Future of Aviation Advisory Comm ittee Record of Meeting

December 15, 2010 United States Department of Transportation Headquarters

Washington, DC

1 Public Announcement

The U.S. Department of Transportation (DOT), Office of the Secretary of Transportation, announced to the public this Future of Aviation Advisory Committee (FAAC) meeting in a Federal Register notice published November 24, 2010 (75 FR 71 789).

Committee Members in Attendance

Name Affiliation (s)

Susan Kurland (Committee Chair) Assistant Secretary for Aviation

and International Affairs DOT

Juan J. Alonso Associate professor, Department of

Aeronautics and Astronautics Stanford University

Susan M. Baer Director, Aviation Department Port Authority of New York &

New Jersey (PANY/NJ)

David Barger President and

C hief Executive Officer JetBlue Airways Corporation (JetBlue)

Bryan K. Bedford Chairman, P resident and

Chief Executive Officer Re public Airways Holdings, Inc. (Republic Airways)

Severin Borenstein Professor, H aas School of

Business University of California, Berkeley (Haas School of Business )

Thella F. Bowens President and

C hief Executive Officer San Diego County Regional Airport Authority

John M. Conley International A dministrative

V ice P resident and Air Transport

Division D irector Transport Workers Union of America (TWU)

, American Federation of Labor and Congress of Industrial Organizations ( AFL

- CIO )

Cynthia M. Egnotovich Seg ment P resident,

N acelles and I nterior S ystems Goodrich Corporation (Goodrich)

Patricia A. Friend International P resident Association of Flight Attendants (AFA)

– Communication Workers of America (CWA) , AFL

- CIO

Robert L. Lekites President United Parcel Ser vice Airlines (UPS)

Ana McAhron

- Schulz Director of E conomic and

F inancial A nalysis Air Line Pilots Association

, International (ALPA)

William J. McGee Travel and Aviation Consultant Consumers Union

Daniel McKenzie U.S. A irlines R esearch A nalyst Hudson Se curities , Inc.Future of Aviation Advisory Comm ittee Record of Meeting

December 15, 2010 United States Department of Transportation Headquarters

Washington, DC

2 Name Affiliation (s)

Jack J. Pelton Chairman, P resident

, and

Chief Executive Officer Cessna Aircraft Company (Cessna)

Nicole W. Piasecki Vice President,

Business Development Boeing Commercial Airplanes (Boeing)

Raul Regalado President and Chief Executive

Of ficer Metropolitan Nashville Airport Authority

Glenn F. Tilton Chairman United Continental Holdings, Inc.

Christopher J. Williams Chairman and Chief Executive

Officer The Williams Capital Group

Other Officials Present

Name Affiliation (s)

Pam Hamilton (Designated Federal Offi cial (DFO) ) Director of Rulemaking Federal Aviation Administration ( FAA )

Ray LaHood Secretary DOT

John Porcari Deputy Secretary DOT

Randy Babbitt FAA Administrator FAA

Background and Welcoming Remarks

This is the record of the f if th meeting of the FAAC, a Federal advisory committee formed pursuant to and subject to the requirements of the Federal Advisory Committee Act (FACA) Title 5

, U. S. C ode App endix 2 (2007)

. Ms. Pamela Hamilton, FAA Director of Rulemaking, called the meeti ng to order

at 9:3 9 a.m. and welcomed the committee members and public in attendance. She introduced

Ms. Susan Kurland, FAAC C ommittee C hair.

Ms. Kurland stated the committee began its work 7 months ago, after Mr. Ray LaHood, DOT Secretary

, charged the FA AC with identifying concrete recommendations for meaningful changes on which the DOT, Congress, and other stakeholders could immediately act. She added the purpose of this meeting is to complete the task.

Ms. Kurland introduced and welcomed Mr. John Porca ri, DOT Deputy Secretary. She summarized

Mr. Porcari’s duties and credentials. Mr. Porcari thanked Ms. Kurland and the committee. He stated

from the beginning, he and Secretary LaHood had high hopes and expectations for the committee’s work, adding the committee is composed of a diverse group of experts doing important work for the aviation industry, its workforce, and consumers.Future of Aviation Advisory Comm ittee Record of Meeting

December 15, 2010 United States Department of Transportation Headquarters

Washington, DC

3 Mr. Porcari explained that the committee will continue discussing how to ensure the U.S. aviation industry’s competi ti veness, sustainability, and safety. He noted the FAAC is not about the g overnment dictating its position but about the committee advising the g overnment . Mr. Porcari listed the

committee’s areas of concern : ensuring safety, sustaining a world

- class aviation wor kforce, balancing the industry’s competitiveness and viability, securing stable funding for aviation systems, and addressing the industry’s environmental challenges.

Mr. Porcari emphasized Secretary LaHood’s instructions for the committee to produce a usef ul report

. He added the Secretary wants practical, implementable, and commonsense recommendations leading to meaningful changes. Mr. Porcari stated he and Secretary LaHood are eager to hear the committee’s recommendations. He emphasized after today’s re commendations the real work begins. Mr. Porcari

thanked committee members for their enthusiasm and hard work and stated he look s forward to working together on the next step s

.

Ms. Kurland stated the committee has a full agenda today. She asked Ms. Hamilt on to read the

FACA requirements. Ms. Hamilton explained the committee’s requirements concerning objectiveness and public accessibility. She added th at meeting minutes will be available both in the regulatory

docket established for this committee and on the FAAC Web site at http://www.dot.gov/faac.

Ms. Hamilton read the formal statement required under the FACA and listed the safety and security guidelines for the attending members of the public. She then asked to ratify the meeting minutes from

the Octob er 20, 2010, FAAC meeting, and solicited any comments or corrections to the meeting minutes. There were no comments or corrections. On motion, duly seconded, Ms. Hamilton ratified the meeting minutes.

Ms. Kurland introduced the FAAC members and summarize d the committee’s progress. She stated the FAAC began by identifying five areas of interest for consideration in deliberations: (1) safety, (2) competitiveness, (3) the environment, (4) financing, and (5) workforce.

Ms. Kurland listed previous committee meetings and summarized the purpose of each:

 May 25, 201 0

— M embers discussed critical issues facing the aviation industry and formed

subcommittees for five issues.

 July 14, 2010

— E ach subcommittee chair broadly identified their focus areas

.

 August 25, 2010

— M embers heard presentations from subject matter experts (SME) to enhance understanding of topics and reached consensus on the subcommittees’ five focus areas

.

 October 20, 2010

— T he subcommittees presented options for dealing with respective issues to
the ful l committee.Future of Aviation Advisory Comm ittee Record of Meeting

December 15, 2010 United States Department of Transportation Headquarters

Washington, DC

4 Ms. Kurland stated the committee will vote on the final recommendations this morning and will present the recommendations to Secretary LaHood this afternoon.

Ms. Kurland reviewed the day’s agenda. She explained subcommittee chairs will presen t their

recommendations to the full committee in the morning

, who will then vote on the adoption of those

recommendations. Ms. Kurland continued, stating Secretary LaHood and Mr. J. Randolph Babbitt

, FAA Administrator, will join the committee for the afte rnoon session to hear the final

recommendations.

Ms. Kurland further commented on recommendations on which the subcommittees failed to reach consensus. She explained the committee will include a description of those issues in its final report recogni zing the importance of the unresolved issues. Ms. Kurland the n turned the meeting over to the

chair of the Environment Subcommittee.

Environment Subcommittee

Mr. Bryan K. Bedford, Republic Airways, Subcommittee Chair, reported on the

Environmental Sub c ommittee

. He thanked all the committee members and Ms. Lynne Pickard, DFO,

for their hard work and dedication.

Mr. Bedford noted many of this subcommittee’s recommendations touch upon work done by all the

subcommittees over the last 7 months. He stated there is not a single solution for the environmental challenges, nor is there a unified global standard on emissions target s . Mr. Bedford added he believes

the recommendations present some reasonable and realistic goals.

Mr. Bedford noted the subcommittee did appl y cost

- benefit analysis when evaluat ing the environment

recommendations. He stated reducing aviation’s environmental impact is a daunting task , and his

belie f is this is a unique opportunity for the United States to take an international position of leade rship on environmental sustainability

, develop key technologies, and create thousands of future jobs.

Mr. Bedford stated the subcommittee’s four recommendations aim to achiev e carbon

- neutral growth

from 2020 onward

, with a long

- term goal of 50 percent redu ction of aviation carbon emissions by

2050. He presented the following four recommendations for Secretary LaHood ’s consideration :

1. Exercise strong national leadership to promote and highlight U.S. aviation as a first user of

sustainable alternative fuels. This would involve increased coordination and enhancement of government and industry efforts to pool resources, overcome key challenges, and take actions

. These would also include promot ing the use of alternative aviation fuels through certification,

fun ding, commercial production and deployment, ―book and claim‖ crediting, and international and domestic acceptance. The DOT should take a lead role within the Biofuels Interagency Working Group and provide increased support to FAA’s alternative fuels work

.Future of Aviation Advisory Comm ittee Record of Meeting

December 15, 2010 United States Department of Transportation Headquarters

Washington, DC

5 Mr. Bedford point ed out this recommendation could reduce annual aviation industry lifecycle

carbon

- neutral emissions by 5 percent by the end of the decade.

2. Accelerate aircraft technology development with more robust research and development by

g overnment and industry. Seek the permanent extension of industry research and development

tax credits

. Seek significant increases in funding to programs such as the FAA’s Continuous Lower Energy, Emissions, and Noise (CLEEN) technology program, and continue to adv ocate close coordination with National Aeronautics and Space Agency aeronautical research programs to develop aircraft technologies.

Mr. Bedford stated historically, the aviation industry has been able to sustain a 1.5 percent annual improvement in aircraf

t fuel efficiency due to new generation aircraft airframe

, engine technologies, and operating practices. He noted if the aviation industry is to achieve the long

- term greenhouse gas

emission reduction goals

, it needs to develop a step

- change function in a irframe and engine design.

Mr. Bedford added given the necessary lead times, these new technologies and designs would require implement ation by the end of the decade in order to meet the goals by 2050.

3. Advocate for substantial additional targeted investme nt to accelerate equipage elements of the Next Generation Air Transportation System ( NextGen ) that have significant near

- term benefits

and an increase d likelihood of successful deployment. Aim for deployment of accelerated equipage within the next 4 years

. E stablish a ground taxi delay management pilot program and recommend appropriate deployment within 3 years of taxi delay management methodology for U.S. airport operations. Begin an airport energy efficiency and emissions reduction program to

reduce em issions from airport power sources and increase energy efficiency at airports.

Mr. Bedford noted research consistently su ggests that implement ing the components of NextGen can reduce greenhouse gas emissions by as much as 12 percent . He asserted a n obstac le is the debate on who should pay for air traffic control ( ATC ) modernization

, but concluded everyone from the industry to the consumers are paying for the lack of this modernization. Mr. Bedford stated his subcommittee strongly recommends the Secretary champion an accelerated timeline for the implementation of NextGen which users can pay for once it has become operational

.

4. Lead an effort to align Federal aviation policy to support an aviation sector approach to

carbon emissions. Building on the Internat ional Civil Aviation Organization ( ICAO ) resolution adopted on October 8, 2010, advocate for a coordinated global and domestic framework for

aviation carbon dioxide emissions. It is important to set a strategic course for further international agreement t hrough ICAO and follow with bilateral negotiations to secure the support of other countries

. The Secretary should take advantage of industry assets to develop practical global implementation methods , such as the International Air Transport Association

mem bers have already agreed to create an emissions inventory system

— the basis for any measurement of emissions reduction progress

. Such steps would enhance the confidence of the aviation industry to make investments in the technological, alternative fuel, in frastructure

, and operational improvements necessary to meet greenhouse gas emissions targets and provide a harmonized approach among key aviation nations and markets around the world.Future of Aviation Advisory Comm ittee Record of Meeting

December 15, 2010 United States Department of Transportation Headquarters

Washington, DC

6 Mr. Bedford noted the subcommittee fully supports the President’s plans to target Federal investment in

the air carrier sector, specifically to acce lerate NextGen deployment. He adde d research shows investment will yield significant return on capital in the form of reduced fuel burn, less time in the air, and less loss of pr oductivity by the air carrier customers delayed by air traffic issues

. Mr. Bedford

suggest ed this would bring new job opportunities in NextGen and development of commercial aviation

alternative fuels along with enhancements to research and development tha t would aid in extending our

international technology leadership. He stated this work in aviation alternative fuels would benefit multiple sectors such as provid ing United States farmers opportunities to grow non

- fuel competing

feedstock without adverse c onsequences to the domestic food suppl y

.

Mr. Bedford added the U nited S tates has a unique opportunity to invest in these sectors and not only take a leadership role in environmental sustainability, but also leadership positions in technologies

which will l ead to greater energy in dependence, security, and the creation of new jobs for

future generations

.

Mr. Bedford yielded the floor to Ms. Kurland who summarized the four recommendations and took a

vote on each one to the full FAAC. The full FAAC adopted all four of the recommendations wit h no dissenting votes.

Subcommittee on Financing

Ms. Kurland turned the meeting over to Mr. Jack Pelton, Subcommittee on Financing chair, Cessna.

Mr. Pelton thanked the Subcommittee on Financing members for their active par ticipation and meaningful discussions, and Mr. John Hennigan, DFO, for his support.

Mr. Pelton indicated the committee developed four recommendations.

1. Extend the alternative minimum tax (AMT) exemption for airport private activity bonds

for 4 years.

Mr. Pe lton noted most commercial airports are publicly owned and operated. He stated the problem and challenge with this issue is that private activity bonds issued to fund airport improvement projects are subject to an AMT on the interest payments to bond hold ers

. As a result, investors require higher

interest rates on these bonds to offset the taxes. Mr. Pelton discussed the benefits of the current two

year tax holiday from the AMT on airport private activity bonds

. H e explained the tax holiday expires

at t he end of 2010. Mr. Pelton recommended the Secretary of Transportation support

Federal legislation to extend AMT relief for 4 years. He stated t he c ommittee would help and

support the Secretary as necessary to achieve permanent AMT relief for airport pri vate activity

bonds

. Mr. Pelton s tressed the exemption will lower airport s’ costs and support growth of

aviation infrastructure.Future of Aviation Advisory Comm ittee Record of Meeting

December 15, 2010 United States Department of Transportation Headquarters

Washington, DC

7 2. Provide f

unding to accelerate equipage of aircraft for NextGen

.

Mr. Pelton indicated there are three challenges in modernizing ATC systems and in

- ground

infrastructure. T he first is historically

, operators have equipp ed their aircraft early and realiz ed no benefit due to slow FAA implementation . The second challenge is a weak business case for early equipage by some operators. Mr. Pelton added NextGen include s a p hilosophy shift to infrastructure

in stalled in aircraft instead of on the ground, and the weak financial state of industry mak es funding for

new equip ment difficult

. H e stated the third challenge is potential difficul t y for the aviation industry to

accelerate NextGen equipage because of competing financial commitments.

Mr. Pelton stated the S ubcommittee on F inancing believe s the F ederal G overnment should help fund this equipage and there should be varied financial stru cture s includ ing grants, loans

, and leases. He continued by noting the associated cost s and benefits will be shared between public and private partners. Mr. Pelton added there was not complete consensus on this issue with one dissent.

3. D eliver the benefit s of NextGen.

Mr. Pelton attested there are large investments that are required for owners and operators to implement

NextGen. He stated t he committee believe s the FAA must do a better job by delivering immediate benefits when the industry equips its airc raft. Mr. Pelton also noted the FAA must focus on the aircraft that are already equipped and deliver benefits to them now. He explained the subcommittee is asking the Secretary to ensure the FAA delivers the operational capability and technology for the industry to receive the benefits of NextGen as quickly as possible

, and to require the FAA to develop and commit

to a timetable of when components of NextGen will be implemented and available and required training and approvals will be in place.

4. R eview of eligibility criteria for A irport I mprovement P rogram (AIP) and Passenger Facility Charge (PFC) programs and funding requirements for these programs.

Mr. Pelton stated th e airport s communit y w ants to broaden the criteria for these programs because the

progr am eligibility might be out of date. He continued by explainin g AIP and PFC dollars might be

used to invest in NextGen technologies to improve the airports ’ capabilities. Mr. Pelton stated t he

subcommittee’s recommendation is the FAA should review and re define the term ― aviation

infrastructure

. ‖ He noted the FAA w ould do as much as possible of any decided

- upon updates administratively and develop legislative recommendations for the Secretary for the remainder of the suggested changes. Mr. Pelton added t here were two constituen cies with strong opinion s on this topic.

He stated the airport s comm unity believes these eligibility criteria changes must be accompanied by

increases in AIP and PFC funding levels

, and the air carrier comm unity believe s more flexi bility is possible without making these increases. The FAA should determine and make recommendations on whether AIP levels and PFC charges need to be adjusted based on eligibility criteria changes.

D r. Severin Borenstein

, Univ ersity of California, Berkele y, Haas School of Business

, dissented on the

second recommendation stating his belief that g overnment subsidization of aircraft equipment is not prudent in these times of extremely tight Federal budget s

. He noted he did not see evidence in th eFuture of Aviation Advisory Comm ittee Record of Meeting

December 15, 2010 United States Department of Transportation Headquarters

Washington, DC

8 recommendat ion to prove this funding is necessary. D r. Borenstein also noted he filed a longer dissent to be included in the FAAC final report

.

Ms. Susan Baer

, PANY/NJ

, asked for clarity on the fourth recommendation. Mr. Pelton noted that the

recommendation include s only reviewing and revising the criteria, not changing the actual funding

levels.

Mr. Raul Regalado

, Metropolitan Nashville Airport Authority

, stated he thought increased AIP and PFC funding had not been included as a part of the recommendation, but it l ater states in the

recommendation that the FAA should review funding. Ms. Kurland turned to Mr. Pelton who explained the recommendation suggests a review of the criteria and a second action for the FAA to
consider review ing funding levels based on eligibi lity criteria changes.

Dr. Juan Alonso, Stanford University, made a statement on the second recommendation. He explained his position that the committee is voting on a recommendation to expedite aircraft equipage, not voting

on how or if it should be fund ed by the government. Dr. Alonso stated he did not think the committee needed to vote on specifics and asked Dr. Borenstein if this allayed his concerns with the recommendation in any way. Dr. Borenstein stated the recommendation is explicitly worded to include government funding of NextGen equipage on aircraft, and that is the point on which he is basing his

dissent.

Ms. Kurland called for a vote on the four recommendations. She summarized the four

recommendations and took a vote on each to the full FA AC. The FAAC adopted recommendations one, three

, and four with no dissenting votes. The second recommendation , f unding a ccelerated

e quipage of aircraft

, had o ne dissent by D r. Borenstein

. Ms. Kurland noted all the recommendation s

were adopted.

Subcommit tee on Competitiveness and Viability

Ms. Kurland turned the meeting over to Mr. Glenn Tilton, United Continental Holdings , Inc., to present the recommendations proposed by the Subcommittee on Competitiveness and Viability (Competitiveness Subcommittee). M r. Tilton reflected Secretary LaHood had sought recommendations that would allow the aviation industry to thrive and compete globally. He stated the economic health of the industry is essential to the health of the overall economy.

Mr. Tilton stated the C ompetitiveness Subcommittee had reached consensus on proposed

recommendations for

—

 Global competitiveness

,

 Aviation taxation

,

 Jet fuel price volatility

,Future of Aviation Advisory Comm ittee Record of Meeting

December 15, 2010 United States Department of Transportation Headquarters

Washington, DC

9  Passenger and community access challenges, including reform of the essential air service (EAS ) program
,

 Development of a national intermodalism policy

, and

 Transparency in consumer information.

Mr. Tilton stated the leads of each working group would summarize the ir respective proposals and respond to questions or comments by the committee

.

Transparency in C onsumer I nformation

Mr. William McGee, Consumers Union, discussed the proposals about passenger and community access challenges and transparency. He stated the subcommittee, with the assistance of DOT representatives, had found a middle ground between vie wpoints on passenger protection issues.

Mr. McGee stated the subcommittee agreed greater transparency is need ed in the se areas:

 Air carrier pricing, particularly with respect to ancillary fees for carriage of checked baggage and other services

Mr. McGee s tated there was disagreement whether such services are truly optional. He added the objective is to ensure consumers booking air travel through any sales channel are aware of the total price.

Mr. McGee noted this issue may be addressed, to some extent, by a pending DOT rulemaking. He compl i mented Secretary LaHood on adopting a proactive stance on passenger protections, but stated the provisions of the proposed rules can be extended to further safeguard passengers’ rights.

 Flight operations

Mr. McGee state d there is a perceptual difference between g overnment

, industry participants

, and consumers about code

- sharing and marketing agreements, particularly with regional operations. He noted regional partners of network air carriers now conduct more than

50 per cent of domestic departures

. Mr. McGee stated the DOT differentiates between

network air carriers and their regional partners using operating certificates, but marketing of

such air carriers under unified brands may lead to confusion among consumers about the entity operating a given flight.

 Air carrier contracts of carriage

Mr. McGee stated air carrier contracts of carriage have become a confusing topic. He added a recent study by Consumers Union concluded such contracts of carriage are frequently diffic ult

to locate on air carriers’ Web sites. Mr. McGee also noted the language of such contracts is often legalistic

, vague, and offer s little practical information to consumers.Future of Aviation Advisory Comm ittee Record of Meeting

December 15, 2010 United States Department of Transportation Headquarters

Washington, DC

10  Mon thly Air Travel Consumer Report

Mr. McGee stated the DOT’s monthly Air Trave l Consumer Report has been an extremely valuable tool for consumers interested in comparing the performance of air carriers. He noted the fragmentation of reporting between certificate holders marketed under a single brand may present incomplete or confus ing information to consumers, diluting the value of the report.

Mr. McGee noted realignment of the monthly report to clearly present information across

brand divisions would generally not require significant expense or effort on the part of

air carriers, a lthough it would subject some smaller regional carriers not currently required to submit information to reporting requirements.

Development of a National I ntermodalism P olicy

Mr. Tilton turned the discussion over to Ms. Baer and Dr. Borenstein to present t he proposals on

intermodalism and EAS. Ms. Baer stated there has been substantial discussion of intermodalism, but little practical application. She reported the Competitiveness Subcommittee seeks a fresh examination of the benefits and opportunities off ered by an intermodal approach. Ms. Baer stated the subcommittee proposes a recommendation that DOT explore opportunities to use non

- aviation transportation modes

to serve EAS

- eligible communities. She noted that while intermodal efforts tie into a discu ssion of EAS, they also present a basis for actions separate and independent from EAS.

Ms. Baer stated the subcommittee also proposes recommending legislation requiring any new

infrastructure initiatives consider components linking airports to other modes of transportation. She stressed modernization of the nation’s ATC system remains the highest priority and stated no funds should be diverted from that objective to serve intermodal initiatives. Ms. Baer stated the subcommittee proposes recommending the c reation of a task force to identify and remove barriers to intermodalism, to permit the most efficient movement of passengers and goods possible.

Essential Air Service

Dr. Borenstein noted the purpose of creating the EAS program was to prevent disruption o f air carrier service to small communities following deregulation of the air carrier industry in 1978. He stated the subcommittee has determined, in many cases, continuation of EAS in its current form represents an

inefficient use of Federal funds because of the availability of alternative means of transportation.

Dr. Borenstein stated the subcommittee proposes recommending, as an interim measure, the DOT limit communities in the contiguous 48 states eligible for air service subsidies under EAS to those re ceiving subsidies on a specified date. He added the subcommittee further proposes updating the criteria for EAS eligibility to recognize some communities can be served more efficiently by intermodal alternatives or by larger airports reasonably accessible by automobile.Future of Aviation Advisory Comm ittee Record of Meeting

December 15, 2010 United States Department of Transportation Headquarters

Washington, DC

11 Ms. Thella Bowens, San Diego County Regional Airport Authority , expressed support for the

subcommittee’s recommendations on intermodalism. Ms. Patricia Friend, AFA

- CWA

, requested the FAAC note as part of its recommendations on EAS, the Com petitiveness Subcommittee proposes the Secretary quickly implement i t s recommendations on intermodalism. She noted, although the recommendations on EAS and intermodalism are separate, they are closely intertwined

and interdependent.

Mr. McGee acknowledged the need for reform of the EAS program, but stressed to the FAAC the Competitiveness S ubcommittee believes EAS continues to provide value to the markets where it is most needed, particularly in rural areas and in Alaska.

Jet Fuel Price Volatility

Mr. Tilt on turned discussion over to Mr. Daniel McKenzie, Hudson Securities, Inc. Mr. McKenzie stated, following vigorous discussion the subcommittee had reached consensus on jet fuel price volatility and taxation

.

Mr. McKenzie stated, given the importance of jet fuel price stability to the air carrier industry, the subcommittee proposes recommending Secretary LaHood

—

 Continue to participate in the United States Commodity Futures Trading Commission (CFTC) rulemaking process implementing the provisions of the Wall Street Reform and Consumer

Protection Act that

—

o Set aggregate position limits on speculative trading and

o Require derivatives to trade on exchanges with real time reporting

.

 Communicate to the CFTC the economic stresses imposed on the air carrier industry b y jet fuel price volatility

.

 Support responsible regulatory intervention to reduce jet fuel price volatility attributable to speculative activities, provided the CFTC concludes such activities have played a significant role in price volatility.

Mr. McKenzi e noted volatility in the availability and price of jet fuel may result from disruptions in production and distribution in addition to fluctuations in oil prices. He stated, as a result, the subcommittee proposes a recommendation that Secretary LaHood com mission a study of the state of

the nation’s on

- and off

- airport downstream infrastructure for storage and distribution of jet fuel.Future of Aviation Advisory Comm ittee Record of Meeting

December 15, 2010 United States Department of Transportation Headquarters

Washington, DC

12 Taxation

Mr. McKenzie noted the tax burden on a typical $300 domestic round trip ticket has nearly tripled, from $22 in 197 2 to $61 in 2010. He stated the subcommittee had identified 17 Federal ly sanctioned taxes and fees, totaling $16 billion annually, applicable to the aviation industry. Mr. McGee reported these taxes and fees come from six Federal agencies under three dif ferent cabinet level departments.

Mr. McKenzie stated in 1990, the industry was only subject to six such taxes and fees, totaling $3.7 billion.

Mr. McKenzie stated the subcommittee had reached consensus on a proposed recommendation that Secretary LaHood c ommission an independent analysis to determine if existing levels of aviation taxes and fees sufficiently balance the DOT’s statutory mandates to ―

... encourage efficient and

well

- managed air carriers to earn adequate profits and attract capital...‖ and ―

... promo t[e], encourag[e], and develop civil aeronautics and a viable, privately

- owned United States air transport industry...

. ‖

.

Mr. McKenzie stated the subcommittee further proposes recommending, based on the results of the proposed analysis, Secretary LaHood purs ue appropriate legislative and regulatory actions to ensure existing and future taxes and fees applied to passengers, air carriers, and general aviation are effective and collected efficiently. He also stated, under the subcommittee’s proposal, the analys is would

include input from aviation stakeholders and independent economists, and would address th e following questions:

 How the level of aviation taxes imposed on the U.S. aviation industry compares to those on other modes of transportation;

 Whether the e xisting level of aviation taxes and fees is levied efficiently and effectively for the services provided by the F ederal G overnment;

 Whether regular consultation between the departments and agencies that administer aviation

taxes and fees would result in a more efficient and rational aviation tax system; and

 What the appropriate balance is between General Fund financing and Airport and Airway Trust Fund financing of capital and operating costs of the national airspace system

.

Global Competitiveness

Mr. Tilto n addressed the subcommittee’s proposals about global competitiveness of the aviation industry. He noted transactions and occurrences such as mergers, proposed mergers, DOT approval of several immunized ventures and global alliances, and the successful ne gotiation of additional

open skies agreements, had altered the competitive landscape of the air carrier industry since the

formation of the Competitiveness Subcommittee. Mr. Tilton stated the subcommittee believed its proposals on global competitiveness w ere both timely and responsive to its mandate.Future of Aviation Advisory Comm ittee Record of Meeting

December 15, 2010 United States Department of Transportation Headquarters

Washington, DC

13 Mr. Tilton stated the subcommittee had identified specific policy actions the DOT should take to carry out its existing statutory mandate to promote a healthy U.S. air carrier industry and strengthen the

compe titive position of U.S. air carriers in global markets, including

—

 Further expanding o pen s kies initiatives with primary focus on the fastest growing global markets

.

 Eliminating artificial barriers to competition in the global marketplace

.

 Updating and rea ffirming the 1995 Statement of U.S. Internatio nal Air Transportation Policy

.

 Acknowledging the importance of global alliances, and, when considering proposed alliances, placing greater weight on the DOT’s existing statutory mandate, including

—

o Strengthenin g the competitive position of U.S. air carriers to at least ensure equality with foreign air carriers and

o Maintaining and increasing U.S. air carrier profitability in foreign markets

.

 Leveraging Secretary LaHood’s recent appointment to the President’s Expo rt Promotion Council to expand the DOT’s role in promoting United States aviation exports. Mr. Tilton

noted the close tie between exports and aviation, and aviation contributes to international trade more than any other industry.

Mr. T ilton offered thanks to the members of the Competitiveness Subcommittee, to the FAAC, and to DOT and FAA representatives assisting the FAAC and its subcommittees for their efforts . He then turned the meeting over to Ms. Kurland.

Ms. Kurland summarized the recommendations pro posed by the Subcommittee on Competitiveness and Viability and requested the FAAC’s vote on each of them. E ach recommendation was unanimously approved for adoption.

The FAAC paused for a break at 10:55 a.m. and resumed at 11:23 a.m.

Labor and World

- class Workforce Subcommittee

Ms. Kurland introduced Ms. Friend. Ms. Friend thanked the DOT and the FAA staff for their support throughout the process. She also thanked the subcommittee members for their thoughtful discussion throughout the meetings, especially for working through the tough topics.Future of Aviation Advisory Comm ittee Record of Meeting

December 15, 2010 United States Department of Transportation Headquarters

Washington, DC

14 Ms. Friend explained the subcommittee had formulated three recommendations, the first focusing on the development of the workforce of the future. She stated there is general recognition the

United States needs improv ed access to science, technology, engineering, and math (STEM) education in order to meet the challenges of the future. Ms. Friend reported the recommendation has not changed since the FAAC meeting in Los Angeles, California. She mentioned workforce deve lopment should be a top tier initiative of the DOT in order to develop, oversee, coordinate, implement, and integrate a strategic plan that includes a STEM education program and activities.

Ms. Friend added the recommendation includes increasing outreach t o educational institutions to raise visibility of aviation and aerospace engineering programs. She stated the recommendation encourages the initiation of programs that give students hands

- on experience applicable to the aviation industry

. Ms. Friend comme nted the DOT and the Department of Labor should work together as integral parts of the Interagency Revitalization Task Force to implement a national strategy focused on recruiting, training, and cultivating an aviation workforce. She also stated the DOT a nd Department of Education should work together to create a state of the art STEM education program that will build a career

- ready,

STEM

- literate workforce.

Ms. Bowens stated the recommendation supports the integration of STEM activities with other

stakeho lders in the industry focused on the same initiative. Ms. Cynthia Egnotovich, Goodrich, added the subcommittee believes there is a great deal of work done already and promoting STEM education will help to coordinate th os e efforts.

Ms. Friend stated the se cond recommendation deals with the state of labor

- management relations. She

added the current relationship between labor and management representatives is not effective, and as a result, there is a considerable amount of distrust between the groups. Ms. Friend noted there is an inability to accomplish negotiations or reach agreements that would benefit all stakeholders, lead to a better workplace, provide workers with dignity and respect, and stabilize the industry. She mentioned there are many reasons f

or the current state of labor management relations, but rather than focusing on history, the recommendation focuses on how to improve the situation.

Ms. Friend further explained the second recommendation covers how the National Mediation Board (NMB) can co ntribute to improving the relationship between labor and management in the aviation industry. She stated in September 2009, the NMB established an independent joint labor

- management committee to help improve collective bargaining, mediation process, and t he delivery of mediation

services. Ms. Friend reported the NMB issued a report, known as Dunlop II, in April 2010. She added the recommendation urges the Secretary of Transportation to support and urge the NMB to quickly adopt the recommendations in Dunl op II and ensure the NMB obtains adequate funding to implement Dunlop II. Ms. Friend stated the subcommittee recognizes the NMB cannot resolve

labor

- management relations alone, and members of the aviation industry must be proactive in fostering a workplac e environment that provides stability for all involved.Future of Aviation Advisory Comm ittee Record of Meeting

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15 Ms. Friend stated the third recommendation is for Secretary LaHood to endorse and implement a semiannual workforce management conference beginning in September 2011. She reported the purpose of the c onference is to bridge the gap of information and understanding between the workforce and management. Ms. Friend explained the subcommittee recognizes there are multiple emotional and

contentious issues facing the workforce. She stated there is value in exploring these problems through continued discussion that may lead to a greater understanding of the issues as well as potentially reach

consensus. Ms. Friend mentioned the issues include foreign repair stations, job outsourcing, foreign ownership, entry standards, and continued fitness standards. She asserted the subcommittee was unable to reach consensus on these topics, but did document their opinions on bankruptcy code, human rights conventions, and entry standards. Ms. Friend encouraged Secretary L aHood to review these papers and take note of the subcommittee’s concerns.

Mr. McKenzie commented on the bankruptcy code and stated when an air carrier files for bankruptcy it typically has run out of cash. He expressed concern the change of bankruptcy le gislation could lead to the liquidation of an air carrier, rather than stabilization. Ms. Friend added the revision of bankruptcy code is not a formal recommendation; rather

, it is a topic for greater discussion.

Mr. Bedford inquired if there was any disc ussion o f baseball

- style arbitration as a solution for the labor management relations problem. Mr. Lekites stated Dunlop II outlines the preparation of parties, the expectations of management, and labor standards. He asserted the NMB helps to facilitate training on how to negotiate and Dunlop II is the guideline for the process. Ms. Friend added the current process does include a possibility for a presidential emergency board. She noted while Dunlop II does not

include baseball

- style arbitration, it doe s include the opportunity for non

- negotiated resolution.

Mr. Regalado inquired about the terminology for the aviation workforce in recommendation three . He stated the term aviation workforce is very broad, and would include air carriers, airports, and gen eral

aviation. Mr. Regalado added a gap does not exist between airport employees and airport management.

He observed there should be clarification in the recommendation. Ms. Friend asserted the recommendation is to have Secretary LaHood issue invitation s to the various areas of the industry. She stated those who are interested in engaging in the conversation are welcome to do so. Ms. Friend noted the conversation was very air carrier

- centric; however, there may be issues in other areas of the aviation and aerospace industry.

Ms. Kurland stated the FAAC was ready to vote on the Labor and World

- c lass Workforce

Subcommittee recommendations. In turn, each recommendation was unanimously approved for adoption.

Ms. Kurland thanked Ms. Friend and the Labor and World

- class Workforce Subcommittee for their

hard work.

Aviation Safety Subcommittee

Ms. Kurland introduced the Aviation S afety S ubcommittee and turned the meeting over to its chair,

Ms. Nicole Piasecki

, Boeing

. Ms. Piasecki stated she was pleased to bri ng six recommendations to the Secretary of Transportation. She added there is strong consensus among the subcommittee members onFuture of Aviation Advisory Comm ittee Record of Meeting

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16 all six recommendations

. She t hanked Mr. Fazio, FAA, Mr. Steve Predmore, JetBlue,

Mr. Paul Feldman, GAMA, Mr. Arn ie Kon h e im

, DOT, and Mr. Dan Grace, Cessna for their

contribution s to the subcommittee’s work

.

Ms. Piasecki stated, as requested by the Secretary, the recommendations are strategic but actionable.

She noted , given the strides in aviation safety over the last 2 decade s, the sub committee’s goal was to

determine how to make further systemic improvements over the next 10 to 20 years.

Ms

. Piasecki asserted that industry and governments have embarked on Safety Management System s ( SMS ) as an overall framework to make continu ous and comprehensive improvements in safety. She

also informed the committee that the FAA has embarked on a rulemaking process to require SMS implement ation at certificated air carriers in the United States

. Ms. Piasecki continued by discussing

the SMS culture and resultant safety responsibilities when implemented in an organization

. Ms. Piasecki emphasized that the sub committee’s task was to look for strategic improvements within the context of an industry already taking steps to implement SMS.

Ms. Pia secki noted improvements to safety in the past have revolved around collaborating with the

g overnment for data gathering and analysis. She continued by discussing the work of the

Commercial A

viation S afety T

eam (CAST) in the late 1990s to achieve an 80 pe rcent reduction in

accidents over a 10

- year period. She stated procedural changes were implemented and the 80 percent goal was achieved by u sing comprehensive accident data and specific training technologies.

Ms. Piasecki added that since th en , the accid ent rate leveled . S he observed the industry will still need to rely on data going forward, but the data will need different analysis

.

Ms. Piasec ki stated the safety community’s traditional approach could be described as forensic , but the approach now need s to be predictive. Ms. Piasecki indicated that using SMS principles, the industry has already started using proactive programs

, such as F light O perations Q uality A ssurance
, the A viation

S afety A ction P rogram , and the A viation S afety I nformation A nalysis and S haring program . She explained the reports generated from these programs will be the backbone of future safety efforts.

Ms. Piasecki add ed that SMS set the context of the subcommittee’s recommendations.

Ms. Piasecki stated the subcommittee’s first r ecommendation states the Secretary of Transportation should seek comprehensive legal protections for voluntary and mandated SMS safety data programs and information to ensure their continued benefits to safety. She continued by explaining the Secretary

sh ould pursue legislative action to provide ongoing protection of safety information systems in the

U nited S tates and work with C ongress to quickly introduce such legislation. Ms. Piasecki discussed the benefits of legislative action

, noting the need to ens ure the free flow of safety data between all areas of the aviation industry . She stated this is necessary to determine caus ation and prevent recurrences in

the future. Ms. Piasecki added the FAA needs to transition from accident diagnostics to prognostic prevention.

Ms. Piasecki discussed the need for comprehensive protection of data to ensure ongoing and robust

data collection. She noted the industry stakeholders are threatened by use of data for civil or criminal litigation. Ms. Piasecki observed th at enhance ment of aviation safety with an SMS approach requires a free flow of safety data and ideas among organizations responsible for the design and operation ofFuture of Aviation Advisory Comm ittee Record of Meeting

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17 aircraft. She concluded by stating development analysis and documentation will be inhibite d if

submitted data potentially could be used in media admonitions

, criminal or administrati ve prosecution

,

o r civil litigation.

Ms. Piasecki delivered the Aviation Safety Subcommittee ’s second recommendation as beginning with

the fiscal year 2012 budget for the FAA. She explained the Secretary should supply focus, priority

, and resources to develop improved tools and methods for provid ing predictive safety risk discovery capabilit ies for the aviation system

. Ms. Piasecki explained these tools will enhan ce the ability to identify risks of future accidents and require application by both the industry and government so the safety initiatives can be proactively implemented. Ms. Piasecki noted modeling and simulation capability must be developed and used in parallel

, and this will require resources and technology beyond what is currently in place.

Ms. Piasecki then described the third recommendation, which state s the Secretary and

FAA A dministrator

, working with aviation system partners and other groups

, sh ould identify new and potentially valuable sources of safety data. She added the Secretary and FAA should establish criteria

for identifying and adding those sources to data sharing efforts . Ms. Piasecki no ted safety can be increased by identifying addit ional participants or stakeholders for aviation rulemaking committees and voluntary safety programs.

Ms. Piasecki discussed the subcommittee’s fourth recommendation and stated the Secretary should ensure safety performance standards and training are inclu ded in NextGen p rograms. She discussed the importance of Next G en in the subcommittee’s recommendations and the systematic implementation of

NextGen and SMS. Ms. Piasecki noted that during the design and implementation of NextGen, government and industry must systematically manage the inherent risk s of introducing new technologies. She finished by observing that steps are need ed to ensure there are mechanisms t o identify risks.

Ms. Piasecki continued to the fifth recommendation , which urged t he Secretary to review the existing regulatory calendar and provide p a r a meters for the FAA to prioritize rulemakings. She indicated prioritiz ing rulemaking efforts should include industry input and be visible to the pu blic. Ms. Piasecki

added that the Secretary shoul d review rulemakings and ensure they are in line with SMS philosophies and policies established by FAA headquarters. She discussed current rulemaking initiatives and means of identifying the aviation industry’s needs. Ms. Piasecki described a similar CAS T review completed

in the early 19 90s

. She noted the benefits the recommended review could have on the industry

, including a refocus on top safety priorities and a more prompt rulemaking process

. Ms. Piasecki expressed t he sub committee ’s belie f that this review will allow the FAA to move forward on efforts to enhance regulatory efficiency and effectiveness.

Ms. Piasecki discussed the sixth recommendation

, o n use of child restraint s ystems on air craft

. The subcommittee suggests

—

 T he Secretary should utili ze all resources in his office to educate the public on dangers of flying

with children sitting in the lap of an adult.Future of Aviation Advisory Comm ittee Record of Meeting

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18  T he Secretary should update all data on families flying with children sitting in the lap of an

adult

, including accidents and incidents involving injur y and death

.

 B ased on the findings, the Secretary should take necessary actions.

Ms. Piasecki noted the only people not required to be fastened in a seat on an aircraft are children under

2 years old . She observed this is a problem because t he parents of these children lack knowledge about the potential dangers of children flying unrestrained and do not think this is a dangerous situation

. Ms. Piasecki thanked Mr. McGee for keeping the child restraint issue before the subcommittee.

Ms. Piase cki reported there was subcommittee discussion on oversight of external and contract

maintenance. She noted s ome members were concerned with the increasing use of contract
maintenance providers and whether the FAA has adequate resources and personnel to o versee th e s e maintenance providers

. Ms. Piasecki stated other members of the subcommittee believe the current

maintenance standards exceed the FAA standards. She explained the subcommittee could not reach

consensus on a recommendation for this issue. Ms

. Piasecki thanked the subcommittee and opened the

floor for comments.

Ms. Kurland called for a vote by the FAAC on all six recommendations of the Aviation Safety

Subcommittee

. In turn, each recommendation was unanimously approved for adoption.

Ms. Kurla nd reported that the full panel of 2 3 recommendations has been adopted.

She commended the committee for having a good discussion and noted that she and Mr. Porcari thanked the members for all of their work over the past 7 months. She indicated the commi ttee has accomplished the tasks given to them by the Secretary. Mr. Porcari also stated the recommendations are exactly what the Secretary asked for : concise and actionable recommendations. Ms. Kurland turned

to Ms. Pam Hamilton for information on lunch and housekeeping items. Ms. Hamilton moved for recess and lunch, there was a second, and lunch was approved.

The FAAC recessed for lunch at 12:03 p.m. and reconvened at 1:32 p.m.

Presentation of Recommendations

Ms. Kurland welcomed the committee members a nd attendees back from lunch, and noted Secretary

LaHood and FAA Administrator Babbitt had joined the meeting. She introduced Secretary LaHood, giving a brief summation of his responsibilities as Secretary of Transportation and his experience prior to joi ning the DOT. Secretary LaHood thanked Ms. Kurland and expressed his appreciation to the FAAC members for their hard work and thoughtful input in form ing the recommendations. He stated

the health of the U

. S

. aviation industry has improved since the firs t FAAC meeting in May 2010, and

this reflects the work by done by everyone in the industry. The Secret a ry asserted the collaborative

work between the DOT and air carriers has been helpful, but there is work remaining

. Secretary LaHood stated he was grate ful for actionable recommendations from the c ommittee. He stated the DOT would reach out to each of the FAAC members for their assistance moving theFuture of Aviation Advisory Comm ittee Record of Meeting

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19 recommendations forward. Secretary LaHood added the recommendations were important topics, and

he looked forward to hearing the c ommittee’s briefing.

Secretary LaHood recognized Ms. Kurland and Ms. Christa Fornarotto, DOT, for their work in leading the FAAC over the past 7 months. Ms. Kurland thanked the Secretary and asked Mr. Babbitt to address

the c ommitt ee

. Mr. Babbitt thanked the members for their hard work and dedication, and recognized their personal commitment for participating in the FAAC in addition to their demanding full

- time jobs.

Mr. Babbitt stated the U

. S

. aviation industry continues to impr ove and will use the FAAC

recommendations to continue to do so . He recognized the committee members for taking on tough issues and staying focused during discussions that ultimately produced actionable recommendations.

Mr. Babbitt thanked Ms. Kurland for her leadership of the FAAC, and recognized the important

contributions of Ms. Hamilton for serving as the c ommittee’s DFO, as well as other FAA personnel

who assisted the c ommittee with its work. Ms. Kurland thanked the Secretary and Administrator for

the ir remarks.

Ms. Kurland began the presentation of the FAAC’s recommendations to Secretary LaHood, expressing her belief that he would be pleased with the 23 recommendations from the c ommittee. She noted the

c ommittee members and other attendees seated at the table had the full text of the recommendations and a summary document highlighting the recommendations would be shown on the video monitors throughout the meeting facility , for the benefit of the audience . This document is available as

Attachment 1 to this record of meeting. Ms. Kurland read brief summa ries of all 23 recommendations, and concluded by stating this was the official presentation of the FAAC’s recommendations to the Secretary of Transportation.

Secretary LaHood thanked the c ommittee for t he recommendations. He stated because he was not part of the discussions leading to creation of the recommendations, he would like to hear some of that

discussion. Secretary LaHood began with Recommendation 23, Child Safety on Airliners, and asked if

the FAAC believed the DOT should undertake rulemaking on this issue. Ms. Friend stated the

c ommittee was divided on the issue, with some members believing use of child restraint systems (CRS) on aircraft should be mandated, as recommend ed by the National Tra nsportation Safety Board. She stated the FAA believes mandatory use of CRS would push some families to drive because of the increased cost of purchasing a seat for the child , subjecting the children to a more dangerous form of

travel

. Ms. Friend asserted her belief that this theory is unproven and based on outdated data, but for these reasons, the recommendation is not more firm.

Mr. McGee added the recommendation began as a proposal for a mandate, but evolved to at a minimum, continuous education of the flying public on the dangers of children flying unrestrained, and more action should be undertaken by the DOT if warranted by updated data. Mr. McGee stated he chaired a meeting in October 2010 with representatives from the FAA, NTSB, and the ATA

, and no one in attendance would argue that a child flying in their parent’s lap is safer than in a CRS. He noted much of the data supporting diversion of families from flying to driving is quite old, and needs updat ing . Mr. Barger added that a more holistic appr oach from the air carrier industry and g overnment is needed to better study this topic, as much work on this subject has already been done.Future of Aviation Advisory Comm ittee Record of Meeting

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20 Secretary LaHood stated he was supportive of Recommendation 17, Workforce/Management Conference. He expressed a c ommitment to making this conference happen and including as many representatives as possible from labor and management.

Secretary LaHood noted that r ecommendations 12 and 13 concerned the EAS program. He stated there

are concerns of too many airports in t he program and asked the c ommittee for further explanation.

D r. Borenstein explained he worked at the Civil Aeronautics Board in 1978, when the EAS program

was created. He added the program has veered from its original intent, noting several cities curre ntly in the program are within easy driving distance of larger airports with frequent air service. . Dr. Borenstein cited an example of one airport in the EAS being only 71 miles from a major airport. He asserted, based on discussions with DOT personnel who manage the program, that over 90 percent of the people

in some EAS

- subsidized communities fly out of nearby major airports instead of using the EAS

subsidized service. Dr. Borenstein characterized some EAS subsidies as generating 10 cents of value

for ev ery dollar spent on subsidizing air service.

D r. Borenstein continued by explaining the EAS program was originally planned to end after 10 years, but was first extended by Congress and then made permanent. He stated the c ommittee did not dispute

that ther e were communities to which this program is vital, but there are some cities in the program that

do not need aid

. D r. Borenstein cited Hagerstown Regional Airport in Maryland as a specific example, stating this airport receives EAS subsidies but is within easy driving distance of Washington Dulles International Airport via major highways.

Ms. Baer stated the c ommittee believes the intermodal aspect is tangential to the future of the EAS program, citing scheduled bus service used in a codeshare agreement wi th Continental Airlines between Newark Liberty International Airport and the Lehigh Valley International Airport in Allentown/Bethlehem, Pennsylvania. She noted many foreign countries heavily use intermodal transportation to link airports with cities and added her belief that intermodal transportation is an opportunity for cities in the EAS program to have new transportation options.

Ms. Friend explained the interlinked recommendations of intermodal transportation and EAS program requirements demonstrate t he work done by the c ommittee to reach consensus. She stated she was originally opposed to any reduction of air service to small communities, but after listening to testimony

from SME s and other committee members, she understood there were efficient alter natives to link communities through intermodal transportation. Ms. Bowens added the intermodal discussion is tied to EAS program cities and crucial to larger airports where physical infrastructure barriers block grow th

. She noted the topic of intermodal transportation historically has not been a popular subject to discuss in the airport community, but she believes intermodal transportation is the way of the future for airport growth.

Secretary LaHood asked the c ommittee if the phrase ―transparency on pric ing‖ in r ecommendation 11 was in reference to the DOT’s recently released Passenger Protections notice of proposed rulemaking (NPRM). Mr. McGee acknowledged the uncertainties the NPRM faces during the process of development of a final rule and noted consu mer advocacy groups were generally in favor of the proposed rule. He added there were areas of the rule he believed could go further. Mr. McGee expressed his belief that more work was needed on air carrier contracts of carriage, and moreFuture of Aviation Advisory Comm ittee Record of Meeting

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21 specifically, ar eas of these contracts dealing with delays and cancellations. He clarified he was not referring to lengthy onboard delays addressed in the DOT’s Consumer Rule, but rather common delays and cancellations faced by passengers

. Mr. McGee noted passengers in these situations are provided little information on their rights

.

Mr. McGee stated at a minimum, uniformity is needed in contracts of carriage to mak e passengers’ rights clearer

, and more transparency is needed on code

- share agreements so passengers have a clear understanding of which air carrier is operating the ir flight. He explained most passengers believe they are flying on the air carrier through which they purchased the ticket, when they may actually be flying

on one of the air carrier’s partner re gional air carriers or another air carrier altogether.

Mr. McGee stated the expanded use of codeshare partnerships has diminished the reliability of the DOT’s monthly report on air carrier performance in areas of delays, cancellations, and mishandled bag gage. He explained that ranking the air carriers individually masks the true performance of major

air carriers because their partner regional air carriers are not included in the performance statistics, but

rather ranked as another individual air carrier. Mr. McGee expressed concern that with regional

air carriers flying approximately half of all flights conducted by major air carriers, the statistics for major air carriers appear better than actual, because many of their partner regional air carriers are performing worse on delays, cancellations, and mishandled baggage

. Secretary LaHood expressed his belief that the Obama Administration would be pleased with the recommendations on environmental topics. He stated

, although these are difficult topics on wh ich to achieve consensus, they are in line with the President ’s position

.
Secretary LaHood stated he was in full agreement with the c ommittee’s recommendations on NextGen.

He recalled a conversation with Mr. Tilton discussing how to pay for NextGen improv ements. Secretary LaHood noted since that time, many people within the aviation industry and Federal

g overnment have begun to understand the importan ce of this issue and that funding needs to be

available to air carriers to upgrade their aircraft. He exp ressed his belief that the Obama Administration is supportive of this topic and asked Mr. Babbitt for his input. Mr. Babbitt stated NextGen is a positive business case with clearly visible benefits and return on investment. He

cautioned that NextGen suff ers from a lack of public visibility, but added the FAAC’s recommendations would make a good case to get the message to the public.

Secretary LaHood thanked the Committee for noting in r ecommendation 5 that AMT relief for airports

has been effective and ob served that the DOT received praise for its efforts in getting relief for airports from the AMT in the American Recovery and Reinvestment Act of 2009 , Pub lic L aw 111

– 5

.
Secretary LaHood asked the c ommittee for further explanation of the tax burden on air c arriers, passengers, and general aviation covered in r ecommendation 10. Mr. McKenzie explained that the recommendation is about making taxes more efficient and ensuring the taxes being collected are resulting in economic benefit s and benefits to the aviat ion industry and passengers. He cited the disproportionate level of taxes since the 1990s and a general lack of pricing power among air carriers on ticket prices.Future of Aviation Advisory Comm ittee Record of Meeting

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22 Mr. Tilton added the FAAC Subcommittee on Competitiveness and Viability was able to consid er multiple points of view on this topic and develop a recommendation stat ing the c ommittee does n o t
believe 17 separate taxes are efficien t, effective , and transparent, and some g overnment officials may

not even understand that there are 17 taxes or wheth er they are appropriate. Mr. Tilton stated the spirit of the recommendation was to have the DOT bring some clarity to the issue and determine whether these taxes are indeed necessary and serving their purpose. Ms. Ana McAhron

- Schulz, ALPA, added

that tax es and fees are not a new issue for the aviation industry, but the c ommittee believes another

look at this issue is warranted.

Secretary LaHood expressed his belief that open skies agreements negotiated between the United States and foreign countries have benefited the aviation industry. He asked if the c ommittee was suggesting expansion of these agreements in r ecommendation 9. Mr. Tilton responded that the air carrier industry is realizing the benefits of open skies agreements, and the competitive landsc ape of the global aviation industry is changing dramatically. He cited the need to continue review ing whether there are inhibitions to global competition, as well as ensuring that air carriers outside the United States are not receiving benefits over U.S

- based air carriers to ensure a level playing field for the global aviation industry. Ms. Friend stated an area of significant discussion in the Labor and World

- class Workforce

Subcommittee that did not result in a recommendation was whether future open s kies agreements

should have provisions for human and workers’ rights. She asserted workers in the U.S

. aviation industry have concerns that some open skies partner countries are not providing these rights.

Mr. Robert Lekites, UPS, cited the positive effec ts of open skies agreements on his air carrier. He explained these agreements have led to global growth for UPS, allowing the company to carry packages to over 200 countries worldwide, which has in turn fueled UPS’s domestic job growth.

Mr. Lekites added opportunity for growth in global markets still exists , and that open skies agreements help domestic companies expand globally.

Mr. Barger pointed out that some of the topics that were tough issues and the most debated issues formed the basis of good recom mendations, such as the Workforce/Management conference in

r ecommendation 17. He cited these venues as good opportunities for both parties to educate each other on important topics, such as work performed by foreign repair stations.

Secretary LaHood asked Mr. Babbitt if he had any further comments on the recommendations.

Mr. Babbitt asked the Committee for further explanation of Recommendation 22, Identification of Safety Priorities. He noted rulemaking efforts at FAA take significant time and are influe nced by a number of parties, including Congress

. Mr. Babbitt asked what prioritization methods the c ommittee had considered during development of this recommendation. Ms. Piasecki stated the c ommittee was aware of the numerous rulemaking s th e FAA underta ke s by recommendation or mandate from a wide variety of sources, and that all of them could not possibly be implemented. She added the c ommittee did not prescribe a specific action to be taken by the DOT or FAA because it lack ed the time to discuss

this s pecific issue in depth. Ms. Piasecki offered the safety prioritization work of CAST in the early 1990s as an example of how industry and government can collaborate for the benefit of aviation safety.

Ms. Piasecki concluded by stating the c ommittee’s inte nt is to ensure that the FAA give s priority to rulemakings that directly improve aviation safety.Future of Aviation Advisory Comm ittee Record of Meeting

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23 Mr. Lekites briefly discussed the enforcement aspect of this recommendation, stating that compliance inspections by FAA personnel that are not directly relate d to safety improvements, such as discovering an item in a maintenance log book that was not signed off

, do not improve aviation safety. He cited the

need to focus on a safety

- driven agenda by regulatory agencies, rather than more traditional enforcement, in which violations are often issued for relatively minor infractions that ultimately have no direct impact on aviation safety.

Mr. McGee stated significant discussion occurred on the topic of the FAA’s oversight of contract maintenance facilities, though no recommendation resulted bec ause of lack of consensus. He expressed his belief that the topic was not solely a labor issue but had safety implications. Mr. McGee described the changes that have taken place in how maintenance is performed on air carrie r aircraft over the last few years, with a greater amount being performed by contract facilities. He noted many of these contract facilities are not located in close proximity to FAA field offices

, as air carrier maintenance bases traditionally are, and i t would seem oversight would be more difficult. Mr. McGee added while data may not support that this is a safety risk, from a predictive standpoint, there would certainly be the chance for such a dramatic shift in air carrier maintenance to introduce risk into

the system.

Ms. Bowens noted it was apparent that recommendations on NextGen went through every FAAC subcommittee, and were independently developed but all tie together in some form. She expressed her

belief that this nexus should indicate NextGen i s a priority for the DOT and the aviation industry.

Mr. Barger added he is a co

- chair of the NextGen Advisory Committee, and the FAAC’s recommendations on this topic should blend well with that committee’s work. D r. Alonso cautioned

that as the aviation industry transitioned to new processes with the implementation of NextGen, new safety hazards should be anticipated and mitigated.

Mr. Porcari stated on the topic of environmental recommendations

, the c ommittee made good recommendations, and efforts such a s NextGen efficiencies, the FAA CLEEN program, and research and development work on alternative aircraft fuels provide a real opportunity for the aviation industry to highlight its efforts to reduce environmental impacts. He further asserted this opportun ity should be

seized to demonstrate the aviation industry is taking the lead in these areas in order to avoid the imposition of new regulations. Secretary LaHood stated he had no further questions, and thanked the

c ommittee for their explanations of the r ecommendations.Future of Aviation Advisory Comm ittee Record of Meeting

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24 Closing Remarks

Ms. Kurland moved to her closing remarks. She thanked the FAAC members for their work and

commitment. Secretary LaHood called for final comments before the meeting closed. Ms. Piasecki emphasized that aviation is a global industry and commented on the heritage in the United States around aviation across the value stream. She noted the importance of recognizing the United States is competing with countries making significant investments in infrastructure, equipment, and ai r carrier s. Ms. Piasecki expressed her appreciation for Secretary LaHood’s leadership in taking a coordinated approach in critical areas such as intermodality and NextGen. Secretary LaHood acknowledged the importance and added his surprise at the rapid e xpansion of international airports, particularly in China. He agreed with Ms. Piasecki’s comment on the work already done and the work that needs to be done to stay competitive.

Mr. McKenzie raised the issue of jet fuel price volatility. He commented on how excessive volatility has the possibility of wreaking havoc with air carrier financials.

Ms. Baer commented that the FAAC members have been thanked as a committee. She expressed her appreciation for the DOT and FAA staff support, and also recognized the hard work of the staff from United, PANY/NJ, Boeing

, and others who have worked together. Secretary LaHood thanked everyone from the DOT, FAAC, and industry

, and recognized everyone’s hard work.

Mr. Conl e y expressed his gratitude to hear Secretary La Hood embrace the semi

- annual workforce / management conversation. Secretary LaHood emphasized its importance and stated his intention to assign a full

- time person from his office to immediately work with Ms. Kurland and Ms. Fornarotto to implement these re commendations. He further stated his intention to develop a timeline for each recommendation and report the timelines to the FAAC by the middle of February 2011. Secretary LaHood explained the next step will be to gather the resources of talented people

, including

some FAAC members

, and implement recommendations.

Secretary LaHood expressed his enthusiasm for the opportunity to incorporat e NextGen into FAA

activities and harmoniz e the recommendations. He commented on how the White House will become

invol ved in the environmental recommendations. Secretary LaHood explained the DOT will be candid and simply identify recommendations that can not be quick ly implement ed . He stated many of the recommendations can be accomplished quickly with the proper resource s. Secretary LaHood promised

the recommendations will not sit on a shelf. He expressed his gratitude to everyone involved. Secretary LaHood explained these recommendations will improve the industry and will improve the opportunity for the flying public to fly safely for affordable prices. He promised to keep in touch and thanked everyone.

Ms. Kurland reviewed some housekeeping items. She added the DOT will prepar e and issu e a final report based on the recommendations

, which will include other areas of significant discussion from

each of the subcommittees. Ms. Kurland mentioned the report w ill be available on the FAAC W eb site. She offered her final words of appreciation and asked Ms. Hamilton to close the meeting for the

final time.Future of Aviation Advisory Comm ittee Record of Meeting

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25 Adjournment

Ms. H amilton solicited a motion for adjournment. On motion, duly seconded and approved by the majority of the FAAC members present, the meeting adjourned.

The meeting adjourned at 2 :3 2 p.m.

I hereby certify that, to the best of my knowledge, the foregoing minu tes are accurate and complete.

Approved by: ____________________________________________

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Pamela Hamilton

- Powell, Designated Federal Official

Dated: _________ January 25, 2011

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