Future of Aviation Advisory Committee

Record of Meeting

August 25, 2010

Federal Aviation Administration Great Lakes Region Headquarters

Des Plaines, Illinois

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 August 12, 2010 (75 FR 49015).

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 

Chief Executive Officer

JetBlue Airways Corporation

(JetBlue)

Severin Borenstein Professor, Haas School of 

Business

University of California, Berkeley 

(Haas School of Business)

Thella F. Bowens President and 

Chief Executive Officer

San Diego County Regional Airport 

Authority

John M. Conley International Administrative 

Vice President and Air Transport 

Division Director

Transport Workers Union of America

(TWU), American Federation of 

Labor and Congress of Industrial 

Organizations (AFL-CIO)

Cynthia M. Egnotovich Segment President, 

Nacelles and Interior Systems

Goodrich Corporation (Goodrich)

Patricia A. Friend International President Association of Flight Attendants

(AFA)–Communication Workers of 

America (CWA), AFL-CIO

Robert L. Lekites President United Parcel Service Airlines (UPS)

Ana McAhron-Schulz Director of Economic and 

Financial Analysis 

Air Line Pilots Association, 

International (ALPA)

William J. McGee Travel and Aviation Consultant Consumers Union

Daniel McKenzie U.S. Airlines Research Analyst Hudson Securities, Inc.

Jack J. Pelton Chairman, President, 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 

Officer

Metropolitan Nashville Airport 

Authority
Future of Aviation Advisory Committee

Record of Meeting

August 25, 2010

Federal Aviation Administration Great Lakes Region Headquarters

Des Plaines, Illinois

2

Name Affiliation(s)

Glenn F. Tilton Chairman, President, and 

Chief Executive Officer

UAL Corporation (UAL)

Christopher J. Williams Chairman and Chief Executive 

Officer

The Williams Capital Group

Committee Members Not in Attendance

Name Affiliation(s)

Bryan K. Bedford Chairman, President and 

Chief Executive Officer

Republic Airways Holdings, Inc. 

(Republic Airways)

Other Officials and Presenters

Name Affiliation(s)

Pam Hamilton 

(Designated Federal 

Official (DFO))

Director of Rulemaking Federal Aviation Administration 

(FAA)

John Porcari Deputy Secretary DOT

Graham Atkinson Executive Vice President United Airlines, Inc. (United)

Randall Bennett Subject Matter Expert

Chris Bertram Chief Financial Officer DOT

Steve Bradford Chief Scientist, NextGen FAA

Carl Burleson Director, Office of Environment and 

Energy

FAA

Barry Cooper Program Office Manager FAA

Vicki Cox Senior Vice President, NextGen and 

Operations Planning

FAA

Bruce DeCleene Manager Avionics Systems

Elizabeth Dougherty Member NMB

Don Gunther Senior Vice President for Safety Continental Airlines

John Heimlich Chief Economist Air Transport Association (ATA)

Harry Hoglander Chairman NMB

Kevin Knight Senior Vice President for Network 

Planning and Revenue Management

United

Jennifer McNelly Senior Vice President The Manufacturing Institute

Patrick Murphy Subject Matter Expert

Linda Puchala Member National Mediation Board (NMB)
Future of Aviation Advisory Committee

Record of Meeting

August 25, 2010

Federal Aviation Administration Great Lakes Region Headquarters

Des Plaines, Illinois

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Name Affiliation(s)

Karlin Toner Director of the Joint Planning and 

Development Office (JPDO)

DOT

Jeanne Yu Director, Environmental 

Performance Product Development 

Boeing

Background and Welcoming Remarks

This is the record of the third meeting of the FAAC, a Federal advisory committee formed pursuant to 

and subject to the requirements of the Federal Advisory Committee Act (FACA).

Mr. Barry Cooper, FAA Regional Administrator for the Great Lakes Region, called the meeting to order

at 8:31 a.m. and welcomed the committee members and public in attendance to the FAA Great Lakes

Region Headquarters. He acknowledged the presence of Mr. John Porcari, DOT Deputy Secretary, and 

thanked committee members for traveling to Chicago, Illinois. Mr. Cooper provided an overview of 

the Great Lakes region, and noted the role of the Midwest in aviation. He introduced 

Ms. Susan Kurland, FAAC committee chair.

Ms. Kurland thanked the Great Lakes team for their effort in planning the meeting. Ms. Kurland 

introduced Mr. Porcari and described his role as DOT Deputy Secretary, including his experience 

before joining the DOT.

Mr. Porcari thanked the Great Lakes team for hosting the meeting. He recognized, on behalf of 

Mr. Raymond LaHood, Secretary of Transportation, the committee’s progress. Mr. Porcari stated the 

DOT’s mission is clear: the United States must continue to lead the world in aviation. He noted the 

FAAC committee’s work will result in actions that contribute to ensuring aviation safety and a world 

class workforce, balancing the industry’s competitiveness and viability, securing stable funding for the 

future, and addressing environmental challenges. Mr. Porcari reiterated Secretary LaHood’s desire for 

actionable recommendations, and noted the real work will begin with the implementation of those 

recommendations.

Ms. Kurland turned the meeting over to Ms. Pam Hamilton, FAAC DFO, FAA. She outlined her 

responsibilities as DFO, including maintenance of information on cost and membership, ensuring 

efficient operations, and keeping publicly available records of FACA activities. Ms. Hamilton briefed 

the attendees on the purpose of FACA and noted some of its key requirements, including 

balanced representation, publicly accessible meetings, and committees functioning only in an advisory 

capacity. She stated there will be two additional public meetings for the full committee in 2010. 

Ms. Hamilton added the meeting minutes will be made available both in the regulatory docket 

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

formal statement required under FACA, and listed the safety and security guidelines for the members of 

the public in attendance.
Future of Aviation Advisory Committee

Record of Meeting

August 25, 2010

Federal Aviation Administration Great Lakes Region Headquarters

Des Plaines, Illinois

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Ms. Hamilton sought to ratify the minutes from the July 14, 2010, FAAC meeting, and solicited any 

comments or corrections to the minutes. No comments or corrections were brought forward. On 

motion, duly seconded, Ms. Hamilton ratified the meeting minutes.

Ms. Kurland introduced the FAAC members and outlined the agenda for the meeting. She highlighted

the five issues of interest, or ―pillars,‖ identified as priority topics: (1) aviation safety, (2) labor and 

world-class workforce, (3) financing, (4) competitiveness and viability, and (5) environment. 

Ms. Kurland reiterated Secretary LaHood’s request for specific actionable recommendations regarding 

these five areas. She explained at the first committee meeting the following five subcommittees and 

subcommittee chairs were identified: Ms. Nicole Piasecki, Boeing, for Aviation Safety;

Ms. Patricia Friend, AFA–CWA, AFL–CIO, for Labor and World-class workforce; Mr. Jack Pelton, 

Cessna, for Financing; Mr. Bryan K. Bedford, Republic Airways, for Environment; and 

Mr. Glenn Tilton, UAL, for Competitiveness and Viability. Ms. Kurland noted Dr. Juan Alonso, 

Stanford University, would serve as chair of the Environment Subcommittee for this meeting in 

Mr. Bedford’s absence.

Ms. Kurland explained the committee charged each subcommittee with developing 

three to five focus areas. She stated at the July 14, 2010, committee meeting, each subcommittee chair 

reported the committee’s progress and broadly identified focus areas for further exploration. 

Ms. Kurland reviewed the meeting agenda, which included a presentation on the Next Generation 

Air Transportation System (NextGen), subcommittee presentations from subject matter experts (SME), 

and status reports from subcommittee chairs. She stated each subcommittee chair would lead a

discussion among the FAAC members to reach consensus on the subcommittee focus areas for the next

meetings. She thanked the FAAC members and presenters for their work. Ms. Kurland introduced 

Dr. Karlin Toner, DOT, Director of the Joint Planning and Development Office (JPDO), who manages 

an interagency initiative charged with facilitating and developing the NextGen program.

NextGen Presentation

Dr. Toner noted the DOT and FAA have a central role in implementing NextGen, but will not be able to 

complete NextGen alone; U.S. civil aviation and national security will require other government 

agencies and industry partners to play a role in NextGen. Dr. Toner explained JPDO is responsible for 

coordinating research activities, upholding the long-term visions, and identifying strategic areas for 

policy development. She introduced the panel of four FAA experts who would give presentations on 

NextGen: (1) Ms. Vicki Cox, Senior Vice President, NextGen and Operations Planning; 

(2) Mr. Steve Bradford, Chief Scientist, NextGen; (3) Mr. Bruce DeCleene, Manager, 

Avionics Systems; and (4) Mr. Carl Burleson, Director, Office of Environment and Energy. Dr. Toner 

stated all subcommittee presentations summarized below can be viewed on the FAAC docket at 

http://www.regulations.gov, docket number DOT-OST-2010-0074.
Future of Aviation Advisory Committee

Record of Meeting

August 25, 2010

Federal Aviation Administration Great Lakes Region Headquarters

Des Plaines, Illinois

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Ms. Cox’s Presentation

Ms. Cox began her presentation with a brief description of NextGen. She explained NextGen is a 

wide-ranging transformation of the National Airspace System (NAS) designed to bring aviation into the 

21st century. Ms. Cox stated NextGen includes digital communications, broad-based information 

sharing, and the precision associated with satellite-based capabilities. She added NextGen includes all 

aspects of aviation, including general and commercial aviation, unmanned aerial systems, and 

cargo and military operations. Ms. Cox stated the focus of NextGen is maintaining the viability of 

aviation. She noted NextGen will provide the sophistication and flexibility needed to address future 

aviation traffic demands.

Slide 2

Ms. Cox noted the broad-reaching impact aviation has on the U.S. economy and the gross domestic 

product (GDP), such as the movement of cargo and business travel. She further explained reducing the 

environmental impact of aviation is a key element of NextGen planning.

Slide 3

Ms. Cox stated NextGen planning focuses on the 2018 timeframe. She noted the FAA believes that 

within this timeframe, it can deliver sufficient capability to transform the air transportation system. 

Ms. Cox noted the FAA is currently delivering capabilities that are incrementally improving the 

air transportation system, such as improved surface situational awareness, which can reduce taxi time 

by 1 to 4 minutes per flight. She added in the future, NextGen will allow the integration of arrival and 

departure planning with surface traffic movement and automated en route weather updates to take 

advantage of winds aloft or to avoid weather systems.

Slide 4

Ms. Cox explained the FAA commissioned an RTCA, Inc. (RTCA), task force that included a 

broad-based membership of aviation stakeholders. She stated FAA planning incorporates

RTCA recommendations that are reflected in the FAA’s near-term focus on surface movements, 

runway access, and NAS access.

Slides 5 and 6

Ms. Cox referred to a list of NextGen activities planned for the next 3 to 5 years that address 

RTCA task force recommendations. She noted the FAA has adjusted its budget to address these 

recommendations.
Future of Aviation Advisory Committee

Record of Meeting

August 25, 2010

Federal Aviation Administration Great Lakes Region Headquarters

Des Plaines, Illinois

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Slide 7

Ms. Cox provided a depiction of the NAS in 2011 including Automatic Dependent 

Surveillance–Broadcast (ADS–B) coverage, most significantly in the Gulf of Mexico where radar was 

not previously available. She noted new surface capabilities at the Memphis International Airport, 

John F. Kennedy International Airport, and Orlando International Airport, and tailored arrivals to 

improve fuel consumption from oceanic routes into, for example, San Francisco International Airport, 

Los Angeles International Airport (LAX), and Miami International Airport. Ms. Cox further explained 

general aviation (GA) access to airports has been broadly expanded through the introduction of 

Wide Area Augmentation Systems (WAAS) lateral guidance with vertical performance routes, which 

allows instrument access to GA airports without an instrument landing system (ILS) capability. She 

noted this is achieved without ground-based navigational aids.

Slide 8

Ms. Cox reviewed the FAA’s metroplex focus. She stated the RTCA task force indicated the FAA has 

not sufficiently delivered capabilities for operators to take advantage of equipment on their aircraft 

today. Ms. Cox stated the focus of the metroplex effort is to deliver these capabilities, primarily to 

area navigation (RNAV), because 90 percent of aircraft are currently RNAV capable. She explained the 

effort will begin with one pair of cities and expand over the next several years to additional 

metroplexes. Ms. Cox stated the FAA has asked RTCA to form a new NextGen advisory committee to 

track the FAA’s performance in providing these capabilities.

Slide 9

Ms. Cox stated the NextGen budget reflects strong support from Congress and the Administration. She 

noted the FAA’s budget alone will not deliver NextGen. Ms. Cox noted aircraft must be equipped to 

take advantage of NextGen capabilities, and aircraft are a part of the NextGen infrastructure in the 

2018 system.

Slides 10 and 11

Ms. Cox noted the cost of equipage varies depending on a number of factors, including whether an 

operator is forwardfitting or retrofitting an aircraft, the age of the aircraft, and whether the aircraft is a 

GA or transport-category aircraft.

Slide 12

Ms. Cox pointed out NextGen benefits are significant. She stated by 2018, the FAA anticipates delays 

can be reduced by 21 percent, which will reduce carbon dioxide (CO2) emissions and fuel use. 

Ms. Cox noted extending the timeframe out 30 years increases the benefits.
Future of Aviation Advisory Committee

Record of Meeting

August 25, 2010

Federal Aviation Administration Great Lakes Region Headquarters

Des Plaines, Illinois

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Slide 13

Ms. Cox emphasized the cumulative benefits of NextGen also are significant and outweigh the 

costs 2:1. She noted individual operator benefits are more difficult to capture. Ms. Cox stated the FAA 

projects a breakeven point by 2019, and is focusing on delivering capabilities that will allow an

immediate return to the private sector.

Slides 14 and 15

Ms. Cox stated the FAA is looking at various ways to deliver more immediate returns, such as 

providing benefits to the better equipped aircraft using the policy of ―best equipped, best served‖ and 

considering financing options for operators.

Mr. Bradford’s Presentation

Slide 2

Mr. Bradford began his presentation by addressing new skills the FAA needs to deliver NextGen. He 

noted a National Academy of Public Administration study assisted the FAA in identifying the skills 

required to develop and acquire the NextGen infrastructure and operations. Mr. Bradford stated the 

FAA recognizes air traffic controllers will be working in an emerging environment. He also pointed 

out FAA technicians will have to maintain legacy systems, such as very high frequency omnidirectional 

radio ranges (VOR) and ILS, but will need new skills to work with the Internet-based systems.

Slide 3

Mr. Bradford explained NextGen is not about reducing jobs through automation but rather about 

keeping humans in the center of a task and providing automation assistance so individuals can do their 

jobs better. He noted there are many considerations, such as how to maintain workforce skills with 

increased automation.

Slide 4

Mr. Bradford reviewed ongoing human factors studies involving enhanced vision systems,

shared separation, advanced data communications, common automation display and 

interface requirements, and controller selection and training. He described the impacts of

enhanced vision systems on the roles of flightcrews and air traffic controllers during approach and 

landing. Mr. Bradford also noted, in particular, taxing in low visibility when a pilot may see better on 

the surface than the controller. He discussed the effects of shared separation and the use of ADS–B on 

the roles of the pilots and air traffic controllers. Mr. Bradford noted the current system is limited by 

voice communication and, although new data communications allow more complex messages, there are

disadvantages such as the impact of losing data communications, which require backup considerations.
Future of Aviation Advisory Committee

Record of Meeting

August 25, 2010

Federal Aviation Administration Great Lakes Region Headquarters

Des Plaines, Illinois

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Mr. Bradford explained, with regard to air traffic control operations, the terminal controller and the 

en route controller become a blended operation, especially during the transition from en route to 

descent approach. He added the FAA worries about the loss of skills for pilots and controllers as 

automation increases, and the consequences of an automation failure. Mr. Bradford noted it takes a 

long time to build selection testing and training for future controllers, and the FAA is currently 

addressing these issues.

Slide 5

Mr. Bradford reviewed recruitment, retention, and labor involvement issues. He noted the FAA has 

enabling agreements to involve the National Air Traffic Controllers Association (NATCA) and the 

Professional Aviation Safety Specialists (PASS) in NextGen. Mr. Bradford added that NATCA has a 

controller assigned to the NextGen office to provide advice to FAA Headquarters. He emphasized the 

FAA tries to engage the workforce in all phases of NextGen, but there are challenges given the transient 

nature of the workforce. Mr. Bradford stated the FAA will have to provide state-of-the-art recurrent 

training so controllers can maintain their skills for dealing with loss of automation situations. He noted 

that FAA facility modernization will have to evolve to match NextGen.

Slide 6

Mr. Bradford turned to the issue of competitiveness. He noted there are many stakeholders, including

various Government agencies, industry, and union stakeholders, with diverse interests who are affected 

by NextGen. Mr. Bradford explained that integration with the international community, through (1) the 

International Civil Aviation Organization (ICAO), (2) the International Air Transport Association 

(IATA), and (3) the European Union/EUROCONTROL Single European Sky ATM Research (SESAR) 

project, is a key to competitiveness.

Slide 7

Mr. Bradford pointed out the United States actively engages with over 18 other countries in the 

air traffic system daily. He stated it is important that procedures be consistent so the air traffic is 

transferred seamlessly. Mr. Bradford noted it is also important for aircraft leaving the United States to 

be able to use their equipment worldwide. He stated the United States needs to engage the international 

community on air traffic and aircraft standards.

Slide 8

Mr. Bradford reviewed examples of current NextGen projects. He pointed out the FAA has

long-standing action plans with EUROCONTROL on required navigation performance (RNP) and 

RNAV procedures. Mr. Bradford stated the committee has developed international phraseology and 

descriptions. He noted in June 2010, the FAA signed an agreement with the European Commission 

(EC) and SESAR for joint activities, and will have 18 work packages in September 2010 to harmonize 

standards. Mr. Bradford stated the FAA is working with an ICAO standards roundtable to move the

NextGen standards process forward more quickly.
Future of Aviation Advisory Committee

Record of Meeting

August 25, 2010

Federal Aviation Administration Great Lakes Region Headquarters

Des Plaines, Illinois

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Mr. DeCleene’s Presentation

Slide 2

Mr. DeCleene emphasized safety is integrated into the NextGen program rather than

NextGen involving a unique set of safety initiatives. He stated it is critical for NextGen to maintain 

and improve the current level of safety, and described strategies for accomplishing this.

Slide 3

Mr. DeCleene stated the safety management system (SMS) provides the framework for ensuring safety 

with NextGen. He explained there are four SMS components: (1) safety policy that defines the 

benchmarks of safety strategies; (2) safety risk management, which provides assurance that the risks of 

changes have been evaluated and appropriately mitigated; (3) safety assurance for monitoring the 

system, and identifying the emerging risks and activities to reduce those risks; and

(4) safety promotion, which includes a strong safety culture where everyone involved is reporting 

issues and concerns, and a management structure that responds to those concerns.

Slide 4

Mr. DeCleene described how the Aviation Safety Information Analysis and Sharing (ASIAS) program 

assists with the safety assurance component of SMS. He stated the essence of ASIAS is to share data 

among Government and industry partners to identify precursor events for potential future accidents, 

and to use that data to prevent future accidents. Mr. DeCleene explained many of the 

NextGen initiatives offer solutions to resolve risks. As an example, he cited a study on terrain 

awareness and warning system (TAWS) alerts received by aircraft operating in northern California. 

The study was cited to demonstrate the use of ASIAS studies to identify hazards and develop 

mitigations. This includes the use of RNAV as a NextGen strategy to move traffic away from 

hazardous terrain on arrivals into the Oakland International Airport (OAK) and reduce terrain 

triggering alerts.

Mr. DeCleene noted as the FAA moves forward with NextGen, it is constantly looking to leverage 

ASIAS data collection with the NextGen set of solutions to reduce risk. He stated other areas of study 

include terrain collision avoidance systems (TCAS), hard landings, and low visibility operations. 

Mr. DeCleene emphasized the approach is to use very strong data-driven strategies and take advantage 

of NextGen solutions.

Slide 5

Mr. DeCleene reiterated the importance of ensuring the safety of new initiatives. He emphasized the 

importance of applying safety assessments throughout the development of these new technologies and 

operational initiatives, and noted safety personnel are embedded in the NextGen program offices. 

Mr. DeCleene further explained every new initiative goes through the safety risk management system,

which includes preparing documentation and following orders and procedures of evaluating the 

potential consequences of the activity should it not work as planned. He added if there are 

failure modes, determining whether the failure modes are acceptable must be part of the process.
Future of Aviation Advisory Committee

Record of Meeting

August 25, 2010

Federal Aviation Administration Great Lakes Region Headquarters

Des Plaines, Illinois

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Mr. DeCleene stated consideration is also given to new operational characteristics and what data exists 

to provide confidence they are acceptable and meet safety criteria. He noted there are flexible methods 

of compliance appropriate to the criticality of the system. Mr. DeCleene stated the interrelationship of 

the initiatives is considered (for example, the global positioning system (GPS) is critical to RNAV and 

ADS–B, and a problem with GPS could affect these systems, so appropriate backup systems must be 

in place).

Slide 6

Mr. DeCleene explained there are many NextGen implementations that provide not only capacity 

enhancements, but also safety enhancements such as stabilized approaches using RNP, 

increased flightcrew situation awareness, envelope protection, and improved collision avoidance. He 

reiterated as NextGen technologies are implemented, it is important to consider reversionary modes and 

operation. Mr. DeCleene noted with increased automation on the flightdeck and in ground systems, it 

is important to remember a common occurrence in every automation system is that it fails at some 

point, and to consider how these failures will be addressed. He stated new technologies involving 

highly integrated, complex systems are being implemented in the aircraft and consideration must be 

given as to how to cost effectively gain the confidence that they are performing as expected.

Mr. Burleson’s Presentation

Slide 2

Mr. Burleson stated to achieve the full benefit of NextGen, the environmental and energy challenges 

must be addressed. He stated, 30 years ago the focus was primarily on noise, with some focus on 

water quality at airports due to runoff from deicing fluid. Mr. Burleson explained today, the challenges 

are more complex and include, in addition to noise issues, air quality, climate, and energy issues. He 

pointed out these issues are interrelated and tradeoffs exist (for example, when a combustor is built to 

reduce noise, there are air quality and climate impacts). Mr. Burleson also noted increased energy costs 

have fundamentally reshaped air carrier operations, and in 2005, energy surpassed labor as the 

largest cost of operations.

Slide 3

Mr Burleson referred to a 2004 report to Congress on aviation and the environment. He noted when 

Congress established the NextGen effort it included an effort to create an environmental vision.

Mr. Burleson also referred to ICAO standards, and pointed out environmental energy solutions must be 

developed on an integrated global basis. He stated both of these efforts shaped NextGen’s vision of 

providing environmental protection that allows sustained growth. Mr. Burleson emphasized the goal of 

absolute reductions in noise impacts, air quality impacts, and greenhouse gases.
Future of Aviation Advisory Committee

Record of Meeting

August 25, 2010

Federal Aviation Administration Great Lakes Region Headquarters

Des Plaines, Illinois

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Slide 4

Mr. Burleson reviewed key initiatives to achieve the NextGen vision:

 Continue local mitigation. The U.S. Government has provided more money than any other 

country in the world to mitigate local environmental impacts.

 Advance understanding and analytical capabilities. The FAA has launched research initiatives 

on noise, air quality, and climate impact to ensure it is targeting the correct solutions. The FAA 

has also developed new analytical capabilities, such as models that allow comparisons of noise 

versus fuel emissions with regard to the design and operation of aircraft.

 Accelerate operational changes. Mr. Burleson referred to the NextGen operational changes 

previously discussed by Ms. Cox. He described the 2007 implementation of a continuous 

descent arrival at LAX that saves the industry approximately 2 million gallons of fuel and has 

lower noise and emission impacts.

 Accelerate the maturing of aircraft technology. Mr. Burleson noted 90 percent of improvements 

in the past four decades have been the result of technological innovations in aircraft.

 Develop alternative fuels. Mr. Burleson stated in 2009, the first new alternative fuel in 

20 years was certified, and the FAA hopes next year the first new 50 percent bioblend fuel will 

be certified.

 Establish appropriate policy, standards, and market-based measures. Mr. Burleson stated 

NextGen is trying to use an environment management systems approach that integrates 

environmental considerations into all decisionmaking processes. He noted the FAA is looking 

at market-based measures and incentives, such as using emission trading to reduce 

CO2 emissions and loan guarantees to accelerate technology into the fleet.

Slide 5

Mr. Burleson stated NextGen cannot achieve the desired capacity goals in terms of growth, mobility, 

and employment without solving the environmental issues. He noted energy and climate issues could 

prove to be the most significant challenges to aviation growth. Mr. Burleson stated NextGen offers an

integrated and systematic approach to addressing these challenges.

Committee Discussion

Ms. Kurland invited committee members to ask questions of the panel. Mr. Daniel McKenzie, 

Hudson Securities, Inc., asked whether air traffic controllers will have adequate, accelerated training in 

the new system, and whether the FAA has budgeted for this training. Mr. Bradford responded the FAA 

has an evolutionary path where the capabilities are added one at a time, rather than a single, large 

transition to the new system. Mr. McKenzie referred to a presentation given to the Financing 

Subcommittee by Honeywell that indicated the Government’s portion of NextGen could be operational
Future of Aviation Advisory Committee

Record of Meeting

August 25, 2010

Federal Aviation Administration Great Lakes Region Headquarters

Des Plaines, Illinois

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by 2013. He asked whether that was adequate time to allow for training in metroplexes and dual 

operations. Mr. Bradford noted air traffic controllers already know these procedures, but a present

issue is mixed equipage on aircraft, limiting opportunities to take advantage of the more advanced 

procedures. He stated by 2013, the FAA will have tools to deal with blended traffic.

Mr. DeCleene added the initiatives in the implementation stage of NextGen are best suited for

accelerated implementation. He stated the initiatives at the research or development phase may be 

more difficult to accelerate because the safety data or the analysis of failure modes has not been 

completed. Mr. DeCleene noted, with respect to global harmonization, it is important to not leave 

global partners behind if the United States accelerates NextGen implementations.

Mr. Tilton asked what the challenges are to NextGen from a project management standpoint, both 

historically and moving the project forward. Dr. Toner responded one of the biggest challenges is 

maintaining and upgrading existing systems while integrating new capabilities. She noted there are 

discrete windows of opportunity that must be synchronized with research and development 

implementation. Ms. Cox added another challenge is pulling together so many pieces, such as 

technology and human factors, safely and in a way the aviation community can embrace. A further 

challenge is the culture and diverse interests across the aviation stakeholders.

Ms. Friend stated the Labor and World-class Workforce Subcommittee is considering what the impact 

of NextGen will be on the affected workforce. She specifically asked how NextGen will affect the 

interaction of dispatchers, flightcrews, and air traffic controllers. Mr. Bradford responded currently 

there is no interaction between the dispatcher and the air traffic controller. He stated once data 

communications are implemented, there will be a point during a flight where dispatch will also be more 

involved with the flightcrew and the air traffic controller. Mr. Bradford noted this occurs today to some 

extent in the strategic flow program routing of aircraft around large thunderstorms. He stated he 

expects immediate decisions will continue to be made between the flightcrews and air traffic 

controllers, and longer term decisions (those beyond 30 minutes) will involve the dispatcher.

Mr. Raul Regalado, Metropolitan Nashville Airport Authority, asked three questions: (1) how are 

metroplex designations determined; (2) does the alternative fuel effort focus only on jet fuel or does it

also address low-lead avgas; and (3) why was the Economic Development Agency (EDA) or the 

Environmental Protection Agency (EPA) not included as stakeholders in the discussion of 

NextGen’s economic and environmental benefits. He noted the EDA and EPA could be 

beneficial partners in terms of financing of NextGen implementations and avoiding future obstacles.

Mr. Burleson responded the EPA plays a large role in the regulation of aviation system functions. He 

stated the Clean Air Act gives the EPA the authority to set emissions standards for aircraft. 

Mr. Burleson added the FAA must be consulted for safety and noise issues. He stated the FAA works 

closely with EPA colleagues at ICAO to set aircraft standards. Mr. Burleson noted Congress did not 

include EPA as an initial agency when NextGen was set up. He stated it was an oversight and the EPA 

has participated in the JPDO environmental working group since the beginning.
Future of Aviation Advisory Committee

Record of Meeting

August 25, 2010

Federal Aviation Administration Great Lakes Region Headquarters

Des Plaines, Illinois

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Mr. Burleson stated, with regard to avgas, the Commercial Aviation Alternative Fuels Initiative (CAFI)

effort was set up in 2006 between the FAA, airports, and the airlines to address jet fuel. He recognized

this is an issue for GA, and stated the FAA has had discussions with the EPA and industry on how to 

address it. Mr. Burleson noted the EPA has issued an advance notice of proposed rulemaking that

recognizes that half of the airborne lead produced in the United States is attributable to avgas.

Ms. Cox explained the FAA considers a number of factors in designating metroplexes: traffic volume, 

the number of airports in a surrounding area including secondary airports, the complexity of the 

airspace, and the equipage of the fleet that uses an area. She indicated beginning this year, the FAA is 

looking at a broad group of metroplex areas to introduce new capabilities. She noted the FAA will also 

be looking outside the metroplex areas to introduce capabilities consistent with the ―best equipped, 

best served‖ policy.

Ms. Piasecki expressed stakeholder concerns that the pace of NextGen development is driven by 

limited resources rather than technical capabilities and requirements. She added the Aviation Safety 

Subcommittee has discussed the risks associated with blending old and new technologies. Ms. Piasecki 

asked whether NextGen will provide for a safer aviation system. Dr. Toner responded safety will not 

be degraded but noted there is a limit to how fast new technology can be introduced. For example, 

there are limits to how fast people can be trained and how the changes will be accepted culturally, as 

well as ensuring an adequate workforce to conduct advanced research. She stated the FAA’s plan is 

well thought out and achievable.

Mr. DeCleene agreed safety will not be degraded under NextGen, and emphasized safety is not just the 

FAA’s responsibility, but industry’s responsibility as well. He stated the resource question becomes,

―what are the most effective means of oversight, recognizing that industry itself must ensure safety?‖

Mr. William McGee, Consumers Union, referred to CO2 emissions, fuel use, and delay reductions 

benefit estimates for 2018. He asked what is needed to increase those estimates, particularly regarding

delay reductions. He asked whether there are limitations within NextGen itself, or whether the 

limitations are within the airline system (therefore outside the FAA’s control). Dr. Toner responded 

about 70 percent of current delays are attributable to weather, which cannot be eliminated but can be 

worked around. She noted the need to balance growth in aviation with protecting the environment. 

Ms. Cox added one factor that makes it appear as if delay reductions are not as improved, is that delay 

reduction estimates assume an accompanying growth in traffic. She further added NextGen will 

provide an opportunity for better managing weather delays, as well as an opportunity to collaborate 

across all aspects of the NAS to further reduce delays.

Mr. Christopher Williams, The Williams Capital Group, asked about incentives to encourage aircraft 

equipage of aircraft and how ―best equipped, best served‖ translates into tangible benefits for 

consumers and operators. Ms. Cox responded the goal is to reduce the costs for the operator who has 

equipped through, for example, better routing for aircraft with ADS–B Out and continuous descent 

approaches. She further noted the FAA is developing tools that will allow aircraft equipped for

NextGen into a separate queue for more efficient arrival to the airport. Mr. Burleson added an example 

of the benefits of a ―best equipped, best served‖ policy is the use of reduced vertical separation 
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minimums (RVSM) to save operators money. He noted airlines equipped to take advantage of 

RVSM saved a net total of $300 million in annual fuel costs.

Ms. Susan Baer, PANY/NJ, asked for the panel’s thoughts on airport capacity constraints and 

NextGen benefits. She also asked about workforce training other than for stakeholders, and how 

metroplexing decisions will be made. She noted ―best equipped, best served‖ may be culturally 

difficult for the FAA because it has not used this approach historically. In response, Ms. Cox stated 

airport capacity is important for NextGen, which should bring flexibility to the use of existing airport 

facilities. She noted there often are environmental issues associated with expanding an existing airport. 

Ms. Cox added a significant goal of NextGen is to increase capacity at existing airports through new 

technologies and procedures, such as closely spaced parallel approaches.

Dr. Alonso noted the international community has set certain environmental goals and asked what role 

NextGen has in achieving environmental goals. Mr. Burleson responded that tackling the 

environmental challenges is at the heart of NextGen and cited the Continuous Lower Energy, Emissions 

and Noise (CLEEN) program and alternative fuel efforts. Mr. Burleson stated aviation and climate 

change will be discussed at the upcoming ICAO meeting. He noted the world is split on this issue. 

Europe has taken the position that aviation carbon emissions should be 10 percent below 2005 levels by 

2020, while large numbers of developing countries want to do very little. He stated the United States is 

in the middle, and using the NextGen program, the United States aspires for carbon neutral growth by 

2020, using a 2005 baseline. Mr. Burleson stated this is potentially achievable if NextGen 

infrastructure and equipage are in place according to the developed timelines, which would make the 

U.S. aviation industry a leader in the international arena.

Ms. Cynthia Egnotovich, Goodrich Corporation, asked how much of the NextGen benefits would be 

realized by 2018 and what the committee can do to assist the process. In response, Ms. Cox stated the 

2018 benefits estimates are conservative, particularly the 21 percent delay reductions. In terms of 

cost reductions, the cumulative benefit recovery is in 2019, assuming operators are equipped to take 

advantage of NextGen. She noted most of the benefit results from reduced fuel use and delays, with 

very little of the cost savings for the FAA. Ms. Cox explained benefits will continue beyond 2018 but 

this is as far as the FAA can currently estimate. Dr. Toner noted pressure needs to be maintained on 

implementation, as well as on research and development, to solve the environmental challenges. 

Mr. Burleson cited a Thomas Friedman article on transitioning to a green economy and the need to

marry mother nature and father greed. He suggested market incentives must be aligned with needed 

technology to produce NextGen.

Ms. Kurland thanked the NextGen presenters and stated the committee would welcome ideas from the

presenters on how the committee can be helpful.

Following a 10 minute committee break, Ms. Kurland noted each subcommittee has SMEs who will 

make presentations to the committee. Ms. Kurland explained that following the presentations, each 

subcommittee chair will report on subcommittee activities and lead a discussion among the full 

committee members to reach consensus on the issues going forward. Ms. Kurland turned the meeting 

over to Mr. Pelton, Financing Subcommittee chair.
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Committee Reports

Financing

Mr. Pelton stated, in trying to identify issue areas to present to the FAAC, the subcommittee required

education on NextGen and how the FAA is funded. At the subcommittee’s August 17, 2010, meeting, 

the subcommittee heard briefings from six SMEs, and found the briefing of Mr. Chris Bertram, 

DOT Chief Financial Officer, on FAA funding very beneficial. The subcommittee felt Mr. Bertram’s 

briefing would benefit the other subcommittees. Mr. Pelton turned the meeting over to Mr. Bertram.

Slide 2

Mr. Bertram explained FAA funding is unique because its capital programs and some of its operations

are funded through a trust fund. He reviewed the FAA’s fiscal year (FY) 2010 budget to explain the 

agency’s funding sources. Overall funding for the FAA is approximately $16 billion, with $10.6 billion

from the trust fund and $5.3 billion from the general fund. Mr. Bertram stated the trust fund provides 

funding for facilities and equipment, modernization programs, grants in aid for airports, and research 

and engineering. He noted the FAA has split operations funding. He explained the trust fund was 

originally established in 1970 to pay the FAA’s capital costs but over time it has also paid for part of 

FAA operations.

Slide 3

Mr. Bertram reviewed the operations budgets for specific areas within the FAA and noted the majority 

of the operations budget ($7.3 billion of the $9.3 billion budget) is allocated to the day-to-day 

operations of the air traffic system. This includes 15,600 air traffic controllers and 6,000 technicians 

who maintain the system. The second largest amount of the budget is allocated to Aviation Safety,

which employs approximately 6,400 inspectors and individuals who set aviation standards. 

Mr. Bertram explained the remainder of the budget is allocated to Commercial Space Transportation

and staff offices, including the Office of the General Counsel and the Administrator’s office.

Slide 4

Mr. Bertram stated Grants-in Aid for Airports, also known as the Airport Improvement Program (AIP), 

has a $3.5 billion budget, which has been at that level for 5 to 6 years. He noted most of this money 

involves grants to airports based on legislative formulas; the remainder involves discretionary grants 

for projects selected by the FAA.

Slide 5

Mr. Bertram reviewed the facilities and equipment budget that funds the FAA’s capital costs. These 

capital costs include funding for NextGen; new facilities, centers, towers, and radar; and 

acquisitions personnel.
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Slide 6

Mr. Bertram reviewed FY 2010 NextGen funding, which is $867,706,000. He noted NextGen funding 

sources include facilities and equipment, research and engineering, and operations budgets. He further 

stated the portion of the FAA budget dedicated to the NextGen budget was recently proportionately 

increased, and the President’s proposed NextGen budget pending before Congress for FY 2011 is 

$1.1 billion.

Slide 7

Mr. Bertram stated the FAA trust fund is funded through various user taxes, including passenger ticket, 

frequent flier, and fuel taxes. He noted the tax rates are set in FAA reauthorization bills and result in 

the collection of approximately $10.5 billion; this goes into the trust fund and Congress then 

appropriates the money for the FAA’s capital costs and a portion of its operating costs.

Slide 8

Mr. Bertram provided a chart depicting FY 2009 taxes by aviation user groups.

Slide 9

In response to the Aviation Safety Subcommittee’s request, Mr. Bertram provided a table depicting 

historical funding of the FAA from FY 2001 through 2010 that illustrated steady funding increases. 

The table also included a breakdown of the operations funding between the trust fund and the general 

fund. Mr. Bertram noted this amount varies over time depending on the amount the appropriations bill

assigns to the trust fund versus the general fund.

Slide 10

Mr. Bertram also provided information on the trust fund cash balance for FY 2010 as requested by the 

subcommittee. He pointed out the cash balance for the end of FY 2010 increased slightly to 

approximately $9.1 billion from approximately $8.8 billion. Mr. Bertram explained there are 

two balances in the trust fund: the cash balance, which is the amount of cash actually in the fund, and 

the uncommitted balance, which is available to make additional commitments and is lower than the 

cash balance. He noted the DOT and FAA work hard to maintain the uncommitted balance, which is

currently just under $1 billion, at a relatively stable amount.

Mr. Pelton invited questions from committee members.
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Committee Discussion

Mr. MacKenzie noted NextGen and modernization initiatives are generating incremental economic 

benefits, and asked, given that incremental benefits could be realized more quickly, what are the 

prospects that Congress will appropriate additional money to the trust fund. In response, Mr. Bertram 

stated adding money to the trust fund would require an additional tax source. He noted the current 

appropriations bill has some slight increases in fuel taxes but, overall, Congress has decided to keep the 

trust fund tax rates at the current levels. Mr. MacKenzie clarified he meant to refer to the general fund. 

Mr. Bertram stated if Congress wanted to provide more funding, the effect on the Federal deficit would 

be the same regardless of the source; therefore, the issue is whether Congress wants to provide more 

funding. He noted the funding for NextGen, versus funding for the legacy systems, has changed as 

NextGen implementation progresses.

Ms. Thella Bowens, San Diego County Regional Airport Authority, questioned the long-term viability 

of the trust fund regarding demands that will be placed on the funds from various sectors, primarily 

airports. She added NextGen will likely add to the stress on the trust fund. She noted, according to the

Congressional Budget Office (CBO), the trust fund is not growing at a rate necessary to cover projected 

needs. Ms. Bowens asked how increasing airport needs will be met when there are no additional 

resources. Mr. Bertram noted the main source of airport funding is the AIP, which has been funded at 

$3.5 billion since 2006. He reiterated the goal of maintaining a stable balance in the trust fund and 

noted there is some ability to increase funding from the general fund to keep the trust fund balance 

stable. In addition, there are some expected increases in receipts to the trust fund in the future. He 

stated the AIP, which provides about one-third of airport funding, has been relatively stable and there 

are other sources of airport funding depending on the particular airport.

In response, Ms. Bowens noted the FAA projects airport capital needs at approximately $50 billion

between 2013 and 2017, while the airport industry projects needs of $94 billion. Given an average of 

$72 billion in projected needs, she asked how the trust fund will remain viable without new funding 

sources. She stated trust fund revenues have not been increasing at the same rate as in the past because 

of reduced airport operations. Mr. Bertram responded there have been some general fund contributions

every year since 2001. He stated if Congress continues its policy of prioritizing capital improvement 

funding, including AIP, the hope is the trust fund will remain a stable and viable financing mechanism 

for the FAA’s capital requirements.

Mr. David Barger, JetBlue, asked whether NextGen has the appropriate attention in Washington, DC, 

relative to competing budget interests. Mr. Bertram noted 3 to 4 years ago, NextGen funding was 

approximately $200 million to $300 million, and 2011 NextGen funding is expected to be $1.1 billion, 

which demonstrates NextGen is a priority for DOT and Congress. Mr. Barger asked whether the 

$40 billion equipage cost for NextGen is accurate and where that burden will fall. Mr. Bertram 

responded there is a Federal cost and an industry cost for capital and operations, and some airports will 

need to add capacity. Mr. Bertram offered to provide more cost information to the committee. He also

noted the FAA publishes information on its capital improvement program that details the next 5 years 

of capital spending and includes NextGen information.
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Mr. Regalado expressed concern that even though AIP funding is stable, the net amount of funding to 

airports is decreasing while capital requirements are increasing. He noted the Office of Management 

and Budget (OMB) has questioned the continued viability of the trust fund. Mr. Bertram reviewed the 

allocation of AIP funds. He reiterated the commitment to keep the trust fund viable and stated DOT

works with OMB and Congress to achieve this goal.

Mr. John Conley, TWU, AFL-CIO, asked if the tax information is readily available to the consumer and 

whether the flight segment tax is static. Mr. Bertram responded the flight segment tax is imposed on 

each takeoff and landing, and the rate is adjusted annually for inflation. He believes the taxes appear 

on a passenger’s ticket. Mr. Conley asked whether the commercial jet fuel tax would be applicable to 

the consumer. Mr. Bertram stated the jet fuel tax would not appear on the ticket. He further explained 

the differences between the various fuel taxes.

Mr. MacKenzie asked whether there would be funding shortfalls if NextGen is accelerated. 

Mr. Bertram reiterated the funding for NextGen has grown and he is not aware of any easy acceleration 

of NextGen by simply increasing funding. He does not believe NextGen is being slowed down because 

of a lack of funding commitment.

Ms. Piasecki inquired about the status of the Administration’s suggested shift from taxes to user fees. 

Mr. Bertram responded the 2011 budget is based on traditional funding rather than user fees. He stated 

Congress has indicated it intends to continue with the current funding system for the next 2 years.

Ms. Bowens asked if the budget includes the increased staffing costs associated with NextGen. 

Mr. Bertram stated the main NextGen projected costs are for equipment and facilities and, although it is

too early to determine FAA staffing, a large increase in staffing is not anticipated.

Mr. Pelton thanked Mr. Bertram. Mr. Pelton noted there has been much concern about NextGen 

funding, given the importance of NextGen. He stated the subcommittee has identified four important 

issues for consideration:

1. Review project eligibility criteria for airport programs, such as AIP, passenger facility charges 

(PFC), and other rates and charges, with the recognition that NextGen requires funding for 

airport infrastructure.

2. Consider the public policy case for the use of funding tools such as grants, low interest loans, 

loan guarantees, and tax credits, as incentives for aircraft equipage and NextGen enhancements.

3. Examine the benefits of alternative minimum tax (AMT) relief for airports.

4. Explore the operational issues that accompany FAA implementation of the ―best equipped, 

best served‖ policy.

Mr. Pelton asked for the full committee endorsement of these four issues. With no comments from the 

committee, Mr. Pelton indicated the Financing Subcommittee will move forward with its work.
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Ms. Kurland then turned the meeting over to Ms. Piasecki, chairman of the Aviation Safety 

Subcommittee.

Aviation Safety

Ms. Piasecki reviewed the five areas of the Aviation Safety Subcommittee’s focus:

1. Better sharing and protection of safety data information. Ms. Piasecki emphasized this is 

essential to improving an already safe aviation system. She stated the key is how to incentivize

participation in sharing data.

2. Identification of the priorities around safety to ensure effective risk management. Ms. Piasecki 

noted a similar process was undertaken with the Commercial Aviation Safety Team (CAST) in 

the late 1990s.

3. NextGen safety enhancements. She stated the subcommittee believes safety needs to be a 

design criterion.

4. Promotion of a just culture for safety. Ms. Piasecki emphasized the advantages of SMS will 

only be realized if safety is embedded in the culture. She stated the subcommittee is identifying 

where strong safety cultures exist in the industry and what policies foster such a culture.

5. Review of tactical, everyday safety issues such as bird and wildlife hazards and child safety 

seats on aircraft.

Ms. Piasecki introduced Mr Don Gunther, Senior Vice President for Safety, Continental Airlines, for a 

presentation on data sharing benefits. Ms. Piasecki stated Mr. Gunther is the CAST co-chair, a member 

of the Flight Safety Foundation, and industry co-chair of the ASIAS Executive Board (AEB).

Slide 2

Mr. Gunther reviewed the benefits of data sharing. He noted data sharing produces a better platform 

for sound analysis of emerging safety threats; and a data driven safety approach assists in identifying 

the proper mitigation for these threats. Mr. Gunther explained additional benefits of data sharing are 

data fusion, data-driven decisionmaking, and data-driven investment and resource allocation decisions. 

Data fusion provides an overall view of how aircraft operations, air traffic procedures, and national 

policies interact. He pointed out the better the data, the better the decisionmaking process in the 

safety arena and, with the right data, safety funding can be properly allocated.

Slide 3

Mr. Gunther explained ASIAS is a collaborative effort between Government and industry for sharing 

data and analysis, and is used to identify precursors to accidents and incidents. He noted this effort has 

occurred in the last 3 to 4 years.
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Slide 4

Mr. Gunther reviewed the basic principles governing ASIAS:

 Data is used only for safety advancement.

 Reporting is nonpunitive. Mr. Gunther stated, in his experience, the two programs that have 

enhanced safety over the years are the Aviation Safety Action Program (ASAP) and Flight 

Operational Quality Assurance (FOQA) program. He explained ASAP is a self-reporting 

program for aviation personnel, and FOQA provides objective aircraft flight performance data. 

He stressed the importance of the voluntary nature of these programs.

 Sensitive data is deidentified. Mr. Gunther stated this includes air carrier, crewmember, and 

ground personnel information.

 Analyses are approved by the AEB.

 Data is protected and aggregated. Mr. Gunther explained, as ASIAS grows and is more 

successful, there will be more demands on ASIAS; the key will be protections for the 

information and the analyses.

Slide 5

Mr. Gunther reviewed the five types of proactive safety analyses:

1. Directed studies. He explained these studies are presented to AEB from, for example, the 

MITRE Corporation, which aggregates the protected data, combines it with publicly available 

data, and develops an analysis of events. The AEB then directs a study, MITRE completes the 

analyses and, in most cases, this information is then provided to CAST. Mr. Gunther noted 

CAST has done a fabulous job of reducing aviation accidents over the last 10 years, and has 

moved from a forensic approach to a more proactive data-driven safety approach.

2. Known risk monitoring. Mr. Gunther stated known risks, such as unstable approaches, can be 

monitored for trends, and trends can then be addressed.

3. Safety enhancement assessments. Mr. Gunther stated CAST has produced over 60 safety 

enhancements over the years and their effectiveness can be assessed through ASIAS.

4. Vulnerability discovery. He noted an individual air carrier may not recognize an issue that can 

be identified and addressed when industry data is combined.

5. Benchmarking operations. Mr. Gunther explained benchmarking is the most important analysis 

from the industry perspective, and allows an air carrier to compare its operations to the industry 

and adopt appropriate mitigations.
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Slide 6

Mr. Gunther presented a list of ASIAS partners, including the FAA, labor and industry organizations, 

manufacturers, and individual air carriers. He emphasized ASIAS has 32 partner air carriers providing 

protected data that produces a great deal of information about operations in the NAS.

Slide 7

Mr. Gunther provided a list of data sources for ASIAS studies that includes proprietary data from 

ASAP, FOQA, the Air Traffic Safety Action Program (ATSAP) and manufacturers, safety data from the 

FAA, the National Aeronautics and Space Administration (NASA), the National Transportation Safety 

Board (NTSB), and other air traffic control data.

Slides 8 through 12

To illustrate the value of data fusion, data-driven decisionmaking, and effective interventions, 

Mr. Gunther presented a depiction of the area around OAK with traffic tracks, minimum vectoring 

altitudes, airport and airspace procedures, and safety event focus. He explained TAWS warnings were 

being received. Based on a study of this information, RNAV/RNP was used to reduce the risks, and 

minimum vectoring altitudes were revaluated; GPS enhanced software upgrades eliminated much of 

the problem.

Slide 13

Mr. Gunther commended CAST for its strong support of ASIAS. He noted there were early concerns 

about CAST’s deliberate structured approach to studying accidents, and that CAST would not be able 

to take a more proactive approach using just data and be responsive in a timely manner. Mr. Gunther 

stated CAST’s vision is to reduce air carrier accidents worldwide. Its mission is to enable continuous 

improvements, and safety enhancements are an important part of that mission. He explained by being a 

part of ASIAS, CAST is able to extend its mission. Mr. Gunther stated CAST’s initial goal was an 

80 percent reduction in accidents by 2007; by 2008 there was an 83 percent reduction in fatality rates.

Slide 14

Mr. Gunther presented a list of CAST industry and Government members. He noted that the correct 

stakeholders are looking at the correct issues and identifying solutions that are vetted through the 

appropriate channels. He pointed out CAST’s relationship with ASIAS is very important in developing 

safety enhancements.

Slide 15

Mr. Gunther discussed a bar graph depicting ASIAS results combined with CAST results. He pointed 

out, through 2007 the graph illustrates a 70 percent accident reduction at a cost of approximately 

$400 million to $500 million and a goal for 2020 of a 75 percent accident reduction at a cost of 

approximately $600 million. He noted that implementing all CAST projects would net an additional 
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accident reduction of 5%, but at a cost of $5 billion, and cited this as an example of the need to balance

financial and safety management.

Slide 16

Mr. Gunther offered the committee areas to consider:

 Ensure findings from safety programs, such as CAST and ASIAS, are used in NextGen to 

prioritize solutions and address tactical safety issues.

 Ensure continued data analysis and sharing programs through long-term funding, and accelerate

these programs to provide benefits to the flying public. Mr. Gunther emphasized the 

importance of protecting data and maintaining trust between Government and industry.

 Programs such as CAST and ASIAS should serve as a model for programs in other segments of 

the aviation community. As an example, he noted the helicopter community is modeling a 

program after CAST, which is reducing accidents in that industry.

 Ensure protection for voluntarily supplied information.

Committee Discussion

Mr. Tilton asked what challenges the uncertainty regarding NextGen and its implementations pose. 

In response, Mr. Gunther provided an example involving a difficult airport arrival where FOQA data 

indicates the risks are high. The use of an RNAV arrival would reduce the risks, but not all aircraft are 

RNAV-capable. He noted it is important to ensure the benefit warrants the cost to industry. Mr. Tilton 

asked whether the consequences of incentives have been considered with regard to more favorable 

routing. Mr. Gunther responded it is important to be equitable and determine what delivers the most 

safety benefit given the available resources.

Mr. Regalado noted neither the FAA Airports office nor the airport industry are CAST members and 

asked whether airport safety was a concern of CAST. Mr. Gunther indicated airports were a concern 

and CAST has an observer for airports. In addition, the CAST membership committee currently is 

reviewing this issue.

Mr. Barger asked whether there are any lessons learned from CAST regarding how to attract talented 

individuals to the aviation and aerospace industry. Mr. Gunther stated CAST and ASIAS must obtain 

SMEs from industry and noted there is a need to identify talent from other sources. CAST has not 

studied this but it is a concern with regard to developing future safety managers. Mr. Barger asked 

whether there has been consideration of giving universities such as Purdue University or 

Embry-Riddle Aeronautical University observer status. Mr. Gunther indicated there is contact between 

CAST and those communities, and it is beneficial to familiarize individuals from those communities

with, for example, FOQA and ASAP programs.
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Ms. Baer referred to Mr. Gunther’s comments on other segments of the aviation industry that are 

modeling programs after CAST. She asked how that process could be accelerated and how this might 

benefit aviation safety. Mr. Gunther noted CAST has an international outreach, and Europe, 

Latin America, and Asia have safety organizations that have adopted CAST safety enhancements. He 

further stated ASIAS is still maturing, and data from all sources, such as business and military aviation, 

is necessary for a complete understanding of the national airspace. Mr. Gunther added the challenge 

will be to bring all the data together.

Ms. Egnotovich asked how this process will evolve from a global perspective. Mr. Gunther stated the 

biggest challenge is cultural, regarding human factors training and managing automation.

Mr. Pelton noted the inclusion of GA in ASIAS and he encouraged ASIAS to reach out to the General 

Aviation Manufacturers Association and the National Business Aviation Association.

Ms. Piasecki thanked Mr. Gunther for his presentation. She reviewed for the committee the expert 

presentations at the Aviation Safety Subcommittee meeting the previous day.

Ms. Piasecki stated Ms. Peggy Gilligan, FAA Associate Administrator for Aviation Safety, summarized 

how the FAA is taking a proactive approach to reach the next level of safety. Ms. Gilligan discussed

the need to identify overall system safety performance rather than individual system component 

performance. Ms. Gilligan also highlighted the importance of the open exchange of safety information 

and discussed the role of ASIAS. Ms. Piasecki stated after the presentation, there was a lively 

conversation during which Ms. Gilligan discussed some of the barriers regarding ASIAS and achieving 

the next level of safety:

 The need for a cultural change from analyzing data to a more predictive approach to preventing 

events.

 The need for investment and continued funding of technical capabilities such as data fusion and 

the ability to measure emerging threats.

 Data protection.

 Resources and funding.

Ms. Piasecki also summarized the presentation of Mr. Bill Voss, President of the Flight Safety 

Foundation. She stated Flight Safety is a global leader in improving aviation safety and as an 

independent, nonprofit organization, it is in a unique position to identify global safety issues. Mr. Voss

addressed a variety of issues that need attention, including legislative proposals for stronger protection 

of volunteered aviation safety information. Regarding NextGen, Mr. Voss commented that old errors 

will meet new technology and encouraged the systematic testing for human errors. Mr. Voss also 

challenged the subcommittee to consider that new technology is built on old systems; for example, 

digital systems using analogue data of low quality. Other topics Mr. Voss discussed included robust 

training.
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Ms. Piasecki reviewed for the committee the presentation of Mr. Brad Brugger, the International 

Coordinator for Safety of Flight and Compliance for the Transport Workers Union. Mr. Brugger 

emphasized the need for a robust SMS as a key element of a safety culture. He reviewed research from 

various institutes to outline key indicators, characteristics, and values found in safety cultures. 

Mr. Brugger also discussed a ―just‖ safety culture in contrast to a secretive culture.

Ms. Piasecki also summarized the presentation of Mr. Tom Bradley, Professional Airways Systems 

Specialists, which represents FAA personnel who maintain and repair traffic control and navigation 

systems, and FAA inspectors. Mr. Bradley led a discussion on the outsourcing of maintenance and the 

appropriateness of FAA oversight. Ms. Piasecki also noted there was representation from Cessna at the 

subcommittee meeting, which was very useful and important.

Ms. Piasecki stated the presentations affirmed that the subcommittee’s five focus areas require an 

overall umbrella of SMS. She noted the pillars of SMS are built on a foundation of a strong safety 

culture. She concluded by requesting comments from the committee on the subcommittee’s 

five focus areas.

Mr. McGee commented the committee has heard from many experts who provided much information 

to consider, and stated there would clearly not be consensus on all issues. With regard to safety, 

Mr. McGee noted the discussions on the value of voluntary programs and importance of corporate 

culture. However, he asked that the conversation return to the issues of FAA oversight and 

enforcement. Mr. McGee pointed out the hope is that all corporations invest in stronger corporate 

cultures and safety initiatives, but there are worst practices in addition to best practices. He reiterated 

the twin issues of regional air carrier oversight and maintenance outsourcing and stated, from a safety 

standpoint, the industry hears that there is one level of safety. He asked how to ensure (1) one level of 

safety and (2) the FAA has the tools and resources to go where the work is being done whether it is 

inside or outside the United States.

Ms. Ana McAhron-Schulz, ALPA, expressed concern that some air carriers are barely able to afford 

implementation of basic safety programs. Ms. Piasecki referred to the discussions about cost-benefit 

analyses and how to drive changes and mitigate risks before accidents. 

Mr. Conley expressed a belief that there was fundamental agreement on criminal history and record 

checks. He stated those are fundamental processes and there should be one set of thresholds and 

criteria. He added it should not matter which airport or personnel position is involved; the standards 

should be raised to prevent any individual who might compromise safety from coming into a 

sensitive area.

At the close of the discussion on safety, Ms. Hamilton reminded the FAAC members they should not 

discuss any FAAC business among themselves during the lunch break and solicited a motion for a 

temporary adjournment. On motion, duly seconded and approved by the majority of the FAAC 

members present, the FAAC adjourned at 12:15 p.m.
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The meeting resumed at 1:11 p.m. After welcoming FAAC members and other attendees back from 

lunch, Ms. Kurland explained the afternoon session would begin with a report from Mr. Tilton, Chair of 

the Subcommittee on Competitiveness and Viability. She then turned the meeting over to Mr. Tilton.

Competition

Mr. Tilton noted the Subcommittee on Competitiveness and Viability’s duty is to balance the industry’s 

competitiveness and viability both domestically and internationally, in recognition that a competitive 

airline industry is critical to the national economy. He explained, to this end, the subcommittee is 

charged with—

 Examining changes in the operating and competitive structures of the airline industry.

 Considering innovative strategies to open new international markets and expand commercial 

opportunities in existing markets.

 Investigating strategies to encourage the development of cost-effective, cutting edge technology 

and equipment critical for a competitive industry coping with increasing economic and 

environmental challenges.

 Examining the adequacy of current Federal programs to address (1) the availability of 

intermodal transportation options and alternatives, (2) small and rural community access to the 

aviation transportation system, (3) the role of State and local governments in contributing to 

such access, and (4) how the changing competitive structure of the U.S. airline industry is likely 

to transform travel habits of small and rural communities.

Mr. Tilton stated the subcommittee held three meetings with excellent attendance, and future meetings 

will be held on October 15, 2010, and November 18, 2010. He explained the subcommittee’s goal for 

those meetings will be to develop issue areas for consideration by the FAAC and Secretary LaHood. 

Mr. Tilton indicated many of the issues before the subcommittee are shared by other subcommittees

and in some instances they have deferred to other subcommittees, such as on financing of infrastructure

and modernization. He stated the subcommittee agreed to focus on three broad topics:

1. Ensuring unfettered access for U.S. airlines to the world’s largest and fastest growing global 

markets. Mr. Tilton noted the working group addressing this topic is composed of Ms. Friend, 

Ms. McAhron-Schulz, Mr. McGee, and Mr. Tilton.

2. Challenges to U.S. airlines’ industry viability: aviation tax burden and jet fuel price volatility. 

Mr. Tilton explained the subcommittee will work with the Financing Subcommittee on this 

issue. Working group members are Ms. Baer, Mr. Bedford; Dr. Severin Borenstein, University 

of California, Berkeley; Ms. McAhron-Schulz; Mr. McKenzie; Mr. Pelton; Mr. Tilton; and 

Mr. Williams.

3. Air passenger and community access challenges with consideration of (1) whether the DOT and 

FAA should develop a comprehensive intermodal policy to more efficiently and economically 
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facilitate the movement of passengers and goods among transportation modes; (2) ensuring 

passengers have real-time access to information on fares, fees, and flight status in a manner that 

does not impair the airline industry’s competitiveness and viability; and (3) improving airline 

and passenger access to congested airports and small and rural communities. Working group 

members include Ms. Baer, Mr. Bedford, Dr. Borenstein, Ms. Friend, Ms. McAhron-Schulz, 

Mr. McGee, Mr. Pelton, and Mr. Williams.

Mr. Tilton turned the meeting over to Mr. Randall Bennett and Mr. Patrick Murphy for a presentation 

entitled ―Airline Competition: Current Assessment and Looking Ahead.‖ Mr. Murphy gave the 

presentation.

Mr. Bennett’s and Mr. Murphy’s Presentation

Slide 2

Mr. Murphy explained to the committee he would be discussing studies he and Mr. Bennett conducted 

on airline competition. In 2006, Mr. Murphy and Mr. Bennett realized the Government had not done an 

assessment of the airline industry since 2000. Therefore, they designed a study using data beginning in 

1995 to assess the industry, and they obtained funding from United for the study. In 2007, they also

conducted a study on domestic competition, and in 2009, they added international alliances to the 

study. They briefed four Federal agencies, three congressional committees, the U.S. Government 

Accountability Office, and numerous trade associations on the studies.

Slide 3

Mr. Murphy explained there are two different business models currently operating in the industry:

1. Low-cost air carriers operating primarily in larger markets with a focus on connecting traffic 

over hubs. These air carriers typically target price-sensitive travelers but are also beginning to 

serve last-minute business travelers.

2. Network air carriers who rely on passenger flows over hubs from communities of all sizes, and 

internationally. These air carriers have limited capacity for price-sensitive demand given the 

presence of the low-cost air carriers.

He noted these two models lead to intense competition and service for a broad spectrum of demand.

Slide 4

Mr. Murphy explained they measured competition by traditional methods and determined the industry 

was continuing to be highly competitive:

 Average fares and yields declined so that domestic yields today, when adjusted for inflation, are 

one half what they were in 1978 at the time of deregulation.

 Competition at city-pair level remains vigorous with 20,000 city pairs in the United States.
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 Low-cost air carriers are entering more markets.

 Hub premiums have declined substantially. He explained 10 years ago there was a concern 

network air carriers were charging high fairs at hubs; that issue has almost disappeared, given 

the low-cost air carriers.

Slide 5

Mr. Murphy stated their first major finding was that the industry has undergone major structural 

changes, representing a reversal from the situation in the mid 1990s. He noted the low-cost air carriers 

have replaced the network air carriers as price leaders and are the drivers of growth in the domestic 

market. Mr. Murphy and Mr. Bennett believe this structural change is not likely to change, but the 

low-cost air carriers and network air carriers can coexist by targeting different segments of demand.

Slide 6

Mr. Murphy’s and Mr. Bennett’s second finding was that the old domestic fare structure collapsed 

in 2000. He explained this was a disaster for the network air carriers because their costs were 

escalating while revenues were declining. As a result of the pricing collapse, the network air carriers 

permanently lost $11 billion in annual revenue. Mr. Murphy and Mr. Bennett believe this change was 

the result of (1) the ―dot.com‖ collapse and the accompanying decline in business travel; (2) the growth 

of Internet ticket sales, which resulted in fare transparency; and (3) the emergence of the low-cost 

air carriers. He noted the network air carriers have been profitable in only 1 year in the last decade.

Slide 7

Mr. Murphy discussed the current state of low-cost air carriers: (1) Their costs continue to be 

one-third lower than network air carriers; (2) They continue to experience high growth with 35 percent 

of the domestic passenger market; (3) They have been profitable in almost every year over the last 

decade; and (4) They are poised to compete internationally. Mr. Murphy stated it is significant for 

policymakers to note that the low-cost air carriers serve very few small communities.

Slide 8

Mr. Murphy reviewed the study’s findings regarding network air carriers. He explained they have 

(1) become 35 percent smaller in the last decade; (2) lost most of their domestic pricing power even 

where they are not competing with low-cost air carriers; and (3) even after heroic measures and 

bankruptcies, have not been able to close the price gap. He pointed out the network air carriers serve 

over 300 small communities to provide flow to their network, and they are increasingly focused on 

international growth; this has resulted in $3 billion of additional annual domestic traffic flow revenue.
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Slide 9

Mr. Murphy explained the international routes have become more important and support the network 

air carrier’s ability to compete with the low-cost air carriers. He emphasized these air carriers need this 

global network to remain competitive. Mr. Murphy stated alliances are the second best business 

strategy for network air carriers because they cannot merge for legal reasons. He explained the 

alliances support growth and competition. He noted only 220 of the 70,000 transatlantic city pairs have 

nonstop service, so alliances are critical. Mr. Murphy and Mr. Bennett examined transatlantic growth,

costs, prices, and profit margins since alliances formed in 1991. They found the transatlantic region is 

performing better than other parts of the world with no negative effects on competition.

Slides 10 and 11

Mr. Murphy and Mr. Bennett concluded—

 The airline industry is more competitive than at any time since 1995.

 Deregulation has fostered competition.

 Network air carriers are under significant cost and competitive pressures, and the situation is 

not temporary because low-cost air carriers continue to expand and set prices.

 Low-cost air carrier cost convergence is not occurring.

 The competitive struggle in the industry is between the two business models.

 Future domestic competitiveness will hinge on network air carriers developing international 

networks with antitrust immunity.

 Alliances have benefitted consumers, airlines, and airline employees, and have bolstered 

domestic competition and service to small communities. Mr. Murphy explained alliances 

bolster network air carrier service to 300 small communities because alliances support network 

air carriers.

Mr. Tilton then turned the meeting over to Mr. Graham Atkinson and Mr. Kevin Knight for a 

presentation entitled ―Domestic and Global Airline Competition—Current State of Play and Challenges 

Looking Forward.‖

Mr. Atkinson’s and Mr. Knight’s Presentation

Mr. Atkinson began the presentation by stating Mr. Knight is United’s Senior Vice President for 

Network Planning and Revenue Management. Mr. Atkinson stated he is United’s Executive 

Vice President responsible for loyalty business, and was the President of Star Alliance.
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Slide 2

Mr. Atkinson explained the focus of their presentation would be an international perspective of the 

issues. He presented a population weighted map of the world with 2010 real GDP growth rates,

illustrating that much of the economic growth is occurring outside the United States.

Slide 3

Mr. Atkinson presented a map of the world depicting the areas covered by OpenSkies agreements, 

restrictive agreements, and no agreements. He stated the DOT has done a remarkable job negotiating 

almost 100 OpenSkies agreements, which have benefitted the U.S. aviation industry. He noted the 

areas of the world with the largest population centers and the highest economic growth rates are also 

the areas with the most restrictive agreements or no OpenSkies agreements with the United States. 

This presents a problem for all U.S. air carriers, but particularly the network air carriers, in terms of 

competitiveness and growth opportunities.

Slide 4

Mr. Atkinson pointed out the United States has been losing its leadership position in aviation over the 

last 20 years. Ten years ago, the four largest air carriers worldwide in terms of revenue were 

U.S. air carriers, but currently the two largest air carriers in the world are European. He stated this has 

occurred through organic growth and noted the European air carriers have not been affected by the 

hypercompetitive U.S. markets. Equally important is those air carriers have participated in 

cross-border mergers and other acquisitions. For example, he noted the Lufthansa Group owns other 

European airlines, and Air France and KLM have merged. Mr. Atkinson stated the Asian air carriers 

also are merging, and he expects China to appear on the list of the 10 largest air carriers in the future. 

He concluded international operators are clearly challenging U.S. network air carriers.

Slide 5

Mr. Atkinson described the operations of Emirates Airline (Emirates). He explained, since 2000, 

Emirates has grown from serving 57 markets to over 100 markets. Emirates has 143 widebody aircraft

typically used in international operations, in comparison to United’s 96. In 10 years, Emirates has

grown to one and one half times the size of United in terms of these aircraft. He noted Emirates has 

200 more widebody aircraft on order, in comparison to United’s 50. Mr. Atkinson stated Emirates was

built on the sovereign strategy of Dubai to take advantage of growing markets in Asia. He noted the 

Emirates’ model is being replicated by Doha in Qatar and Etihad in Abu Dhab, and poses a serious 

threat to U.S. air carriers.
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Slide 6

Mr. Atkinson explained, in response to restrictive barriers in regulated markets, alliances have emerged 

to help U.S. air carriers effectively compete. He then turned the presentation over to Mr. Knight, who 

reiterated a global network is key to the success of U.S. air carriers. He stated it is not possible for a 

single airline to provide its customer base with service to all global destinations; alliances are key to 

developing new revenue streams and providing customers with access to new markets.

Slide 7

Mr. Knight stated alliances have allowed airlines to link network air carriers and provide service across 

the globe. He explained this has resulted in new revenue streams, which strengthens air carrier

profitability and promotes growth. As an example, he noted, through its Star Alliance with Lufthansa, 

United has expanded service from two to nine daily flights into Germany, and has increased profits.

Slide 8

Regarding the degrees of integration, Mr. Knight discussed the differences between interline 

agreements, code-share agreements, and joint ventures. He explained alliances began as interline 

agreements, that is, commercial agreements between air carriers to allow an air carrier to book 

passengers on another air carrier’s flight and provide for the handling of baggage between air carriers. 

Interline agreements evolved into current code-share agreements, which provided for seamless 

connectivity and allowed reciprocal frequent flier cooperation. Mr. Knight further explained 

air carriers are now entering into deeper commercial relationships through joint ventures where 

air carriers share revenue and, in some cases, profits. OpenSkies agreements and antitrust immunity 

are critical to the success of joint ventures.

Slide 9

Mr. Knight noted the marketplace has had a dramatic effect on partnerships and alliances, and provided 

a table illustrating changes in current alliances. As an example, he pointed out Continental Airlines’ 

decision to move from the Skyteam Alliance to the Star Alliance as a result of the Delta Airlines and 

Northwest Airlines merger. He provided further examples of air carriers moving between alliances and 

noted shifts between alliances have a direct impact on the other participants in the alliance. To 

illustrate this point, he stated when Japan Airlines (JAL) entered a restructuring and needed capital,

Delta saw an opportunity to solidify its position in the Asian market; Delta offered over $1 billion in 

investment, which then triggered a response from American Airlines (which already had a partnership 

with JAL).
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Slide 10

Mr. Knight reiterated the highest growth rates are occurring outside the United States, and 

U.S. air carriers need to be able to participate in those markets that often have restrictions. He further 

noted U.S. air carriers have lost their leadership position to foreign air carriers, and emerging airlines 

are changing the competitive landscape. Mr. Knight emphasized that development of alliances is

critical, and cross-border investments and mergers will continue to impact alliances.

Slide 11

Mr. Knight offered suggestions to address the current situation:

 Establish access to the most important international growth markets. To achieve this, it is 

necessary to (1) reaffirm policy to support open skies, (2) negotiate additional OpenSkies 

agreements with priority on those markets with the greatest potential, and (3) support the 

removal of trade barriers.

 Enable effective cross-border alliances by facilitating (1) immunized commercial relationships,

(2) deeper commercial relationships as proposed by the parties, and (3) access to needed 

infrastructure such as slots and gates.

Mr. Tilton then turned the meeting over to Mr. Robert Lekites, UPS.

Mr. Lekites stated access to emerging markets is as critical to the cargo airlines as it is to passenger 

airlines. He noted U.S. cargo airlines are among the world’s largest airlines in terms of operations, 

employees, and impact on the U.S. economy, and, therefore, should be a DOT priority. He emphasized 

cargo airlines need unfettered access to global markets, which requires obtaining OpenSkies 

agreements and enforcing those agreements. He acknowledged DOT and the U.S. Department of State 

have been successful in opening foreign markets and obtaining over 100 OpenSkies agreements, and 

these efforts have had a major positive impact on the U.S. and global economies. 

Mr. Lekites suggested the DOT and the U.S. Department of State focus on a few fast growing markets, 

specifically, China, Hong Kong, Mexico, and Brazil. In addition, he stated practical access is also 

necessary and obstacles remain, such as local airport restrictions, restrictions on competitive ground 

handling, nontransparent slot constraints, custom facilities problems, restrictive environmental 

measures, and nighttime curfews. He noted the international market is UPS’s growth area: 10 years 

ago approximately 12 percent of UPS block hours were international; today, that figure is 50 percent, 

primarily from access to China. Without OpenSkies agreements, UPS would primarily be a domestic 

air carrier. He concluded by complimenting Mr. Atkinson and Mr. Knight on their presentation.

Mr. Tilton invited the committee to ask questions of the panelists.
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Committee Discussion

Ms. Friend asked what the FAAC could recommend to change the situation sufficiently so the industry 

could become profitable. In response, Mr. Murphy encouraged the committee to defend deregulation 

and support the continued development of alliances and resist efforts to limit them. He noted alliances 

are the future of U.S. airlines. In addition, he encouraged the committee to support open international 

markets, especially regarding China (which continues to restrict U.S. airlines), and to urge a fair tax 

policy in the United States and abroad. He pointed out the U.S. airline industry has been one of the 

least profitable industries for the last decade and believes these steps would strengthen the industry.

Mr. Regalado pointed out if the FAAC’s recommendations are accepted, other Governments will have 

to reach agreement with the United States. He asked, to what extent would this process be hindered by 

NextGen equipment requirements? Mr. Knight responded NextGen would not be a considerable barrier 

because NextGen will be equally important to the international community. Mr. Tilton noted there is 

significant coordination between the United States and other nations on NextGen, and it is understood 

the investments worldwide must be as seamless as possible. Mr. McKenzie pointed out foreign 

air carriers are more profitable and, therefore, it is easier for them to make the investment in NextGen.

Dr. Borenstein clarified the presenters were not approved by the Subcommittee on Competitiveness and 

Viability, and the subcommittee was not aware of the presentation content. He asserted this raises an 

issue as to the subcommittee’s credibility. In his opinion, the presentation was not neutral and 

effectively presents United’s view of the world. He noted the presentation used 40 minutes of the 

subcommittee’s allotted 1 hour. Dr. Borenstein stated two journalists asked him how a Subcommittee 

on Competitiveness and Viability chaired by the CEO of a legacy air carrier could be credible. He 

commented that having presentations financed by United is not the way to reach consensus or to have a 

real, open debate. When Mr. Knight expressed concern that he would not have the time to refute all of 

the issues, Mr. Tilton offered him as much time as needed. Dr. Borenstein commented Ms. Kurland 

needed to maintain a schedule; however, Ms. Kurland stated she could take some time from the breaks.

Dr. Borenstein stated he has worked in the airline industry for more than 30 years, advised DOT and 

the U.S. Department of Justice on airline policy, studied competition extensively, and written the

first study empirically identifying the hub dominance effect. He noted, although he may agree with 

many of the presenters’ facts, he does not agree with their conclusions. In rebuttal to the presentation, 

Dr. Borenstein made the following points:

 It is true that low-cost air carriers are gaining market share and expanding. However, the 

report states 80 percent of network air carrier routes are competing with low-cost air carriers; 

this rate is based on the assumption that competition is metropolitan area by metropolitan area

and not airport by airport, for example, Baltimore-Washington Thurgood Marshall International 

Airport is equivalent to Ronald Reagan Washington National Airport. He noted the figure 

would be closer to 28 percent if the calculations were done on an airport-by-airport basis.
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 Hub premiums have not disappeared, although they have declined since the mid 1990s. 

Dr. Borenstein stated there is clear evidence of dominance and market power in a number of 

airports; when looking at pricing, it is difficult to accept the claim that the market is 

hypercompetitive. On some routes, fares are three to four times higher than comparable length 

service routes. He stated airlines exercise market power when they have the opportunity.

 Air fares are down substantially since deregulation, but load factors have increased 

substantially. Dr. Borenstein stated if airfare declines are adjusted for load factors, more than 

two thirds of the real decline in air fares is the result of air carriers increasing the number of 

passengers on every flight.

 Low-cost air carriers are entering more routes. Dr. Borenstein stated these are air carriers that

have 30 to 40 percent lower costs on identical service routes. He noted when two air carriers

have costs that differ by 30 percent, the higher cost air carrier either controls its costs or goes 

out of business. He suggested the most serious challenge to network air carriers is their high 

costs. Dr. Borenstein added if barriers to entry (for example, frequent flyer plans, 

uncompetitive uses of corporate marketing agreements, and blocking of entry to gates and slots)

did not exist, there would be more rapid expansion. He stated while he is heartened that 

low-cost air carriers are expanding, he questions why it took so long. He suggests the cost 

differentials became so extreme that the low-cost air carriers were finally able to enter these 

markets.

 The network air carriers are not serving small towns and cities, rather their commuter 

air carriers are serving those areas. Dr. Borenstein noted the relationship between the commuter 

air carrier and the network air carrier does not always involve ownership. He suggested these 

relationships could be with low-cost air carriers.

 The problem with the aviation industry is the lack of competition. Dr. Borenstein stated barriers 

to entry are preventing low-cost air carriers from expanding. He suggested such expansion 

would either drive the legacy air carriers out of business or force them to lower their costs.

 There should be a level playing field in the international markets. Dr. Borenstein stated 

U.S. air carriers should not receive special treatment but be treated fairly. He questioned the 

position that the United States should have the largest presence in every industry.

Mr. Conley asked Mr. Murphy if the suggestions he offered in response to Ms. Friend’s earlier question 

would result in the erosion or outsourcing of U.S. jobs. Mr. Murphy responded he did not believe his 

suggestions would have any effect on an air carrier’s decision to outsource. Mr. Conley asked about 

the effect of alliances in particular. Mr. Murphy stated he does not interpret alliances as the 

outsourcing of jobs but rather the cooperation among airlines to reach new markets.
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Mr. Tilton offered the presenters an opportunity to respond to Dr. Borenstein’s comments. Mr. Murphy 

stated they agree fundamentally on many issues. Regarding service to small communities, Mr. Murphy 

noted low-cost air carriers serve 38 small communities in the United States and the network air carriers 

serve 334 small communities through feeder carriers. He disagreed that if the network air carriers 

stopped serving those communities, the low-cost air carriers would serve them. He questioned whether 

the high-cost feeder air carriers could work with the low-cost air carriers and whether the low-cost 

air carriers would be interested in connecting traffic. As to barriers to entry, Mr. Murphy noted there 

are only two slotted airports in the United States that present questions; beyond that, the expansion of 

low-cost air carriers suggests they are able to overcome those barriers.

Mr. Bennett stated air fares, adjusted for inflation, are lower now than in 1995, which suggests a 

competitive industry. In addition, the number of markets with multiple competitors has increased. He 

noted it is strange it took so long (given the low-cost air carriers’ cost advantages), but economics 

prevailed. Mr. Bennett added providing network air carriers with access to international markets may 

help them to repair. He stated the low-cost air carriers will eventually enter the international markets,

which will be competition for the network air carriers. Dr. Borenstein questioned the wisdom of 

propping up the high-cost air carriers by providing them access to other markets. Mr. Bennett 

responded he was not suggesting ―propping up‖ those air carriers. He stated the network carrier model 

is the correct model for the international market, and the vast majority of the international market will 

not be served by the low-cost air carriers.

Mr. McKenzie stated the capital markets have subsidized low airfares and these airfares are not 

sustainable. He further noted when a carrier adds complexity, such as different fleet types, costs 

increase exponentially. As an example, he related when JetBlue added a second fleet type, their costs 

increased dramatically. Mr. McKenzie recognized alliance maturity has been the result of competition 

overseas, but asked whether it was also the result of consumer needs. Mr. Atkinson agreed meeting 

client needs is fundamental to the growth of alliances.

Regarding alliances and joint ventures, Ms. McAhron-Schulz expressed air carrier labor groups’ 

concern that if there is a sharing in the profits, the work performed also should be shared. She 

expressed concerns China has no labor laws and many of the foreign air carriers, especially those in 

China and the Middle East, are subsidized by their Governments. Mr. Bennett responded, as the 

air carriers developed more integrated alliances, the large growth in the transatlantic market 

accelerated. He noted between 2003 and 2008, large network air carrier traffic grew by 50 percent,

which represents many jobs. He suggested, absent alliances, there would not have been this growth,

and domestic air carriers would have experienced a net loss of jobs.
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Mr. McGee referred to Dr. Borenstein’s concerns and stated there will need to be sensitivity to the 

concerns of individual committee members, given the committee is such a diverse group where some 

voices are stronger than others. He then asked whether the lack of cost convergence is the result of 

labor costs or other factors, such as the hub-and-spoke network. Mr. Bennett responded he and

Mr. Murphy have not extensively studied cost structure, but the lack of cost convergence is not solely 

the result of labor costs. He stated when the operating costs of low-cost air carriers and network air 

carriers are compared, the differences are across the board. Mr. McGee also expressed concern about a 

lack of transparency for consumers regarding a range of issues, including code-sharing, alliances, and 

safety differences.

Mr. Tilton commented it is unfortunate Mr. Bedford could not attend today. He noted Mr. Bedford is 

CEO of Republic Airways, which has a hybrid business model involving both a low-cost air carrier and 

a regional air carrier. Mr. Tilton noted Mr. Bedford is a member of the Subcommittee on 

Competitiveness and Viability and also chairs one of the subcommittee’s working groups.

Mr. Barger commented he represents a low-cost air carrier and, as a member of the subcommittee, he 

was fine with viewing the presentation for the first time today. He noted this is part of a fast-moving 

committee and subcommittee process. Mr. Barger stated he found the presentations helpful and noted 

JetBlue flies to South America and looks at the world through the ―alliance lens.‖

Ms. Baer agreed alliances are the future and encouraged the airline industry to work more closely with 

airports. She pointed out when an air carrier obtains the rights to fly to a new destination, there are 

issues about the use of airport property. Ms. Baer asked whether the panel had considered airports that 

have little or no additional access for air carriers. Mr. Bennett responded their study took a macro view 

of the issues, but agreed Ms. Baer raised an important point.

Mr. Tilton concluded by noting the lively debate is captured by the Subcommittee on Competitiveness 

and Viability’s three subject areas. He stated this is the largest and most democratic subcommittee. 

Mr. Tilton noted the subcommittee’s working group chairs include Mr. Bedford, who represents a 

low-cost and regional air carrier, and Mr. McGee, who represents the consumer.

Ms. Kurland thanked the subcommittee and its panelists. After a 10-minute break, she turned the 

meeting over to Dr. Alonso, acting as chair of the Environment Subcommittee for Mr. Bedford.

Environment

Dr. Alonso explained the Environment Subcommittee is charged with understanding the issues and 

barriers the aviation industry faces regarding sustainable growth and the environment. He identified 

the other members of the subcommittee as follows: Mr. Bedford, subcommittee chair; Ms. Egnotovich; 

Ms. Piasecki; and Mr. Regalado.
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Dr. Alonso noted the environment is one of the major constraints for the sustainable growth of the 

aviation industry. This is highlighted more frequently because of the confluence of the effects of CO2

on the environment and the use of fuel. He stated the subcommittee’s discussions have focused on 

CO2 and the global climate impacts of aviation, and three main issues have emerged:

 Aircraft technologies which historically have accounted for the majority of the environmental 

impact reductions of the commercial aviation system,

 Aircraft operations and traffic management, and

 Alternative fuel use in the commercial aviation market.

Dr. Alonso stated the subcommittee has also discussed issues such as gains from runway metering, 

minimizing the impact of ground service equipment, reinstatement of research and development 

tax credits that are expiring, and international harmonization and equipage.

Dr. Alonso introduced Ms. Jeanne Yu, Director, Environmental Performance Product Development at 

Boeing. Her presentation was entitled ―Environmental Benefits from Operations and Aircraft/Engine 

Technologies.‖

Ms. Yu’s Presentation

Slide 2

Ms. Yu stated there are global environmental challenges, and the aviation industry is expected to be a 

technology leader in meeting those challenges. She noted innovative technologies will set the 

United States apart from the world from a competitive standpoint.

Slide 3

Ms. Yu explained aviation CO2 is relatively small and must remain so. In 2008, global manufacturers 

signed a declaration for action on climate change with a commitment to carbon-neutral growth and a 

goal of a carbon-free future. She noted companies will work together to achieve this goal, but 

Government also has a role in providing the opportunity for technology development.

Slide 4

Ms. Yu reviewed the progress made over the last 5 decades: a 70 percent improvement in fuel 

efficiency and reduced CO2, and a 90 percent reduction in noise footprint. She stated new technologies 

will be needed to achieve the next level of improvements.
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Slide 5

Ms. Yu noted the subcommittee is addressing CO2 as a priority. She explained from a product 

standpoint, there are three categories to consider:

 Environmentally progressive products and services;

 Operational efficiency, that is, ensuring products are operating as efficiently as possible; and

 Renewable fuel and energy solutions.

Slide 6

Ms. Yu presented the development of biofuels as an example of connecting people to accelerate 

technology. She stated the initial discussions on biofuels began with a group of about 20 people from 

around the world gathered at Seattle-Tacoma International Airport. They initially thought it would take 

20 to 50 years to fly an aircraft on biofuels. However, as the dialogue progressed, it became apparent 

this could be achieved in a shorter timeframe; and a goal of 2 to 3 years was set. She explained 

partnerships were formed with airlines, engine manufacturers, and global certification agencies to 

achieve this goal.

Slides 7 and 8

Ms. Yu discussed the following areas of opportunities from a product standpoint for reducing fuel 

consumption, emissions, and noise:

 Airplane modifications. As examples, she offered airplane winglet retrofits as a way to improve 

fuel efficiency by 3 to 5 percent; and carbon brakes for the B–737 that are 500 pounds lighter 

and, therefore, increase fuel efficiency.

 Operational efficiency. Ms. Yu stated aircraft must be operated to maximize fuel performance. 

She noted Boeing assists operators with flight planning and also has an ―Aircraft Health 

Management‖ tool that identifies aircraft engine performance.

 Airspace efficiency. Ms. Yu related a recent RNP demonstration as an example of the way 

NextGen will improve airspace efficiency.

Slides 9 through 11

Regarding environmentally progressive products and services, Ms. Yu stated CO2 presents the biggest 

opportunity to address climate change concerns, and noted CO2 is aligned with fuel efficiency. 

She reviewed fuel efficiency improvements for new airplanes in service. She noted the largest gains 

are achieved by incorporating new technologies into larger changed products such as the B–787 and 

the B–747–8; this effort would increase fuel efficiency by 20 percent and 16 percent, respectively. 

Ms. Yu stated the 20 percent improvement in fuel efficiency of the B–787 is based on a suite 

of solutions.
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Slide 12

Ms. Yu stated CO2 and fuel efficiency improvements involve research in the following four areas:

 Next generation materials. She noted creating lighter weight materials, such as composites, that 

are equally or more structurally efficient, reduces the weight of the overall aircraft and increases 

its fuel efficiency.

 Aerodynamic design improvements. As an example, Ms. Yu pointed to the raked wing tip on 

the B–777, which reduces drag and improves fuel efficiency.

 Propulsion systems improvements. Ms. Yu explained integrating new, more efficient designs, 

such as open rotors, results in efficiencies.

 Less energy-intensive electric systems. She noted more efficient power distribution results in 

less engine power draw and therefore less fuel consumption.

Slide 13

Ms. Yu discussed the evolution of aircraft composite technology development. This began in the 1970s 

with carbon epoxy when Boeing worked with NASA to develop the first demonstration parts to be 

flown on B–737s. She referred to a pie chart illustrating the increasing use of composites, which has 

increased aircraft performance. She noted composites comprise approximately 50 percent of 

the B-787.

Slide 14

Ms. Yu stated technology also includes the creation of state-of-the-art modeling computational tools

and processes that allow more rapid development of new configurations.

Slide 15

Ms. Yu explained technology maturity is measured on NASA’s Technology Readiness Level (TRL) 

scale. She stated technologies are deemed technology-ready when they reach TRL 6. TRL 6 

technologies are considered for new products approximately 3 to 6 years before airplane entry into 

service. She noted it may take up to 10 years for major technologies to reach TRL 6, and the issue is

how to shorten this timeline.

Slide 16

Ms. Yu stated demonstrators have been used in quiet technologies. As an example, she cited noise 

reducing chevrons developed during the Quiet Technology Demonstrator Program.
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Slides 17 and 18

Ms. Yu spoke about the need to broaden the use of demonstrators and accelerate environment 

technology. She stated Boeing has a model for an ecoDemonstrator, which will provide a platform for 

achieving that goal. Ms. Yu explained Boeing introduced the ecoDemonstrator program concurrent 

with winning $25 million in cost sharing through the FAA CLEEN contract. This money will fund the 

first two flight tests, which are scheduled for 2012–2013. The flights will involve the first key 

technologies: (1) adaptive trailing edge, which helps in the reconfiguration of the wing during flight; 

and (2) ceramic composites, which allow higher temperature engine efficiency. In addition, Boeing is 

working with NASA on a future demonstrator for major changes.

Slide 19

In summary, Ms. Yu discussed the requirement for successful breakthrough innovation. She stated 

there must be focus and commitment. Regarding the issue of focus, she suggested there needs to be an 

aviation industry construct around a technology innovation portfolio, and the focus must be on the short 

and long term. From a commitment standpoint, she noted interruptions in technology development are 

detrimental, and sustained long-term research investment and appropriate incentives are necessary.

Dr. Alonso thanked Ms. Yu and introduced Mr. John Heimlich, ATA chief economist, for a presentation 

entitled ―Commercial Aviation: The Quest for Sustainable and Affordable Alternative Jet Fuel.‖

Mr. Heimlich’s Presentation

Slide 2

Mr. Heimlich stated there are environmental and economic motivations to pursue alternative energy for 

aviation. He noted aviation business decisions are based on long-term fuel costs. He further noted 

from 1991 through 2000, the average spot price for jet fuel was $0.59 per gallon. At that time, the 

U.S. Energy Information Administration forecasts for 2010 and 2011 were $2.19 per gallon and 

$2.34 per gallon, respectively. Mr. Heimlich indicated important considerations for the industry are the 

expected trajectory of prices in terms of level and volatility.

Slide 3

Mr. Heimlich explained the industry competes with other petroleum users for supply. As more gasoline 

and diesel is derived from nonpetroleum sources, the margins of petroleum refiners will decrease. As a 

result, petroleum refiners will have an economic incentive to reduce refinery use, which will result in 

less jet fuel output and upward pressure on prices. He illustrated the types of fuel produced from 

one barrel of petroleum, and noted approximately 10 percent results in jet fuel while approximately 

50 percent results in gasoline. He stated the properties and characteristics of refining make it 

impossible for refiners to produce 100 percent jet or diesel fuel from a barrel of petroleum. 

Mr. Heimlich suggested alternative fuel development represents an opportunity to reduce dependence 

on events in the other petroleum segments.
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Slide 4

Mr. Heimlich pointed out $0.01 per gallon represents $175 million to $200 million in annual costs for 

the industry. Further, a petroleum-dependent aviation industry is susceptible to price shocks, supply 

disruptions, and carbon constraints. He noted alternative fuels also can reduce emissions. 

Mr. Heimlich explained the industry is committed to ―drop-in fuels,‖ which do not require changes to 

airplanes, airports, or pipeline infrastructure. These fuels also can be comingled with different fuel 

blends. He stated U.S. transportation, agriculture, and energy policies are key enablers of this process.

Slide 5

Mr. Heimlich described the CO2 life cycle for fuel, which begins with the generation of feedstock, 

requires transportation and processing, and ends with combustion in the aircraft. He noted alternative 

fuel provides benefits such as the sequestration of carbon in a loop; reduction or sequestration of 

carbon during transportation and/or processing; and decreases in CO2 yield upon combustion in 

some cases.

Slide 6

Mr. Heimlich described the Commercial Aviation Alternative Fuels Initiative (CAAFI) and the groups 

collaborating in this process. He noted the passage of the first new specification for synthetic fuels last 

year, and the future passage of the specification for hydrotreated renewable jet (HRJ) fuel through 

CAAFI. Mr. Heimlich pointed out CAAFI is working at the international, national, and state and local 

levels.

Slide 7

Mr. Heimlich stated ATA and the Defense Logistics Agency (DLA) formed a strategic alliance for 

alternative fuels in March 2010. The purpose of the alliance is to explore cooperative market 

engagement for fuels; harmonize contractual terms; and jointly advertise requirements to supply 

competitively priced, environmentally preferred, and operationally secure jet fuel in different parts of 

the country. He emphasized a constraint on their efforts is the U.S. Department of Defense’s (DOD)

5-year contracting authority limitation. DOD is seeking to extend this to 20 years to better match 

investment horizons. He noted DLA and the U.S. Pacific Joint Command are partnering with ATA, 

Boeing, FAA, and the U.S. Department of Agriculture in the ―Farm to Fly‖ initiative regarding the 

upcoming farm bill, with the view that it is a farm and energy bill.

Slide 8

Mr. Heimlich explained off-take agreements have been key to progress in the development of 

alternative fuels and provided a list of recent memorandums of understanding in this area.
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Slides 9 and 10

In conclusion, Mr. Heimlich outlined the following challenges to commercial deployment of 

alternative fuels:

 Price stability and affordability. He noted most of the suppliers are seeking minimum price 

guarantees above the market price, and neither the airlines nor DOD is currently able to exceed

that price. He emphasized the importance of transitioning these suppliers to market price 

competitiveness, which may take Government involvement.

 Certification. In addition to HRJ, Mr. Heimlich stated there will be other pathways (for 

example, lignocellulosic bioconversion), with different solutions depending on where the crops 

are grown, the local strengths, and the type of equipment available. He noted other pathways 

may yield larger volumes of environmentally beneficial fuel.

 Feedstock readiness. Mr. Heimlich stated the industry is conscious of the ―fuel versus food‖

issue and that sustainability requires large quantities that do not compete with food stocks.

 Crediting of environmental benefit. Mr. Heimlich explained fuel is typically comingled in 

common carrier multiproduct pipelines and storage facilities, and an airline may not receive the 

exact fuel it purchased. He emphasized it is important a purchaser receive credit for purchasing 

environmentally beneficial fuel regardless of what that purchaser actually receives.

 Compatibility of international and domestic acceptance criteria. He emphasized the importance

of compatible environmental criteria worldwide and within the United States.

Dr. Alonso thanked Mr. Heimlich. He asked the committee for any comments on the subcommittee’s 

suggested issue areas. He noted the subcommittee has postponed until its next meeting consideration 

of the goals being established for environmental performance by the aviation system and whether the 

goals are achievable.

Mr. McKenzie asked what the price of crude oil needs to be for biofuels to be economically viable;

whether all the fuels discussed are ―drop-in fuels‖(that is, compatible with existing aircraft engines and 

fuel systems), and what incentives are needed. Mr. Heimlich responded for the next generation, only 

―drop-in fuels‖ will be manufactured and used. He also noted it would not be economical or feasible to 

reengineer aircraft and engines or to have segregated storage facilities.

Regarding the price of crude oil, Mr. Heimlich stated there may be some companies that can produce 

alternative fuels at a cost comparable to crude oil prices of $50 to $60 per barrel. He further noted 

there is a correlation between fuels that yield greater environmental benefit and higher prices. In 

addition, he stated it is irrelevant whether the incentives are for the supplier or purchaser, as long as a 

competitive market price is reached. He explained the ―credit crunch,‖ the ethanol bust, and the 

volatility of crude oil prices have all inhibited investors, so public sector involvement is needed. 

Mr. McKenzie asked what it would take to stimulate widespread manufacture of biofuels. 

Mr. Heimlich noted a large number of companies will be needed.
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Mr. Regalado expressed hope the aviation industry can avoid the criticisms directed at alternative fuels 

for automobiles. He noted aviation alternate fuels must have no more environmental impacts than the 

current fuel. Mr. Heimlich responded this is why groups are looking at what sustainability and a true 

life cycle analysis mean. He noted there are different regional solutions, such as turning waste into fuel 

in the northeast part of the country, and innovation must be encouraged. Ms. Yu emphasized the need 

to define sustainability criteria so there is not competition with food or land and water resources.

Dr. Borenstein stated individuals involved in research do not view alternative fuels as a viable 

alternative to $80 to $120 per barrel for crude oil. He noted if there are huge technological 

breakthroughs, they could easily beat $80 per barrel, but at this point there is no serious talk about any 

scale of production. Dr. Borenstein identified two fundamental problems: (1) the need for major 

technological breakthroughs, particularly with the nonagricultural alternatives such as algae; and (2) if 

alternative fuels are ever produced on a large scale, the price of fuel will collapse. He suggested 

focusing on distant technologies that are long shots rather than technologies that are not scalable and 

will never be cheap enough. He emphasized there is no point in solving climate change in only the 

United States, and consideration must be given to the entire global market.

Mr. McGee stated operational issues are a part of addressing environmental concerns. He pointed out 

in the last 10 years, the airline industry has significantly changed. He noted more than 50 percent of 

domestic flights are operated by regional carriers with more aircraft carrying fewer passengers. He 

asked whether the subcommittee has considered such operational issues and disincentives to such 

behavior. Dr. Alonso responded the subcommittee is considering NextGen and whether technological 

improvements can lead to an environmentally sustainable commercial aviation system with such 

growth and changes in operations.

Mr. Tilton noted it is difficult to look to an industry that cannot earn a return on capital for solutions on 

these issues. He stated the contradiction of an economically distressed industry and an environmentally 

important industry must be discussed because the question of who will pay is fundamental.

Dr. Alonso stated the subcommittee will hold a teleconference September 20, 2010, that will be open to 

the public, and he encouraged the participation of the members of other subcommittees. He noted the 

subcommittee also will hold a meeting October 5, 2010.

Before turning the meeting over to Ms. Friend, chair of the Labor World-class Workforce 

Subcommittee, Ms. Kurland reviewed the tasks assigned to the subcommittee: examining the avenues 

for retaining aviation industry employees, and recruiting a world-class workforce for the aviation 

industry. She also noted, although the FAAC meeting was scheduled to conclude at 4:30 p.m., it would 

continue until 5:00 p.m. in light of the dynamic discussions.
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Labor and World-class Workforce

Ms. Friend introduced the members of the Labor and World-class Workforce Subcommittee: 

Mr. Barger, Mr. Conley, Mr. Lekites, Ms. McAhron-Schulz, Ms. Egnotovich, and Ms. Bowens. She 

stated, with regard to the subcommittee’s task of recruiting a world-class workforce, the subcommittee 

agreed there is a projected shortage of U.S. workers in the areas of science, engineering, and math. She 

noted the task is to increase access to these fields of education. Ms. Kurland introduced 

Ms. Jennifer McNelly, Senior Vice President, The Manufacturing Institute (Institute). She noted 

Ms. McNelly supports the Institute’s efforts to launch and implement a strategic national agenda on 

education reform and workforce development on behalf of U.S. manufacturers.

Ms. McNelly’s Presentation

Ms. McNelly stated the Institute is a nonprofit, nonpartisan affiliate of the National Association of 

Manufactures (NAM) and provided an overview of the Institute’s members. She explained the 

Institute focuses on U.S. manufacturing competitiveness, including education reform and 

workforce development.

Ms. McNelly identified two key drivers to the success of U.S. manufacturers: innovation and a highly 

educated workforce. U.S. manufacturers believe a skilled and educated workforce is the single most 

critical element of innovation and the hardest asset to acquire. She stated U.S. manufacturers rank the 

difficulty in finding qualified talent (that is, skilled workers at the engineering level and basic 

technician level) as a top challenge. Ms. McNelly stated U.S. dominance in the aviation industry and 

manufacturing is threatened by the lack of such a workforce. She noted technology advances require 

more advanced skills, but the U.S. education system has deficits.

Slide 2

Ms. McNelly pointed out studies since 1983 have documented problems in the U.S. education system.

Slide 3

Ms. McNelly stated she would offer a framework for action to revitalize the U.S. workforce based on 

building a technical, science technology, engineering, and math workforce. She noted the United States

has focused its efforts on science, technology, engineering, and math (STEM) in grades K through 12 

and higher education. However, the United States has failed to act on the ―missing middle‖—the 

applied STEM pathway from high school to post-secondary education. She stated overcoming this 

challenge requires a systems approach. According to Ms. McNelly, there is a disparity between what 

employers need and what schools are producing, and the traditional industry answer to a supply 

problem is to find a new supplier or push the problem down chain. Ms. McNelly stated there is a need 

to partner with suppliers, build new alliances, and find the key chokeholds and processes that introduce 

variability and defects in the supply chain of human capital. Although the problem is national in scale, 

the solutions must be at the local level.
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Slide 4

Ms. McNelly suggested the challenge is how to develop the pathways for young people that offer 

mobility and allow them to follow their passions. In addition, it is important to recognize transitioning 

workers have transferable skills and to accelerate their path into new employment opportunities. She 

explained this entails career ladders and ―latticing‖ that recognize the skills mobility needed in the 

workforce. Ms. McNelly stated on March 4, 2009, the Institute launched the NAM endorsed 

Manufacturing Skills Certification System. This system will assist the United States in producing the 

high-performance workforce critical to the U.S. economy through competency-based, customized 

education and job training.

Slides 5 and 6

Ms. McNelly explained the evolution of this skills certification system began with the 

Advanced Manufacturing Competency Model. She stated the initial focus was on the following 

four core skill areas needed for entry-level work:

 Personal effectiveness. Will the individual arrive at work on time and be ready to work?

 Basic academic requirements. Is the individual able to read a manual, do basic math, and retain 

training developed by industry?

 General workplace competencies. Is the individual able to work in a team?

 Industry technical competencies.

She noted the first three skills are needed in every sector of the economy. In addition, for the 

manufacturing economy, entry-level workers should understand fundamental principles of 

manufacturing, competency issues critical to U.S. competitiveness, lean manufacturing, 

operational excellence, and continuance improvement. She explained workers should be able to 

―lattice‖ among fields.

Slide 7

Ms. McNelly stated the manufacturing industry has endorsed certifications that met four key threshold 

criteria: (1) nationally portable, (2) driven by industry, (3) aligned to the competency model, and 

(4) third-party validated. She explained this collaborative effort has resulted in an organization of 

certification programs with stackable credentials that can be awarded in secondary and post-secondary 

education. She noted these are valuable, specific credentials with real value in the workplace.
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Slide 8

Ms. McNelly suggested the skills certification system and the career pathways it supports also align to 

secondary and post-secondary education. She stated integrating skills certification into career 

pathways implies they should become part of degree programs so a worker can progressively pursue 

stackable credentials. Ms. McNelly noted the multi-tiered deployment strategy for these certifications 

and credentials is primarily through the U.S. community college system.

Slide 9

Ms. McNelly explained the United States must compete in productivity improvement, innovation, and 

workforce flexibility. She stated the Institute is working aggressively to design and release an 

expanded version of this system to support specific sector demands. She noted the Institute does not 

tell education how to teach but rather communicates the expectations of success.

Slide 10

Ms. McNelly stated the skills certification system will (1) make high quality jobs more attainable, 

(2) lower the dropout rate, (3) increase the number of students who are ready for work upon completion 

of their education, and (4) provide validation to employers that an individual has the necessary skills. 

In summary, Ms. McNelly offered the following areas for consideration:

 National leadership. Ms, McNelly stated there must be a recognition that manufacturing and 

aviation is important to U.S. economic security, and that STEM is critical to national 

competitiveness.

 Addressing the ―missing middle.‖

 Reinvigorating the Interagency Aerospace Revitalization Task Force.

Committee Discussion

Ms. Bowens noted education is a local issue and suggested the committee consider how to integrate its 

efforts with local agencies and businesses that need the same skill sets needed by the aviation industry. 

In response, Ms. McNelly recognized this as the greatest challenge. She stated the Institute is

activating the certification architecture in 23 States. She noted part of the reason the Institute has been 

successful is that its system allows local educational solutions based on regional needs. However, she 

emphasized there needs to be a common framework. 

Mr. Tilton stated this is a national issue for all industries; the committee needs to be aware there is a 

competition for talent, and successful industries win. He emphasized the aviation industry’s need to be 

an attractive employer, and stated this requires a bright future for the industry. Mr. Barger asked if 

there is an ongoing dialogue with the U.S. Department of Education about STEM literacy. 

Ms. McNelly responded there is some dialogue. However, she stated the United States has not 

prioritized the concept that applying what you learn is as important as learning the theories.
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Ms. Friend stated the subcommittee recognizes there is a future critical labor shortage and it has a 

series of suggestions the subcommittee hopes will make STEM education a priority. She pointed out 

the need to formulate those proposals into actionable items. Ms. Friend also noted airport operators 

have identified a number of workforce recruitment issues. She added the subcommittee also has 

discussed promoting a culture of workplace dignity, and one concern is that in unionized workplaces,

protracted labor negotiations create an unhealthy atmosphere.

Ms. Friend introduced the next presenters: Mr. Harry Hoglander, Chairman, and 

Ms. Elizabeth Dougherty, Member, the National Mediation Board (NMB). She noted the NMB 

oversees collective bargaining in the aviation industry.

Mr. Hoglander’s and Ms. Dougherty’s Presentation

Mr. Hoglander thanked the committee for the opportunity to speak and pointed out the NMB has the 

statutory authority to promote a harmonious relationship between the aviation industry and its 

employees. He stated Ms. Dougherty would begin their presentation entitled ―The Role of the NMB in 

Ensuring Timely Collective Bargaining.‖

Slide 2

Ms. Dougherty provided an overview of the NMB, which operates under the 1926 Railway Labor Act

(RLA). She noted the RLA only addresses the railroad and aviation industries, and was enacted by an 

agreement between labor and management. Ms. Dougherty stated the NMB has three main functions: 

(1) oversee and conduct union representation elections at railroads and airlines, (2) mediate and oversee 

negotiations for collective bargaining agreements, and (3) pay for and administer a system for 

arbitrating grievances in the railroad industry. In conjunction with the last two functions, the NMB 

offers alternative dispute resolution services.

Slide 3

Ms. Dougherty stated there are three NMB members: Mr. Hoglander; Ms. Linda Puchala, and herself. 

She noted the board members are presidentially appointed and confirmed by the U.S. Senate, and no 

more than two board members may be from the same political party.

Slide 4

Ms. Dougherty reviewed the offices within the NMB. She noted the General Counsel office and the 

Chief of Staff report directly to the NMB.
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Slide 5

Ms. Dougherty reviewed the purpose of the RLA, which is to—

 Avoid interruptions to interstate commerce.

 Promote harmonious labor relations.

 Ensure employees are free to organize without carrier interference.

 Provide for the prompt settlement of major and minor disputes.

Slide 6

Ms. Dougherty provided an overview of the RLA. She noted there are many unique aspects of the 

RLA and NMB framework in comparison to the National Labor Relations Act framework. She 

explained the RLA and NMB provide for system-wide bargaining units; for example, all flight 

attendants at an airline must be represented by a single representative. In addition, Ms. Dougherty 

stated contracts are amendable and do not expire, and the status quo must be maintained when the 

contracts become amendable. The RLA requires mandatory mediation before parties may use self help; 

and self help cannot be used until the parties are released by the NMB. 

In addition, the RLA provides the NMB with wide discretion in mediating collective bargaining 

agreements. She pointed out the airline industry opted not to participate in the NMB’s program to pay 

for arbitrating certain grievances. Ms. Dougherty stated the NMB has a 97 percent rate of resolving 

cases through negotiated agreements, and currently has more than 90 active mediation cases.

Slide 7

Ms. Dougherty explained the RLA bargaining process, which begins with direct negotiations between 

the parties when or before a collective bargaining agreement becomes amendable. She stated parties 

sometimes reach agreement at this stage without coming to the NMB; however, if the parties are unable 

to resolve the issues, they approach the NMB for statutory mediation. She noted an intermediate option

is for the parties to ask for NMB alternative dispute resolution services. 

Ms. Dougherty explained if the NMB is unable to facilitate a negotiated agreement through mediation,

the NMB will offer the parties the option of entering into binding, voluntary arbitration. If either party 

rejects that offer, the NMB releases the parties, who must wait 30 days before engaging in self help. 

She pointed out if the NMB determines at the time of release that any section of the United States

would be deprived of essential transportation services, the NMB notifies the U.S. President. The 

President will then determine whether to create a presidential emergency board (PEB). Ms. Dougherty 

stated if the President creates a PEB, the PEB has 30 days to hold hearings and report to the President. 

She explained at this point, another 30-day period begins, during which the parties try to reach an 

agreement. If the parties are unsuccessful at the end of that period, they may engage in self help unless 

Congress intervenes.
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Ms. Dougherty turned the presentation over to Mr. Hoglander.

Slide 8

Mr. Hoglander reviewed the NMB’s mediation case inventory and noted the NMB currently has the 

highest number of cases in the last 30 years. He pointed out many of the airline cases are bankruptcy 

cases or bankruptcy-induced contracts that have reached their amendable dates. At the time the 

presentation data was gathered, the NMB had 91 active cases: 54 airline cases and 37 railroad cases. 

Mr. Hoglander stated there was one short strike in 2010 involving Spirit Airlines. He noted over the 

last 75 years, 241 PEBs have been created, with less than 50 involving the airline industry. He stated 

there is a trend away from the creation of PEBs, with the last airline PEB created in 2002.

Slide 9

Mr. Hoglander reviewed NMB mediation initiatives to ensure a timely collective bargaining process 

which include the following:

 A robust case review process where certain cases are watched more closely, such as those cases 

where the parties are close to agreement.

 Promotion of grievance mediation to limit bargaining related issues so that minor issues are 

resolved before the difficult issues are addressed.

 Promotion of electronic tools to speed the bargaining process.

 Promotion of interest-based bargaining.

 Adoption of the Dunlop II recommendations (see discussion of slide 10 below).

Slide 10

Mr. Hoglander stated the Clinton Administration formed a committee, chaired by Mr. John Dunlop, to 

address certain labor-management relations issues. He explained the committee’s report, known as the 

Dunlop Report, made dramatic recommendations to improve the NMB. This resulted in the 

transformation of the NMB from a dysfunctional organization to a very sharp, fast-moving organization 

that works fairly well. He noted since that report was issued, there have been a number of complaints 

about the slowness of the mediation process. Therefore, another committee, referred to as the 

Dunlop II Committee, was formed to make further recommendations concerning the NMB. 

Mr. Hoglander stated as a result of the Dunlop II Report, the NMB reinstated the Chief of Staff position 

and instituted a process for mediation scheduling. He stated the NMB also is working on an expedited 

process to accelerate the mediation process. However, he noted the parties have much to do regarding

the speed of a case.
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Slide 11

Mr. Hoglander discussed the Interest-based Bargaining Sample Protocol Agreement, which parties sign 

before beginning the mediation process. He noted when a case appears before the NMB, there is 

sometimes much animosity among parties, and the NMB must bring the parties together. He 

reviewed the elements of the protocol, which includes requiring the parties to complete a facilitated 

course on interest-based bargaining and to agree to general conditions, such as conducting 

themselves professionally.

Slide 12

Mr. Hoglander addressed technology improvements in the bargaining process. He described the 

NMB’s use of the central desktop, which allows parties to share their thoughts and information during 

the negotiating process at any time of the day. He indicated this electronic exchange of information 

results in a faster mediation process. Mr. Hoglander stated the use of the desktop is now voluntary but 

may become mandatory in the future.

Mr. Hoglander turned the presentation over to Ms. Dougherty.

Slide 13

Ms. Dougherty provided a list of factors influencing the length of the collective bargaining process,

which includes the parties’ motivation to reach settlement, the labor-management relationship at the 

beginning of the bargaining process, and the expectations of the parties, which can have a large impact 

on the ability to ratify an agreement. In addition, Ms. Dougherty explained the parties can accelerate

the process by resolving minor issues before the mediation process begins. She noted airline 

contracts involve hundreds of issues, and resolving some of those issues before mediation would 

facilitate the process.

Slide 14

Regarding the obstacles to mediation, Ms. Dougherty cited the availability of parties and mediators, 

and the adequacy of preparation. She also stated the NMB rarely sees the same union/management 

teams by the end of negotiations, which can slow the mediation process. Finally, she noted national 

and global events, such as highly volatile fuel prices, can complicate negotiations.

Committee Discussion

Ms. Friend reiterated the subcommittee must offer actionable issue areas and asked whether the 

availability of mediators was a funding issue. She noted the value of conducting mediations for 

consecutive days. Ms. Dougherty responded the NMB has recently hired two mediators. She added 

the Dunlop II Report addressed the issue of mediating on consecutive days. She stated the NMB is 

interested in maximizing the number of days a case can be worked within a week or month, but noted

the NMB must be mindful of the quality of life of its mediators as well as the parties. Mr. Hoglander 

added he is precluded from speaking about funding but noted industry has hired mediators away from 

the NMB and it takes time to replace these individuals.
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Mr. McKenzie commented labor costs are one of four key profit drivers for the airlines. He asked how 

NMB views its role in managing the parties’ expectations. Mr. Hoglander responded the NMB is 

biased only in the public’s interest and seeks to promote harmonious relationships to avoid the 

interruption of commerce. He stated expectations must be managed by the parties and not the NMB.

Mr. Lekites offered his observations about the mediation process in the airline industry. He noted from 

the union perspective, there is a focus, for political reasons, on obtaining release. He stated the airlines’ 

view is that if release is not obtained, something was left on the table. He further stated in his 

experience, mediators have been more than willing to stretch the week out and work through the 

weekend. Mr. Lekites emphasized the need to expedite the process. 

Ms. Dougherty noted both parties often have the mentality the process will just take a given amount of 

time. She stated the NMB is trying to change that mentality and find ways to expedite the process. 

Mr. Tilton commented other industries are evolving with more creative, flexible contracts because of 

the volatility and uncertainty of the economy. He asked for the panel members’ opinions on why this 

has not been the case with the aviation industry. Ms. Dougherty responded volatility is part of the 

problem, and cited profit-sharing as an example of flexibility in contracts. She suggested the volatility 

of the industry makes profit-sharing unattractive to unions. Mr. Tilton noted the issue always returns to 

the need for an economically viable industry.

Ms. Friend stated the subcommittee will continue to consider, but may not identify, any actionable 

items. She added the subcommittee will hold a teleconference with a bargaining practitioner, and will 

have a presentation on leveling the playing field at the next full committee meeting. She also noted the 

subcommittee has identified certain concerns involving outsourcing and foreign investment issues. 

Although the subcommittee may not be able to reach consensus on these issues, it will summarize those

concerns to be included with the subcommittee’s issue areas.

Closing Remarks

Ms. Kurland thanked the committee members and presenters for their hard work and participation. 

She reminded everyone the next full FAAC meeting will be held on October 20, 2010, in 

Los Angeles, California, at the FAA Western Pacific Region facilities. She noted the subcommittees 

will bring alternatives and options for full committee debate.

Ms. Kurland turned the meeting over to Ms. Hamilton.
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Adjournment

Ms. Hamilton solicited a motion for adjournment. On motion, duly seconded and approved by the 

majority of the FAAC members present, the meeting was adjourned.

The meeting adjourned at 5:16 p.m.

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

Approved by: _______________________________________________

Pamela Hamilton-Powell, Designated Federal Official

Dated: November 2, 2010