Chairman Shelby, Senator Murray, Members of the Subcommittee:

Thank you for the opportunity to appear before you today to discuss the Federal Aviation Administration (FAA) and our budget request for fiscal year 2004.   Before we begin, I would like to acknowledge the new Chairman of this Subcommittee, Senator Shelby from the great state of Alabama.   I look forward to working closely with you as well as the other Members of this Subcommittee during my tenure as FAA Administrator.   Finally, I would also like to recognize Kenneth Mead, Inspector General for the Department of Transportation.   Thank you, Ken, for your commitment to work jointly with us to tackle our most pressing financial and performance challenges.

In the seven months I have served as Administrator, I have had the privilege to lead an agency whose mission is second to none---the safety of our nation’s aviation system.  Our mission is carried out by thousands of talented, energetic, and dedicated employees who care about the safety of the American people and our mission.  It is an honor to represent them here today.

We at the FAA operate and maintain the Nation’s complex air traffic control system and the facilities and equipment that enable its optimal operation.   Our controllers control and monitor more than half of the world’s air traffic---up to 5,000 aircraft in U.S. airspace at any given moment.  FAA conducts state-of-the art research to continually improve safety and efficiency.  We help improve the safety and capacity of more than 5,000 public-use airports in the United States.  Our inspectors oversee more than 7,000 operators, including 139 major air carriers.  Our maintenance technicians perform the maintenance, repair and engineering of over 62,000 facilities and pieces of equipment.

Reauthorization

I am pleased to say that on March 25, Secretary Mineta sent to Congress the Administration’s reauthorization proposal—the Centennial of Flight Aviation Authorization Act, or Flight-100.  I would like to thank Secretary Mineta and Deputy Secretary Jackson for their commitment and dedication to developing and supporting Flight-100.

I also want to thank them for their tremendous efforts in challenging the Agency to be Safer, Simpler, and Smarter.  These three principles form the basis of Flight-100, but they also form the cornerstone of the entire Agency’s mission—better performance, more flexibility, and increased accountability.   Later in my remarks, I will address several of the Agency initiatives designed to meet these challenges.

To that end, we believe that the Administration’s proposal will serve as a strong foundation for the development of reauthorization legislation.  It builds upon AIR-21 in that it maintains our commitment to safety, capacity, and system efficiency.  The funding levels in Flight-100 continue to support important infrastructure improvements, safety initiatives, system efficiencies and safety research.  It adds no additional taxes, no economic demands on an economically troubled industry, and it provides no new financial burdens on the American people.  I thank you for your consideration of Flight-100, and I look forward to continuing the dialogue on this, our blueprint for aviation in the future.

Budget

Let me now turn my attention to the purpose of our meeting today—the 2004 President’s Budget.  Our budget supports Flight –100 in that it contributes to our efforts to be Safer, Simpler, and Smarter.

To support our operations and capital investments, the President has proposed a FY 2004 budget of $14 billion -- a lean budget, but generous given these challenging times.  Specifically, his budget requests $7.6 billion for operations, $2.9 billion for facilities and equipment, $3.4 billion for airport grants, and $100 million for research and development.

This represents a 3.7 percent increase from the 2003 enacted budget.  Funding will support 49,748 employees.

I want to thank all the members of this Subcommittee for your tireless efforts and continued dedication to supporting the FAA’s funding needs.  Fully enacting the President’s budget will permit the FAA to hire more controllers to prepare for an expected surge in retirements, make needed improvements in the National Airspace System (NAS), and fund safety, capacity, and security improvements at our nation’s airports. Your support for these investments will reap benefits for years to come, as FAA provides a safe and efficient aviation system that contributes to national security, promotes economic growth, and encourages the recovery of civil aviation.

Safer, Simpler, Smarter

Safety

First, let me address my number one priority, and that of every FAA employee---safety, both in the skies and on the ground.  Under the superb leadership of Secretary Mineta, the Department’s emphasis on safety has never been greater.  The United States has a remarkable safety record.  Almost 100 years after the Wright Brothers first took to the skies, FAA is proud to report that CY 2002 was one of the safest years in the history of the U.S. airlines, not a single fatal air carrier accident, and we continue to make progress in reducing the number of general aviation fatal accidents.  We are proud of this achievement, but we will not rest on our laurels. 

Safety must always be our top priority, especially with the airline industry in serious economic trouble.  As a carrier reduces its schedule, its fleet and its personnel, we must evaluate the impacts of these reductions and amend our  surveillance plans as necessary.  I recently met with the FAA managers overseeing US Airways and United Airlines to ensure that we have appropriately expanded our review of these carriers.  The approach we are taking with these carriers is to focus our safety oversight on areas that may be more at risk during a financial crisis.

We will support the resurgence of the airline industry with some of our most effective mechanisms—continuing our investments in building capacity at our nation’s airports and putting safety first. 

Out of a total budget request of $14 billion, $8.7 billion will be used to support FAA safety goals.   Full funding of the President’s Budget will provide needed funds for inspecting aircraft, expanding safety programs and hiring an additional 20 safety staff; operating and maintaining the air traffic control system; hiring 302 additional air traffic controllers (in anticipation of the first wave of controller retirements); returning the Hazardous Materials Program from TSA; purchasing airport surface movement detection equipment; making AIP grants for airport safety, capacity and security investments, as well as for noise mitigation and research on aviation safety.

In commercial aviation safety, several programs and initiatives were instrumental in reaching last year’s high level of aviation safety.  The Runway Safety Program helped reduce the number of high-risk runway incursions significantly, which in turn lessened the risk of collisions.  Runway incursions declined from 407 in FY 2001 to 339 in FY 2002 due to our aggressive actions to reduce these incidents, and the number of high risk  incursions fell from 53 in FY 2001 to 37.  The Airport Movement Area Safety System (AMASS), now operational at 31 major airports, has been officially credited with saves at San Francisco, Boston, and Detroit.

Our Safer Skies initiative, a joint government and industry effort to reduce commercial fatal accidents by 80% by 2007, made significant progress in addressing a number of factors that cause air carrier accidents.  I am pleased to say that we are on track to accomplish this goal.

The Air Transportation Oversight System (ATOS) is another tool to increase air travel safety and, like Safer Skies, is targeted for increased funding in the President’s Budget.  Under ATOS, in addition to comparing carriers’ performance to all the requirements of our regulations, aviation safety inspectors evaluate air carrier systems that impact safety.  Using ATOS, we have identified weaknesses in air carrier programs and made sure that the carrier took corrective actions.

In FY 2002, the FAA research program focused on key areas to reduce the size, weight and complexity of fuel tank inerting system designs.  We developed a simple system to inert the critical fuel tanks (heated center tanks) in transport airplanes.  The system has virtually no moving parts, resulting in high reliability, low installation weight, and low operating costs.  The FAA’s R&D program and the sharing of the data and system design have helped the industry, including the Boeing Company pursue inerting systems for the transport airplane fleet.  The availability of a practical inerting system provides for a balanced approach of ignition prevention and flammability reduction.  In FY 2004, the research program will focus on high priority safety projects.

We have also strengthened our international safety focus.  We are working  with the International Civil Aviation Organization (ICAO), as well as other members of the international aviation community, to strengthen and further aviation safety.  For example, ICAO and the Joint Aviation Authorities are both involved in the Commercial Aviation Safety Team (CAST), the commercial aviation side of Safer Skies.  FAA also initiated the Global Aviation Information Network (GAIN), a program that promotes the global collection and sharing of safety information.

Though progress has been made, we agree with the Inspector General that more can be accomplished.  We will continue to build upon our 2002 successes.

Security

Since the events of September 11, the focus of Congress and the American people has been on security, and understandably so.  You and your colleagues should be applauded, along with TSA, on your joint efforts to improve aviation security.  By federalizing baggage screeners, ensuring that all checked baggage is screened, and expanding the federal air marshal program, your efforts have made air travel much more secure.

The FAA has played an important role by providing resources and in successfully transitioning our former security programs to TSA.  And we continue to work closely with TSA to assure that our safety programs are interrelated and coordinated with their security programs—without redundancy and complications.  We look forward to the healthy continuation of our partnership to restore the faith of the American people in aviation.

The President’s Budget requests $198 million to secure FAA facilities and electronic systems.  This includes $145 million in Operations to fund internal FAA security, including securing our many information systems and background checks of staff.  Internal security is not a new activity, but was temporarily transferred to TSA in the FY 2003 budget.  Fully funding the President’s Budget request would also provide 26 new controllers to support the North American Air Defense command and its expanded airspace security programs.

Capacity Building

While safety remains our first concern, we must also remain committed to expanding capacity throughout the aviation system—in the air and on the ground.   While demand for passenger travel is down, it will return. The   FAA must be ready for this recovery.  Now is the time to focus on increasing airport capacity, while air traffic is temporarily reduced.  Both the President’s Executive Order on environmental streamlining and the $3.4 billion investment included in the budget for the AIP program demonstrate the Administration’s commitment to expanding capacity.  With this level of funding, coupled with some structural changes in AIP formulas, the Administration will be able to better target projects of national significance that provide the greatest system benefit and, at the same time, provide additional funding to airports that rely most on Federal assistance. 

Even after September 11, FAA’s Operational Evolution Plan (OEP) remains fundamentally sound--- with a planned 31 percent increase in capacity by 2010.  In response to the costly, frustrating, and unacceptable delays that plagued the system in the summers of 1999 and 2000, FAA made needed changes, such as identifying and addressing choke points in the system and developing and refining regular communications between the airlines and the FAA Command Center to deal with daily problems in the system.

The User Request Evaluation Tool (URET) gives controllers the ability to approve more direct routes and is saving airlines time and fuel.  With this tool everyone wins.  We’re also seeing terrific results from the Traffic Management Adviser (TMA), which makes more efficient use of our busiest airports. 

We believe that new runways added at the right airports are the single most effective way to increase capacity.  Thus, FAA’s OEP tracks 12 runways scheduled for completion in the next 10 years.  During calendar years 2003 and 2004, Denver, Houston, Miami, and Orlando airports are expected to complete runway projects.

The importance of investing in airport infrastructure cannot be discussed only in terms of alleviating a congestion problem at a specific location.  These investments provide relief to the entire air system.  The economy relies on aviation to move people and products, and aviation relies on an efficient NAS to accommodate the capacity demands placed upon it.   We must all work together—Congress, Federal, state and local governments, and industry stakeholders—to ensure that the future does not catch us unprepared for the return of air traffic to pre-September 11 levels and higher.  Future generations depend upon us.

A Safer, Simpler, Smarter and More Business-Like FAA

In my tenure as Administrator, it has become apparent that FAA’s operational costs must be brought under control.  Since any future growth must be manageable, our decisions must be made in an informed manner.  Just as our safety decisions should be driven by data, so should all our management decisions.  Consequently, we must accelerate our efforts to set up our new financial system, DELPHI, and complete the implementation of our Cost Accounting System (CAS) and Labor Distribution Reporting (LDR) initiative, and use these tools to drive analysis toward better decisions.

We will improve our cost accounting and acquisition processes, and we will become a performance-based organization.  Currently, FAA has implemented cost accounting in two lines of business and several support organizations.  And while we track 80 percent of our costs on a monthly basis, we still have a lot of work to do.

As part of our cost accounting system, we are implementing a labor distribution system in air traffic services called Cru-X, to account for and distribute labor costs.  Our air traffic controller workforce will use this data to better assess their workload and performance.  Recently, the Inspector General noted that we have additional work to do on internal controls related to this system.  I am committed to making this change, and to assuring  the integrity of our cost information.  With budget shortfalls and depleting trust fund revenues, we must be diligent stewards of the public’s funds.

Though we have made great strides, there is still much to be done.  FAA received another unqualified or “clean” audit opinion on our FY 2002 Consolidated Financial Systems.  I am proud to say that this is the second year in a row that the Agency has received such an opinion.  This gives us the firm foundation that we need to implement DELPHI effectively and to continue to build our cost accounting system.

The Agency has worked hard to implement a performance based pay system.   Approximately 36 percent of our employees are currently under the system—a system that links organizational goals with individual performance goals at every level.  We must fully embrace a new way of thinking: pay equals performance.  I pledge to you my full commitment to implementing such a system FAA-wide.

Conclusion

To ensure that FAA moves forward in all these areas, one of my top priorities is to provide consistency and predictability in the way FAA works with industry.  I do not want any variations in FAA policy or practice in the regions or field offices.  I want our industry partners in the United States and around the world to know what they can expect and count on when dealing with the FAA.  The future of aviation is dependent upon all of us leveraging our reduced resources in support of the common goal: a safe and efficient aviation system for our children and generations to follow.

This year marks the centennial of the Wright Brothers’ historic flight at Kitty Hawk.  When you look back on those early days of aviation and compare how dangerous air travel was to its safety record of today, it is easy to congratulate ourselves and feel content with how far we’ve come.  Yet, our pride should not give way to complacency.  We must continue to set and work to achieve goals on safety, capacity and efficiency.  Though we will face countless obstacles and difficult decisions, we must draw upon the strength and courage of great aviation pioneers, such as Lindbergh and Earhart, who set difficult goals and attained them.  I am proud to take part in the future of aviation, and I stand ready to work with you, as together we enter the second century of flight.  Thank you.

This concludes my prepared statement.  I am happy to answer your questions at this time.