspace. So even the ability to get up and into 

the traffic streams doesn’t solve the problem. In addition, airports 

such as the ones that you’re flying out of, there really is no place 

to expand. I mean, if we could get some more tarmac, it would 

help. But there’s really no way to do that. So, a lot of it does go 

to things like airspace redesign. And, as you know, we have a plan 

47

on the street right now where we’re having public hearings for redesign of the airspace in the New York/New Jersey area, four different options. And we’re looking forward to seeing how that will 

proceed. 

Senator LAUTENBERG. Ms. Blakey, doesn’t that affect traffic nationwide? 

Ms. BLAKEY. Yes. 

Senator LAUTENBERG. I mean, if it’s congested here, then it affects the whole system. 

Ms. BLAKEY. It can have a ripple effect through the entire system. It’s one of the reasons why we pay so much attention to the 

New York/New Jersey/Philadelphia area, because those airports 

are critical for the flow. 

Senator LAUTENBERG. Mr. Chairman, your patience is appreciated. I want to ask one more thing. 

Will the Administration propose a new user fee for any segment 

of the general aviation community, including business aviation? 

There’s constant griping by the airlines to the fact that private or 

general aviation gets a kind of a free pass on the costs for entering 

the airspace. There’s a ticket tax for every passenger that goes on 

commercial. And that’s not the case in general aviation. And I wonder whether anything is contemplated, by way of a fee for general 

aviation, to compensate for that. 

Ms. BLAKEY. Senator, as I mentioned to the Chairman before you 

arrived, I would be the happiest person in this room if the Administration’s proposal were before us all to discuss. I’m not able to 

comment on it, because it still is under review. And so, I can’t discuss the final characteristics—but I would tell you this, we have 

heard, in a great degree of detail, from the affected stakeholder 

groups. We have heard from the general aviation community, about 

their view that they are marginal users of the system, and from the 

air carriers, about their view that they are picking up too large a 

burden of the cost. So, we have factored all of those kinds of concerns and comments into the proposal we will be putting forward. 

And I hope that you will see that it is taking an approach that we 

seek to balance those competing concerns and interests. 

At this point, our chief concern is that we are able to tie the costs 

of the system to the revenue, and to come up with a stable costbased system that is more equitable than the current system is. 

Senator LAUTENBERG. Thank you, Mr. Chairman. 

Senator BURNS. Thank you, Senator Lautenberg. 

The budget commits $18 billion to the Joint Program and Development Office. Can you explain to us, all three of you take a shot 

at this, the main purpose of this office and how this $18 billion to 

that Joint Program Development is used——

Dr. DILLINGHAM. I’ll take the first shot. 

Senator BURNS.—for the Committee? 

Dr. DILLINGHAM. Chairman Burns, the JPDO is——

Senator BURNS. Million. I’m sorry. I said billion. Million. 

Dr. DILLINGHAM. The JPDO is the organization that consists of 

several Cabinet-level agencies that has been mandated by the Congress to develop the plan for the next generation air traffic control 

system. And the process that they’re using is a process—at least 

initially, of leveraging resources from the constituent partner agenVerDate 0ct 09 2002 13:56 Aug 01, 2006 Jkt 028521 PO 00000 Frm 00051 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\28521.TXT JACKF PsN: JACKF
48

cies. NASA and FAA are putting in approximately the same 

amount of money for the JPDO. The JPDO is using that money ostensibly to plan and do demonstration projects and activities. We 

recently did an analysis of where the JPDO was, and what the status was. I think it’s fair to say that, based on the complexity of 

what they’ve been asked to do, that they are doing a relatively good 

job. We also identified some challenges that they have to face as 

they move forward, including the fact that it is an organization 

that doesn’t really have the authority to control other Cabinet 

agency budgets and personnel, and also that they have to maintain 

this stakeholder involvement as they move down the line. And 

some stakeholders—some critical stakeholders are not involved in 

it. In the history of that kind, the situation has not been real good 

with the current ATC modernization system. 

So, I mean, that’s what it’s put up to be, that’s why it was mandated. And that’s how it is proceeding at this point in time. It’s 

about 2 years old, a little over 2 years old, headquartered or housed 

primarily in FAA. 

Senator BURNS. Mr. Zinser——

Mr. ZINSER. Yes, sir, the——

Senator BURNS.—any comments on the——

Mr. ZINSER. The $18 million that is in FAA’s budget is also leveraged with appropriations from other agencies that participate. And 

Dr. Dillingham is correct, it’s primarily a planning exercise at this 

point, trying to integrate the interests of all the stakeholders, the 

six different departments involved, or agencies involved, in trying 

to design, develop, and deploy the next generation air transportation system. But right now they’re trying to develop those requirements. The JPDO is not really producing any products or real 

air traffic control systems with that money yet. 

Ms. BLAKEY. Mr. Chairman, if I could mention one thing, though, 

because I’d love to show it to this Committee, if there’s an opportunity at some point. Mr. Zinser’s right, of course. This is not 

where the primary funding for major capital investments is going 

to be. But, in addition to all of the very difficult work of coordinating Cabinet-level agencies, and all of the precise work of looking 

at budgets and research and trying to make sure that they are well 

aligned, and ultimately presenting a unified budget to the OMB 

that shows exactly how these programs satisfy the needs to develop 

an enterprise architecture and a concept of operations for the future, it’s tough work. It’s very difficult. But, what I’d love to have 

the Committee see at some point is, one of the demonstration programs that was funded. There was one this fall called Network Enable Operations, NEO, where legacy communications systems—

these are not new communications systems, all were linked up and 

talking to each other in realtime. This is our air traffic control system, this is dispatch from the airlines, this is military information 

coming in, this is security information. This means, unlike the situations that we have seen where there are aircraft coming into the 

Washington airspace that no one can identify, and then there is 

this enormous scramble, often too late, to determine exactly what’s 

going on. Is this an aircraft that has no business being there, and 

is it one that poses a threat? These systems are able to anticipate 

much earlier actually what it is, who should be tracking it, what 

49

kind of information you already have, what kind of information you 

need. And I always found it a very impressive thing that, for relatively little money, you could have all these existing legacy systems talk as though they were one. 

Senator BURNS. Well, I looked at this, and I said, ‘‘Well, now, if 

they haven’t turned out anything, they’ve not made any recommendations. I don’t know what it is and how come it’s costing 

us $18 million?’’ I mean, do we have some other way of designing 

a modernization program and presenting a master plan, then everything that we do has to fit within that master plan as we modernize? I don’t see any reason we couldn’t be using that $18 million 

someplace else. That’s the bottom line. That’s the bottom line I 

drew. And you’ll have to convince me otherwise. 

Dr. DILLINGHAM. Well, Mr. Chairman, I think that the demonstration projects that the Administrator referred to are, in fact, 

very costly. And the research that they are contracting for to support the decisions that they have to make is costly, as well. And 

as it is now, only NASA and FAA are putting in equal shares of 

money. I think that the Europeans are conducting a similar effort, 

on a smaller scale, and they’re putting in, if not the same kinds of 

money, more kinds of money, or greater amounts of money, to try 

and move in the same direction. And I think it’s worth noting that, 

as Senator Lautenberg started asking about, How can we break up 

some of this congestion, and how can we move to deal with some 

of the delays that—part of the efforts of the JPDO is to not just 

reach out to 2015 or 2025, but to sort of transition the current system into the next generation, and, with that, introduce technologies, as appropriate, that would address some of the delays and 

some of the congestion. And to move in the direction of—we talked 

about—Senator Stevens talked about the ‘‘mosquito fleet,’’ and 

we’re also talking about UAVs and all those kinds of things. Part 

of the next generation will allow these kind of aircraft to use existing regional airports, so that you take some of the congestion out 

of the main airports. 

So, I guess we’re at the point of thinking that it’s probably a relatively inexpensive investment for the payoff that is expected from 

it. 

Senator BURNS. It’s only been in effect 2 years, so that has to be 

taken into consideration. We don’t do anything around here with 

lightning speed. So, do that. 

That’s about all the questions I have for today’s hearing. There 

are some things that I think we’ve got to discuss as we move forward on reauthorization. I would hope that we could get some kind 

of an idea out of the Administration down there of FAA, what they 

want to see in that reauthorization right away. It would certainly 

help us. It would start that discussion and make sure it’s all incorporated in the draft proposal. We’d like to see that as soon as we 

can. 

There’s other Members that had questions. If you could respond 

to those questions, both to the individual Member and to the Committee, I’d certainly appreciate that. 

I appreciate you coming, this morning, and sharing your views. 

I’d like to think that we’re very frank and we’re very open, and 

we’ve got some tremendous problems and challenges ahead of us as 

50

passengers—that list continues to grow, and load factors continue 

to grow, but it’s being done on more aircraft now, and that sort of 

concerns all of us. We always have to come down on the side of 

safety. I think that’s what this is all about up here. 

Thank you very much for coming this morning. I appreciate your 

testimony. 

[Whereupon, at 11:20 a.m., the hearing was adjourned.] 

(51)

APPENDIX

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. DANIEL K. INOUYE TO

HON. MARION C. BLAKEY

Airport Improvement Program (AIP) 

Question 1. The FAA budget would cut almost $800 million from the AIP account. 

This cut comes at a time that the Airports Council International—North America 

(ACI–NA) indicates airport capital development needs across the country are roughly $70 billion over the next five years. How do you justify such a large cut to the 

AIP program? Do you have any concerns about the proposed cut? 

Answer. Before proposing the $2.75 billion AIP level, we looked very closely at the 

impact on airport capital development. In reviewing the issue for the FY 2006 budget, we had noted that the National Plan of Integrated Airport Systems (NPIAS) published in September 2005 showed a 15 percent reduction over previous NPIAS (published in 2002) reporting periods. Our FY 2006 proposed AIP funding level of $3.0 

billion reflected this reduction. As FAA works on the latest issue of the NPIAS 

(pending), current capital trends show only modest growth—about three percent or 

$1 billion over five years. The pending NPIAS figure is still well below the peak 

level of capital needs identified in the 2002 NPIAS. We also compared the $2.75 billion budget number to our airport capital improvement plan (ACIP) for projects in 

FY 2007. 

Looking at our ACIP data, the FAA will be able to reach all high priority safety, 

capacity, security and environmental projects. In particular, there will be adequate 

funds to meet all current and anticipated Letter of Intent (LOI) commitments, fund 

projects to meet the FAA’s Flight Plan goal for improving runway safety areas 

(RSAs) and help airports meet their Part 1542 security requirements. We will also 

be able to continue work on phased projects. It will slow some rehabilitation projects 

and projects to bring airports up to current FAA design standards. 

The President’s Budget includes support of major capacity projects such as the 

Chicago O’Hare redesign, new runways at Washington Dulles International Airport 

and major projects at Atlanta-Hartsfield International. The major capacity projects 

are multi-year projects that are unaffected by the decrease in the AIP budget due 

to their high priority within the national system.

Question 2. Funding the AIP program below $3.2 billion triggers a formula change 

that would eliminate guaranteed annual entitlements for non-primary or General 

Aviation (GA) airports. Did this factor into your budget calculations? Would you 

seek a legislative fix from Congress to ensure that all airports would receive a portion of the lower funding total or would you focus only on priority projects? Do you 

anticipate annual AIP requests for the duration of your tenure will be below the 

$3.2 billion level that triggers this adjustment? 

Answer. Since the first year that the nonprimary entitlements authorized in AIR–

21 became available, these airports have received up to $900,000 in entitlement 

funds dedicated to their individual airports. Many airports have been able to use 

that money to fund their capital projects and even have begun to construct fuel 

farms and hangars—projects that were previously ineligible for AIP. For the nonprimary airports, (general aviation (GA) and the smallest of the commercial service airports) we have seen a dramatic increase in the amount of general aviation entitlement funds being carried over. In fact, 52 percent of the total AIP carryover, or over 

$200 million, is from general aviation airports. GA airports carried over nearly 60 

percent of the total entitlement that was allocated to them. While the nonprimary 

entitlement would not be available in FY 2007 under the President’s budget, the unassigned state apportionment, which is also directed toward nonprimary airports, 

would increase by 63 percent. 

For these reasons, we do not believe that a legislative change to preserve the nonprimary entitlement is necessary in FY 2007. Indeed any effort to preserve the nonprimary entitlement at the President’s requested funding level for AIP without also 

52

preserving a minimum amount of discretionary funds would impair our ability to 

meet the national priorities outlined above. 

When we consider an appropriate level for the AIP budget, we look at the airport 

planning data, our LOI and other high priority and phased projects. As we look toward the FY 2008 reauthorization, we are reviewing the formula changes as well 

as overall funding level to ensure the maximum utility of the AIP investment.

Question 3. China has announced its intention to provide $17.4 billion over the next five years to improve its airport infrastructure—almost $3.5 billion a year. Effectively investing more than the U.S. on airports for the first time ever. Do you 

have any thoughts about the Chinese commitment to its aviation future? 

Answer. The FAA is encouraged by the Chinese Government’s commitment to improve and expand its airport infrastructure. This responsible investment to meet the 

challenges posed by an aviation system that analysts project will experience double 

digit growth in coming years is an indication that China intends to be a preeminent 

aviation destination and hub. Even with such an investment, the number of airports 

available in China’s less mature aviation system for civilian use is far below the extensive system in place in the United States. 

A comparison of China’s current plan for airport investment with the FY 2007 

budget request for AIP is not an accurate basis for comparing each country’s longterm commitment to aviation. Although the United States has invested over $16.7 

billion since FY 2001 in its airports, with more than $3.4 billion in additional funds 

to be provided this fiscal year, AIP funds only account for approximately 20 percent 

of capital expenditures at U.S. airports. The remainder comes from airport operators, and thus mainly from local and state governments. Thus, looking at the total 

commitment of funds for airport development from all levels of government in the 

United States, the United States’ commitment exceeds that being made China. 

Facilities and Equipment (F&E) 

Question 1. Although the FAA FY07 budget claims it ‘‘supports an interagency effort to develop the Next Generation Air Transportation System (NGATS) to meet 

growing demand for airspace capacity,’’ a preliminary analysis by the DOT Inspector 

General’s Office finds that the level of funding contained in the Administration’s 

F&E request and five-year capital investment program (CIP) will not support the 

Next Generation system. Do you believe the current budget numbers do enough for 

NGATS? How much funding do we actually need through 2025 to meet the needs 

of NGATS? When will the FAA put forward a comprehensive plan/blueprint for 

NGATS? 

Answer. The cost levels in the FY 2007 CIP are adequate to begin NGATS implementation for those JPDO initiatives that are sufficiently developed. The FAA plans 

to begin implementation of two foundational JPDO projects with the FY 2007 budget: Automated Dependent Surveillance Broadcast (ADS–B) and System Wide Information Management (SWIM). The budget also allows for continued concept development of future initiatives. 

In addition, two of today’s major modernization initiatives contained in the CIP 

will help the NAS transition towards the needs of NGATS. This includes working 

with the FAA to analyze the changes that will be needed to both the En Route Automation Modernization (ERAM) system and the Traffic Flow Management (TFM) system that is necessary in order to meet the needs of 4-dimensional air trajectorybased operations—a key NGATS capability. This is a critical element in transforming flight planning and air traffic paradigms into a system that manages operations based on aircraft trajectories, regularly adjusts the airspace structure to best 

meet user and security/defense needs and relies on automation for trajectory analysis and separation assurance. 

In order to address the funding issue, we have asked the NGATS Institute to host 

a series of forums so that the critical assumptions and uncertainties underlying any 

cost benefit effort can receive scrutiny and be validated for further use. The forums 

will involve a wide cross-section of aviation decision-makers. In addition, further detailed studies will focus on the near term costs and benefits which will be used to 

inform more immediate agency planning activities over the next 5 years. We will 

then expand our cost analysis to consider the expected total systems costs for 

NGATS. 

An initial operational improvement roadmap is now under technical review and 

later this year the JPDO will unveil its first iteration of the NGATS Enterprise Architecture and Concepts of Operation. As the JPDO increases the level of specificity 

of the technical documentation and validates it through simulation, the confidence 

in the cost estimates will increase.

Question 2. The FAA’s FY07 budget provides some funding to consider consolidation of air traffic control (ATC) facilities. What is the status of the FAA’s efforts on 

53

considering consolidation of facilities? Has the FAA made any determination or targeted any facilities to date? 

Answer. FAA’s policy is to consider relocating a Terminal Radar Approach Control 

(TRACON) facility to another location anytime construction of a new Airport Traffic 

Control Tower is considered. Other opportunities where existing facilities are currently capable of accepting a collocation are also considered. In the FY 2007 budget 

request, the agency is proposing the following collocations: Lincoln to Omaha, West 

Palm Beach to Miami, and Reno to Northern California TRACON. In addition, Palm 

Springs is planned to be collocated to Southern California TRACON in FY 2006. 

Other collocations are being evaluated and may be submitted in future budget requests. 

Airport and Airways Trust Fund Status 

Question. The Congressional Budget Office’s (CBO) most recent projections of 

Trust Fund balances indicate steadily increasing revenues and uncommitted balances for the Trust Fund through the next decade, up to more than $49 billion by 

FY 2016 based on a re-estimate of the President’s FY 2007 budget request. What 

is your reaction to the CBO estimates? What are the FAA’s longest current projections for the Trust Fund? Please provide those estimates. 

Answer. The FAA forecasts tax revenue into the Trust Fund for a ten-year period, 

but does not issue specific long-term projections for the Trust Fund balance due to 

the significant uncertainty surrounding out-year budget authority assumptions. 

However, like the CBO, we do look at several different scenarios for the Trust Fund 

balance as part of our normal business planning process. We have attached the tax 

revenue forecast FAA provided to the CBO in December 2005. These figures are 

generally consistent with the numbers in the CBO projections (which also include 

interest earned on the Trust Fund’s cash balance). 

Based on the budget authority assumptions for FY 2007 through FY 2011 in the 

FY 2007 President’s Budget request, the referenced CBO uncommitted balance estimates are generally consistent with the Administration’s estimates. (Both project an 

uncommitted balance of $15.5 billion in FY 2011.) As the alternate CBO runs demonstrate, the uncommitted balance projections are highly sensitive to changes in the 

budget authority assumptions. For instance, CBO’s ‘‘Vision 100’’ estimate shows the 

Trust Fund’s uncommitted balance remaining flat at approximately $1.5 billion 

through FY 2016—meaning that there would be very little reserve in the case of 

unforeseen changes in the aviation industry. 

It is important to emphasize that the FAA’s belief in the need for a new funding 

mechanism is not fundamentally about generating more money for the FAA. It is 

about creating a more rational, equitable and stable system that provides the right 

incentives to users and to the FAA, and thereby reducing the likelihood that there 

will be a persistent gap between revenues and costs. 

Air Transportation Oversight System (ATOS) 

Question. Last year, the agency estimated that it would take approximately 300 

additional inspectors to bring remaining carriers into ATOS compliancy. How many 

staff have you added to meet this goal? Considering the current shortage of inspector staffing, how does the agency expect to have ATOS fully implemented by the 

end of next year? Are you presently concerned about creating any gaps in the inspections system as a result of the shortages? 

Answer. The FAA is requesting an additional 101 inspectors for risk management 

and safety oversight. Some of these inspectors will be assigned to ATOS air carriers 

which will allow full implementation of ATOS by the end of next year. 

We are able to realize full implementation with fewer than 300 additional staff 

due to the efficiencies that will result from the expansion of ATOS to all part 121 

air carriers, e.g., sharing certain resources amongst multiple air carrier certificate 

management teams and through improvements to ATOS automation capabilities. 

FAA is not currently concerned about any inspection gaps. We are confident that 

System Safety Oversight will be strengthened through a more efficient use of resources and improved automation. 

FAA’s Telecommunications Infrastructure (FTI) 

Question. Do you believe that the FTI transfer will be completed by its scheduled 

December 2007 completion date? Has the current schedule kept pace with any transition plans or master schedules you have developed for the program? What benefits 

were identified prior to implementation of the FTI program? Are these goals being 

met? 

Answer. The FTI transition master schedule calls for completing the transition of 

all services on the LINCS network by December 2007. There are services supported 

by other legacy networks that do not have the same time criticality and may be 

54

transitioned after December 2007. The LINCS Bridge contract ends on March 13, 

2007, and there is a one-year Continuity of Service option that the FAA can exercise 

to extend the period of performance to March 2008. However, at this point, the 

planned end date for FTI transition remains December 2007. 

The FTI program was re-baselined in December 2004. The associated schedule 

called for a relatively steep ramp-up in the number of sites to be transitioned to 

the FTI network. By April 2005, it became apparent that the ramp-up was not 

achievable. The FAA and the FTI Service Provider implemented extensive process 

improvements to increase transition rates. As part of this activity, revised planning 

targets were set for the remainder of the transition period from April 2005 through 

December 2007 and documented within the program’s Exhibit 300 that is submitted 

to OMB. Over the past 13 months, the FTI program has kept pace with the revised 

planning targets for site transitions and has significantly increased the number of 

service transitions from less than 100 per month to over 700 per month. 

The FTI program is expected to provide a wide range of benefits to the FAA. Some 

of the benefits are quantifiable while others are more qualitative. Examples of the 

quantifiable benefits include:

• Improved service availability: FTI services are specified to provide a higher 

level of availability than the FAA’s legacy services. In addition, FTI services 

eliminate the need for FAA-provided communications equipment that lowers the 

end-to-end availability observed by the end user.

• Faster service delivery: Once the FTI transition is completed, FAA users will 

be able to order and have an FTI service delivered in as few as 15 days. This 

represents a three-fold improvement compared to legacy networks.

• Lower unit cost of service: The FAA’s recurring costs for telecommunications 

will be lower under FTI compared to what it is under the legacy networks. This 

translates into significant costs savings/cost avoidance benefits. It should also 

be noted that FTI prices are capped and can never exceed the price levels negotiated for contract year 7. In addition, there is a price management mechanism 

for adjusting prices downward if the cost of services in the commercial or government marketplace declines.

The non-quantifiable benefits include:

• Performance-based Contracting: The FTI program has a balance of positive and 

negative incentives to ensure that FAA objectives for the program are met. FTI 

has a detailed Service Level Agreement (SLA) that provides invoice credits to 

the FAA if services do not perform as required.

• Improved information security: FTI provides an enterprise-wide approach to information security assurance. The FTI service provider is contractually required 

to comply with the latest government standards for information security. In addition, FTI provides a wide range of enhanced security services like encryption 

and fire walling that can be ordered as an add-on feature with any service.

• Consolidated management of the FAA’s Telecommunications Operating Environment: By replacing the services provided by 8 different legacy networks, FTI 

enables the FAA to streamline its management of its telecommunications enterprise. Today, each of the legacy systems is separately managed, separately 

invoiced, and separately operated. With the implementation of the FTI network, 

the FAA can consolidate these functions and operate more efficiently.

• Broad portfolio of service offerings: FTI provides a broad range of service offerings that enables the FAA to match price to performance and ensure that the 

FAA only pays for the level of service that it requires.

The FTI program is meeting its goals in terms of providing the benefits listed 

above. However, it should be noted that there has been some erosion of cost savings/

avoidance benefits due to the transition shortfalls noted earlier. That notwithstanding, previous analysis has shown that even with a one year delay, the FTI program still has positive net present value (NPV) in excess of $350 million. 

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. FRANK R. LAUTENBERG TO

HON. MARION C. BLAKEY

Question 1. Does FAA have a staffing standard for air traffic controllers? 

Answer. Yes, the FAA has staffing standards for air traffic controllers. These 

standards are mathematical models used to compute the number of personnel required to perform a job or set of tasks. FAA staffing standards are developed 

through industrial engineering techniques and operations research analysis such as 

55

time study, work sampling, and statistical analysis. FAA standards include appropriate allowances for leave, training, travel, and necessary administrative activities 

needed to accomplish a function.

Question 2. How many air traffic controllers are needed to move air traffic safely 

at Newark Liberty Airport? 

Question 2a. When will the FAA know the answer to this? 

Answer. The initial staffing level for Newark Liberty Airport Traffic Control 

Tower is estimated to be 35 air traffic controllers. This staffing level is adequate 

for shift coverage, controller training and annual leave requirements. We will continue to review staffing requirements as the ATO implements efficiency and productivity initiatives to provide optimal staffing while maintaining safe operations.

Question 3. How many air traffic controllers do you intend to hire next year? 

Answer. The FAA intends to hire 1,136 air traffic controllers in FY 2007.

Question 4. How many were hired last year? 

Answer. In FY 2005, 438 air traffic controllers were hired.

Question 5. Does the FAA have any future plans to outsource or privatize any part 

of the air traffic control system? 

Answer. The FAA has no plans to privatize the entire air traffic control system. 

We will continue to look for opportunities to achieve cost savings and efficiency improvements throughout the FAA, consistent with our mandate from Congress to operate more like a business. Some of these opportunities may involve partnering with 

the private sector. For instance, we will continue the contract tower program and 

are implementing the recent contract awarded to Lockheed Martin through the A–

76 process to operate flight service stations. The contract tower program saves taxpayers over $54 million per year. The A–76 competition for the flight service station 

program will save $66 million in FY 2007, and a total of $2.2 billion over 13 years, 

while providing better service to the flying public. 

In everything the FAA does, safety will remain our number one priority. Our overarching goal is to achieve the lowest possible accident rate, while constantly improving safety. Therefore, we always undertake our efforts to control operating costs in 

the context of maintaining the safest aviation system in the world.

Question 6. Has the FAA performed a cost estimate of the ‘‘Next-Generation Air 

Transportation System’’ ? If so, what is that estimate? 

Answer. The FAA and the JPDO realize the necessity of developing a comprehensive cost model for NGATS. This is critical for the program’s budgeting and planning and naturally is a matter of considerable interest to Members of Congress. 

However, in order to develop a working cost model that reflects the near-term and 

long-term cost for NGATS, it is critically important to specify the NGATS system 

and transition roadmap to a greater level of detail and develop a consensus, not just 

between governmental entities, but with industry, regarding the key assumptions 

that will govern the development of the estimate. 

In order to address the funding issue, we have asked the NGATS Institute to host 

a series of forums so that the critical assumptions and uncertainties underlying any 

cost benefit effort can receive scrutiny and be validated for further use. The forums 

will involve a wide cross-section of aviation decision-makers. In addition, further detailed studies will focus on the near term costs and benefits which will be used to 

inform more immediate agency planning activities over the next five years. We will 

then expand our cost analysis to consider the expected total systems costs for 

NGATS.

Question 7. Has FAA performed or analyzed recent studies regarding the adequacy of the ‘‘Age 60’’ rule for pilots? Is FAA considering revising this rule? 

Answer. The FAA has conducted five studies, using various analytic methodologies, on the relationship of pilot age to accidents. The most recent study, published 

in April 2004, corroborates the findings of two previous empirical studies—specifically that accident rates appear to increase with pilot age. Recent non-FAA research, published in 2005 in open, peer-reviewed scientific literature, reported that 

the risk of violations of flight regulations increased with age in a longitudinal study 

of commuter air carrier and air taxi pilots. Violations of flight regulations are important indicators because pilots with violations are more likely to be involved in accidents or incidents than pilots without violations. 

The ‘‘Age 60 rule’’ has served well as a regulatory limit in the United States. The 

FAA recognizes that science does not absolutely dictate what age is most appropriate for retirement. No absolute, scientific formula may readily be applied to predict progressive, anatomic, physiological, and cognitive decline associated with aging 

because it is variable in severity and onset among individuals. The consistency of 

findings across empirical studies, however, suggests that changes to the ‘‘Age 60 

56

rule’’ should be approached cautiously; so, we presently have no plans to revise the 

rule.

Question 8. Can the FAA meet the requirement of Public Law 109–115 which 

states: ‘‘Provided further, That not later than December 31, 2015, the owner or operator of an airport certificated under 49 U.S.C. 44706 shall improve the airport’s runway safety areas to comply with the Federal Aviation Administration design standards required by 14 CFR part 139: Provided further, That the Federal Aviation Administration shall report annually to the Congress on the agency’s progress toward 

improving the runway safety areas at 49 U.S.C. 44706 airports.’’ ? If not, why not? 

Answer. FAA’s goal, and now Public Law 109–115’s requirement, to improve all 

runways subject to 14 CFR Part 139, Certification of Airports (Part 139), to meet 

standards for runway safety areas (RSA) is on schedule. It must be noted, however, 

that Part 139 requires RSAs to meet design standards ‘‘in a manner authorized by 

the Administrator.’’ We have consistently interpreted this to mean ‘‘to the extent 

practicable,’’ in recognition that it is simply not feasible to get a full standard RSA 

at every runway. When we started the special emphasis on accelerating RSA improvements in FY 2000, we identified a total of 456 RSAs needing improvement. 

From FY 2000 through the end of FY 2005, improvements had been completed at 

208 RSAs. Thirty four RSA’s are scheduled for completion in FY 2006. By FY 2010, 

ninety-two percent of the total 456 RSA improvements will be completed. The remaining RSAs (39) are scheduled to be upgraded between FY 2011 and prior to December 31, 2015. 

We would also emphasize that our policies require constant reevaluation of any 

RSA that cannot fully meet design standards. As conditions at and/or near an airport change, or technology for arresting systems advances, it may be practicable in 

the future to meet RSA standards where today it is not.

Question 9. Does FAA have data that indicates simultaneous extension of the 

landing gear and landing flaps on the Mitsubishi MU–2 presents a safety problem? 

Has FAA investigated this situation? Do you believe it is a safety concern? 

Answer. There is no FAA data to show that the simultaneous extension of the 

landing gear and flaps has caused an accident or presented a safety problem.

Question 10. According to FAA data and other accident data, what is the prevalence of false fire warnings involving the Mitsubishi MU–2? Has FAA investigated 

this? Does FAA consider the potential for false fire warnings a safety concern? If 

so, what has FAA done to address it? 

Answer. False fire warnings were reported in the earliest models of MU–2. This 

problem was corrected and there is little data indicating this is now a problem. The 

FAA considers false fire warnings or any false warning a safety concern and addresses those issues immediately. Pilots operating under 14 CFR part 135 are required by the FAA to be trained, qualified, and tested on normal, abnormal and 

emergency procedures including engine fires and fire warnings that may occur in 

any phase of flight.

Question 11. According to the MU–2 maintenance manual, the pilot should visually confirm if there is a fire prior to securing the engine. Does FAA believe this 

is appropriate, given the aircraft’s operational history and the prevalence of false 

fire warnings? 

Answer. The Aircraft Flight Manual and the aircraft checklist, not the maintenance manual, require the pilot to confirm if there is a fire prior to securing the 

engine. Best practice would be to visually confirm evidence of the problem. The recommendation to visually confirm the existence of a fire is standard procedure in operation of light twin engine aircraft, including the MU–2. The FAA will continue to 

investigate and validate alleged false fire warnings and will take appropriate action.

Question 12. Is there any reason to believe that the Mitsubishi MU–2 aircraft’s 

fire warning device is not accurate or reliable? For similar aircraft, does FAA require visual checks for fire in order to confirm a fire warning device before securing 

the engine? If so, which aircraft? Which aircraft did FAA certify that do not require 

a visual check for fire to confirm a warning device before securing the engine? 

Answer. No. Currently the FAA does not have any indication through Service Difficulty Reports, manufacturer’s information or safety recommendations that the 

Mitsubishi MU–2B fire warning system is inaccurate or unreliable. National Transportation Safety Board (NTSB) investigations on some MU–2B accidents are still 

pending. If the NTSB investigation finds evidence that the aircraft’s fire warning 

is not accurate or reliable we will take appropriate action. 

With regard to other aircraft the FAA does not require visual checks. FAA policy 

(14 CFR part 23) states that the airplane flight manual (AFM) should include procedures for ‘‘proper pilot response to cockpit warnings.’’ The FAA evaluates the procedures during the normal certification process. It may be prudent to proceed directly 

57

to securing the engine if it is not physically possible for the pilot to visually confirm 

the presence of a fire due to an aircraft’s particular geometry, engine location, fire 

location, etc. 

In order to provide a complete list of aircraft that the FAA certified that do not 

require a visual check we would have to review the AFM’s of every airplane. The 

FAA reviewed a sample of five different flight manuals to identify procedures for 

responding to in-flight engine fire indications. The AFMs reviewed were those for 

the Cessna 208, Pilatus PC–12, Pilatus PC–6 (turboprop), Aero Vodochody Ae 270, 

and PZL-Mielec PZL M28–05. All AFMs directed the pilot to proceed directly to securing the engine based on fire warning lights.

Question 13. Has the FAA tested the Mitsubishi MU–2’s propensity to roll inverted faster than a pilot could react when stalled or with only one engine running? 

Answer. Members of the Flight Standardization Board evaluated the Mitsubishi 

MU–2 aircraft using the current Practical Test Standards that would be used for 

a private pilot, commercial pilot or airline transport pilot applicant who chose to use 

the MU–2 aircraft for the practical test. All of the various stall maneuvers for each 

test were evaluated and in all cases, the MU–2 aircraft did not display any propensity to roll when stalled. 

Operations with the critical engine inoperative were demonstrated including all 

of the single engine maneuvers required by the appropriate practical test standard. 

During this portion of the evaluation, the aircraft did not display any propensity to 

roll. 

As part of the review conducted in 2005, comments from training establishments 

and operators (commercial and private) were taken into consideration and at no 

time was there any feeling that the roll rate was a factor. 

As in any aircraft, if a pilot is ‘‘behind the aircraft’’ for any reason, whether it 

be complacency, distractions or work load at that particular time, it would contribute to a loss of control following engine failure. Training for engine out in a multiengine aircraft emphasizes the need to maintain sufficient airspeed to avoid a stall 

with one engine inoperative and a pilot is required to demonstrate flight at the minimum controlled airspeed in that mode.

Question 14. When will FAA propose an airworthiness directive regarding the 

Mitsubishi MU–2’s fuel delivery system? 

Answer. Reviewing engine failures in the MU–2B airplane was a part of the safety evaluation. You may find the FAA final report with more detailed information 

at the following internet site: www.faa.gov/aircraft/airlcert/designlapprovals/

smalllairplanes/cos/mu2lfoialreadingllibrary/. 

FAA review of the available in-flight shut down data for the Honeywell TPE331 

series engines from the past 10 years does not indicate a trend in engine problems. 

Occasionally, service difficulties are submitted to the FAA and to Honeywell without 

identifying the root cause of the in-flight shut down. The FAA is not aware of specific engine or aircraft fuel delivery problems. However, as indicated in the proposed 

action for the airframe and engines, the FAA is evaluating the need to mandate several Japanese Civil Aviation Bureau (JCAB) engine and propeller related airworthiness directives (AD). These JCAB ADs include two that address fuel flow and the 

fuel control, although neither is suspected as a contributing factor in any accident. 

The Notice of Proposed Rulemaking (NPRM) concerning the flight idle fuel flow setting was issued on April 21, 2006. (Reference Docket No. FAA–2006–23884.) This 

comment period closes on June 15, 2006. Additionally, the NPRM concerning the inspection of the engine torque indication system was issued on April 21, 2006. (Reference Docket No. FAA–2006–23883.) That comment period also closes on June 15, 

2006.

Question 15. Does the FAA feel that proper pilot training could have prevented 

all crashes involving the MU–2? 

Answer. The FAA believes that training is integral to the safe operation of any 

aircraft and places a high level of importance on it. The December 2005 FAA MU–

2B Series Safety Evaluation Report determined that a number of factors contributed 

to the MU–2 accidents. Training alone is unlikely to have prevented all accidents. 

Nevertheless, the FAA is, at this time, evaluating options to address all of the factors, including training. Some changes that are expected to be made in training are:

• All initial, recurrent, transition, re-qualification or differences training be required in the MU–2 exclusively in accordance with the manufacturers approved 

training program.

• Flight reviews for operators of MU–2 conducted under the Code of Federal Regulation 14 CFR 61.56 will be required in the MU–2 itself as opposed to any airplane multi-engine, land.

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• Landing currency requirements under 14 CFR 61.57 must be maintained in the 

MU–2 exclusively. Landing done in other multi-engine airplanes will not be 

credited for landing currency in the MU–2.

Question 16. How does the FAA enforce regulations concerning maintenance/repair of smaller (non-commercial passenger) aircraft by non-FAA certified repair stations? 

Answer. FAA oversees these maintenance activities by inspection of the aircraft, 

review of the aircraft maintenance records and performing surveillance on the certificated mechanics and inspection authorization holders that provide the maintenance and inspection of these aircraft. This surveillance includes verification that 

the work was done in accordance with appropriate data using the proper equipment 

to perform the maintenance.

Question 17. How does FAA enforce regulations requiring FAA Inspection Authorizations for certain repair work by non-certified repair stations? 

Answer. Aircraft mechanics with inspection authorization are certificated in accordance with 14 CFR part 65 to perform aircraft maintenance. These mechanics 

are overseen through planned scheduled surveillance with National Work Program 

Guidance and non-scheduled surveillance of the mechanic including verification that 

the work was done in accordance with appropriate data using the proper equipment 

to perform the maintenance, inspection of aircraft they maintain, review of the aircraft maintenance records they make, and review of the FAA Form 337 they complete for each major repair and alteration. Furthermore, each inspection authorization holder’s authorization is renewed once a year verifying that they continue to 

meet performance and currency requirements to retain their inspection authorization.

Question 18. As part of FAA’s ‘‘comprehensive safety evaluation of the Mitsubishi 

MU–2,’’ did the agency review all the flight test data that was generated to comply 

with certification provisions? Was that data actually used to satisfy compliance, especially with respect to ‘‘controllability’’ and ‘‘stalls’’ ? 

Answer. The FAA evaluation team reviewed the flight test reports from the original validated type certificate (TC) (TC No. A2PC) and the original type certificate 

(TC No. A10SW). In addition, the team reviewed the test reports from the 1984 and 

1996 Special Certification Reviews (SCR). All of these reports included ‘‘controllability’’ and ‘‘stalls’’ compliance. 

The data used for showing compliance for the original type certificates were used 

to verify the airplane met its certification basis during the two SCRs and this most 

recent Safety Evaluation. 

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. FRANK R. LAUTENBERG TO

TODD J. ZINSER

Question 1. Has anyone at USDOT performed a cost estimate of the NGATS? If 

so, what was the result? 

Answer. The costs associated with the next generation air transportation system 

for FAA (new ground systems) and airspace users (new avionics) remain undefined. 

The JPDO’s recent progress report to Congress was silent on financial requirements 

and there are no formal cost estimates for NGATS. We have seen some preliminary 

estimates developed by FAA but caution there are considerable unknowns, and costs 

depend on, among other things, performance requirements for new automation and 

weather initiatives and to what extent FAA intends to consolidate facilities. The 

JPDO is conducting workshops with industry to help refine the costs, requirements, 

and milestones associated with the next generation system. However, FAA will have 

to analyze this information and provide Congress with expected funding requirements and when the funding will be needed.

Question 2. Does FAA have an adequate system in place to determine whether 

the number of air traffic controllers assigned to a particular facility will provide for 

the safety of air traffic operations? 

Answer. No, the current staffing standards used by FAA do not adequately reflect 

staffing needs at individual facilities. FAA has used the current staffing standard 

models to determine controller staffing levels since the 1970s. The models are generally accurate at the ‘‘macro’’ level because they were designed to generate national 

estimates, but they do not adequately reflect staffing needs at the facility level. 

FAA is aware of the need for staffing standards at the facility level. In FAA’s controller workforce plan, issued in December 2004, FAA committed to reassessing its 

air traffic staffing models for terminal and en route operations. According to FAA, 

the reassessment will be conducted with a view towards achieving a staffing estiVerDate 0ct 09 2002 13:56 Aug 01, 2006 Jkt 028521 PO 00000 Frm 00062 Fmt 6601 Sfmt 6621 S:\WPSHR\GPO\DOCS\28521.TXT JACKF PsN: JACKF
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mating methodology (either a revised staffing standard model or another estimating 

model) that yields high confidence staffing estimates at the national and facility levels. 

In May 2005, we recommended that FAA begin its planned reassessment of the 

current staffing standards as quickly as possible. Accurate facility staffing requirements are particularly important as FAA begins implementing its workforce plan 

to hire 12,500 new controllers over the next 10 years. FAA has begun its assessment 

of staffing standards at en route facilities, the first planned locations: however, as 

of April 2006, those actions had not yet been completed.

Question 3. Is the FAA on track to meet its staffing plan for air traffic controllers? 

Answer: In FY 2005, FAA hired 438 new controllers, which was inline with the 

plan’s projection. For FY 2006, FAA plans to hire 1,249 controllers, which is also 

inline with the plan’s projection. However, in its FY 2007 budget request, FAA has 

stated that it may need to revise its planned number of new hires for FY 2006 in 

order to meet the 1 percent government-wide rescission. 

In addition, actual controller retirements have been more than what was projected 

in the agency’s workforce plan. In FY 2005, 465 controllers actually retired compared to 341 projected in the plan—36 percent more than what was projected. FAA 

needs to review and update the methodology it uses in calculating projected retirements before the next update to the plan. 

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. FRANK R. LAUTENBERG TO

GERALD L. DILLINGHAM, PH.D. 

Question 1. Does FAA have an adequate system in place to determine whether 

the number of air traffic controllers assigned to a particular facility will provide for 

the safety of air traffic operations? 

Answer. We have not evaluated the adequacy of FAA’s procedures for staffing its 

air traffic control facilities. Historically, FAA has computed the number of controllers needed on a system-wide basis, but distribution of these totals to the facility 

level was a negotiated process. The Department of Transportation Inspector General 

reported that FAA’s staffing standards do not take into account the significant difference in complexity and workload among FAA’s 300 terminal and en route control 

facilities and can lead to staffing imbalances. 

FAA has begun developing and implementing new staffing standards that use an 

algorithm that incorporates traffic levels and complexity of traffic at the facility 

level to determine the number of controllers needed, according to an FAA official. 

The official stated that FAA plans to address specific facilities whose characteristics 

do not lend themselves to formulaic evaluation, such as the Cleveland en route center, where domestic airspace and international airspace are mixed. At such facilities, 

FAA plans to conduct on-site reviews to develop qualitative data to determine the 

number of controllers needed. 

FAA is working with Mitre Corp. to further refine its process for determining controller staffing needs. The ultimate objective is to assess the traffic level and complexity on a sector-by-sector basis to develop more accurate controller staffing requirements. FAA expects that the new process will also consider the anticipated 

losses at each facility to determine the hiring needs. Facilities with fewer losses 

would get fewer trainees. In the past, the number of trainees was computed as a 

percentage of total facility staff.

Question 2. Is the FAA on track to meet its staffing plan for air traffic controllers? 

Answer. While FAA met its Fiscal Year 2005 staffing plan by hiring 438 controllers (3 more than its target), FAA is not keeping pace with its updated air traffic 

controller staffing plan to hire 930 controllers in Fiscal Year 2006. As of early May 

2006 it had hired about 400 or less than 50 percent, according to an FAA official. 

To meet its 2006 staffing plan, FAA needs to hire about 530 controllers in the remaining five months of this fiscal year. 

FAA’s soon-to-be-published staffing plan update will show reduced hiring needs 

for the next few years, compared to those published in its 2004 plan, according to 

an FAA official. The 2004 plan was based on FAA’s 2004 air traffic forecast. FAA’s 

2006 air traffic forecast shows less air traffic over the next few years, compared to 

2004. Consequently, FAA has reduced its near term controller hiring plans accordingly, and plans to revise its staffing plans annually based on the air traffic forecast. 

While the controller hiring target was constrained by the Fiscal Year 2005 budget, 

FAA has the budget needed to hire the planned number of controllers in Fiscal Year 

2006, according to an FAA official.

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Question 3. Has anyone at USDOT performed a cost estimate of the ‘‘Next-Generation Air Transportation System? ’’ If so, what was the result? 

Answer. To our knowledge, no formal cost estimates exist for the NGATS. However, FAA’s Research, Engineering and Development Advisory Committee (REDAC) 

and Air Traffic Office (ATO) have separately developed preliminary estimates. In 

both cases, these estimates were presented as unofficial and had not received any 

formal approval from any agency. REDAC estimated FAA’s costs to implement 

NGATS under 3 scenarios. Two scenarios assume varying levels of productivity improvements under NGATS. Under these scenarios, FAA’s total cost to operate the 

NAS over the next 20 years will average about $15 billion, in constant $2005 dollars, with or without implementing NGATS. Only under the third scenario, where 

there would be no productivity increases, would NGATS cost more than the status 

quo. REDAC notes that continuing the status quo, without implementing NGATS, 

is not a viable option because, without the capacity increases from the NGATS, demand would exceed the capacity in enough places in the United States to have a 

significant impact on the overall economy. 

FAA’s Air Traffic Organization estimates that FAA’s Facilities and Equipment 

cost for NGATS will total about $15 billion between 2006 and 2025, in addition to 

projected Facilities and Equipment costs without NGATS. In contrast to the REDAC 

estimate, the ATO did not estimate the NGATS’ impact on FAA’s operating or other 

costs. The ATO’s estimate for Facilities and Equipment is higher than the Facilities 

and Equipment component of REDAC’s estimate. We have not analyzed reasons for 

the differences between these estimates. 

Developing a cost estimate for the NGATS is difficult due to the many assumptions that must be made about the policies and technologies that will be used in 

the future system. The difficulty is compounded in obtaining consensus among numerous stakeholders on what these assumptions should be. An additional factor is 

the amount of success that the Air Traffic Organization (ATO) will achieve in cutting its costs. For example, an annual savings of $500 million per year could substantially offset the cost of NGATS. We are currently reviewing the ATO’s efforts 

to reduce its costs and expect to issue a report later this year. 

To develop better estimates of the cost of NGATS, the Joint Planning and Development Office (JPDO) recently held the first in a series of three workshops with 

stakeholders. The first workshop convened representatives of commercial and business aviation—operators of high performance aircraft including airliners, regional 

jets, business jets and turboprops operated by major and regional air carriers, cargo 

air carriers, on-demand air carriers (traditionally air taxis), corporate aviation, fractional ownership programs and others. JPDO plans to target the second workshop 

to focus on the military and public safety concerns, and the third to focus on airports and state/regional aviation groups—airports and other public and local, state 

and regional planning bodies. Although one of the goals of the meeting was to develop better cost estimates of the cost of NGATS, the first workshop did not result 

in any cost estimates. Workshop participants noted that before cost estimates can 

be developed, they need FAA’s description of system-wide operational capabilities 

and benefits for users.

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