Remarks as Prepared for Delivery

Thanks, Paul [Rinaldi]. I want to thank you and Trish for your leadership, as we deal with the challenges with respect to the sequester. We appreciate the strong partnership we have with NATCA and I very much look forward to continuing to work together in the days and months, and years ahead.

I also want to acknowledge and thank everyone here for the great job that you do. NATCA represents many of our employees. Its not just air traffic controllers. Its architects and engineers, as well as staff support, technical, and flight procedure specialists. Due to your efforts, and those of your colleagues throughout the agency, we at the FAA can proudly say we run the safest, most efficient air traffic system in the world. Our intention is to keep it that way.

To do so, Ive stressed three priorities for the FAA. Youve heard me talk about them. The first is to make aviation safer and smarter. Were doing it through a more sophisticated safety data and analysis process. Because of your ATSAP reports, weve made nearly 200 safety corrections to the system since the program began five years ago.

Through voluntary safety reporting, along with automated data gathering toolslike CEDAR, weve collected close to a million safety-related reports from all sources.

Now were exchanging information with the airlines and the National Transportation Safety Board through the ASIAS program. Through the Confidential Information Sharing Program, or CISP, weve already exchanged over 8,700 safety reports with 12 airline partners. Through these partnerships with labor and industry, we will continue to identify, and more importantly, fix more safety issues than any single program could.

Because of these efforts, and many others, we took home this years prestigious IHS Janes ATC Award for our proactive safety management system. Our win shows how far weve come in reaching the next level of safety and shows why we play a lead role in global aviation.

The second priority youve heard me talk about is to accelerate the benefits of technology into the public domain. And the third priority is to empower you, our employees. You know the system best and we need your full engagement.

These last two areas have gone hand in hand when it comes to air traffic modernization. Through collaboration with all of you at NATCA, and with your subject matter expertise, weve made great progress with the implementation of ERAM and those lessons learned are being applied to TAMR as well.Were also making great progress with Performance-based Navigation procedures and other programs as part of our transition to NextGen.

Take ERAM. Weve benefited by having a national user team led by a labor and management counterpart from each of our en route centers. And through the ERAM Steering Committee meetings, centers that have successfully deployed ERAM have passed on the lessons learned to the centers whose deployments are coming up. Personally, I think its a great process, and with it, weve come a long way in the past 16 months. To date, we have 11 out of 20 en route centers using ERAM on a daily basis, and another five have reached initial operating capability.

Were also seeing the benefits of FAA-NATCA teamwork in our metroplex initiatives, through which were making better use of congested airspace around the nations busiest metropolitan areas, reducing fuel consumption and lessening aviations carbon footprint on the environment.

For example, last August, flights approaching the Washington DC area started using satellite routes and immediately began saving fuel and emissions. For the airlines, these new routes will save $2.3 million in fuel costs in the first year of operation. We estimate that about 60,000 flights are using these new procedures into Dulles each year. At National, about 57,000 flights are flying the new routes each year.

And through Performance Based Navigation, were deconflicting traffic at busy adjacent airports like Chicagos OHare and Midway. Over the past two years, weve made better use of this congested airspace by publishing a satellite-based procedure used by RNP-equipped aircraft when theyre flying into Midway. This procedure has allowed OHare to improve its arrival rate by eight to 12 aircraft per hour when the ceilings are low. Thats huge. And aircraft flying into Midway travel fewer miles and save fuel, also very important.

Were also continuing to make progress with our Data Communications trials in Memphis and Newark airports. As part of the Memphis trial, weve moved from using the tool for cleared as filed procedures to processing amended routes for flights. By sending and receive digital instructions to and from pilots, well be able to increase overall system efficiency, while reducing the likelihood of hearback and readback errors.

These are just some examples of how the collaborative process is helping to implement NextGen. And how NextGen is helping to deliver more on-time flights, reduce fuel burn and reduce greenhouse gas emissions.

This is an approach that works. And when you have the kind of professional and constructive relationship we have, you need to keep it going. Im personally very committed to it.

But as you all know, things arent perfect when we look to the future. The sequester poses a major challenge to the entire agency, including to the collaborative efforts that have been so instrumental to our modernization. It challenges our effort to deliver greater benefits to the flying public as soon as we would like.

As air traffic delays mounted last month, the nation saw exactly why the sequester, as designed, is flawed public policy and Congress decided to give us the financial flexibility to cancel the furloughs for the remainder of the fiscal year. With this flexibility, were also able to keep the 149 low activity towers open through September 30. And were putting $10 million towards NextGen, to reduce cuts and delays in core programs; and $11 million to maintain equipment and infrastructure that is so necessary for the system.

But the fix is just a Band-Aid. It only lasts until the end of the fiscal year. It doesnt address the long term fiscal challenge we have. Although the furloughs have been cancelled, the sequester continues and we still have to cut $637 million. Yes, we were able to transfer $253 million from a source previously off limits, the airport grant program. But we still have to cut $384 million from other areas by September 30. This means we have to maintain cuts in areas like staffing, hiring, awards, contracts, training, and travel.

Weve also cut our spare parts inventory, which may increase restoration time during outages and reduce system efficiency. We may have to postpone technology and procedural deployments that were slated for completion this year. And with the Academy shut down, were not conducting trainings and getting people certified to maintain and operate new technologies.

Looking ahead to FY2014, the budget situation is still very uncertain. President Obama has proposed a workable solution to our nations budget challenge and the FAAs 2014 budget request of $15.6 billion is part of that. This budget request supports our critical safety programs, modernizes our aviation infrastructure, and strikes a balance between maintaining current infrastructure while deploying key NextGen programs to support the growth and changes in aviation. It does all this at funding levels that are $351 million lower than FY 2012. This is a 2.2 percent decrease, which is part of the Presidents effort to reduce the deficit.

Whats going to happen between now and the first of October? We dont know. Congress has taken care of this situation until the end of the fiscal year, but two more things have to be dealt with. First, unless the sequester is permanently fixed, it will last for ten years. Congress must cancel it and give us the funding certainty that will enable us to properly plan our future activities as an agency.

Second, we need an appropriations act for FY14. Weve been running on a continuing resolution for FY13. Under this situation, its hard to have a thoughtful discussion about how to move forward. Unless all of these things are dealt with, were going to be dealing with a very uncertain environment.

Against this backdrop, I want to thank everyone for their patience and professionalism as we continue to deal with what is an extremely difficult fiscal issue. I hope the sequester is resolved as quickly as possible. If it remains in effect, the FAA may be required to cut even more next year than we did this year. While we can hope for the best, because of the financial uncertainty, we have to plan for the worst. As you and I both know, thats not a sustainable course of action and its no way to run a government. In either case, the FAA remains committed to working closely with NATCA as we face the challenges ahead.

Thank you, George (Nield). It is a pleasure to be here to speak at todays event.

Commercial space transportation is an important, and growing, part of our aviation system. And, the innovation seen in this industry today parallels the challenges, imagination and courage of the early pioneers of flight over 100 years ago.

Space transportation has come a long way since John F. Kennedy first noted more than 50 years ago that the United States was not built by those who waited and rested and wished to look behind them. This country was conquered by those who moved forward, and so will space. Exploration and travel into space has certainly come a long way since those early days.

The partnership we have government and industry working together plays a significant part in this forward motion. This cooperation allows us to hear one anothers viewpoints, but also to outline any challenges we may foresee. Putting these issues out in the open helps to move us forward.

And, the impressive development in space transportation is due in large part to the efforts of many in this room.
I would like to take a moment to recognize a few who have made a big difference.

First, I would like to thank former COMSTAC Chair, Will Trafton. As many of you know, Will served as COMSTAC chair from 2007 until last year. As chair, he pushed the committee forward as a relevant and important voice for industry on how to regulate commercial space transportation. For your leadership and service, we would like to thank you, Will.

I would also like to present our thanks to former COMSTAC Vice Chair, Chris Kunstadter. Chris served as the Vice Chair from 2009 until last year, and continues to serve as Chairman of the Business/Legal Working Group. He has provided outstanding leadership for the committee. Thank you, Chris, for your excellent guidance and advice.

Today, the growth in commercial space transportation is more and more noticeable to the American public. Last year, SpaceX completed its Commercial Orbital Transportation Services demonstration mission by launching and berthing its cargo capsule to the International Space Station. And then it safely returned with cargo intact back to Earth. This was the first time that private industry resupplied the Space Station. Since that time, SpaceX has completed two more cargo missions.

Orbital Sciences also demonstrated its launch capabilities last month for the same service, taking off from the Mid-Atlantic Regional Spaceport on Wallops Island, Virginia.

The innovations dont stop there. SpaceX has already started testing a new design to create the worlds first fully reusable launch vehicle. In Texas, SpaceX has been operating under an experimental permit from the FAA to use the Grasshopper rocket to conduct a launch and then return to a vertical position on the launch pad. These innovations might further reduce the cost of launches and create new commercial space industry opportunities.

The goal of lowering the cost for access to space is noble, not only for business, but also for science and the accessibility of space to more people. Virgin Galactic has begun powered test flights of its Space Ship Two design, in an effort to begin flying tourists from Spaceport America in New Mexico.

As with space itself, the possibilities are endless, and they are not limited to a few locations or a handful of companies. The FAA has licensed spaceports in Mojave, California, in Kodiak, Alaska, and in several other locations. There is also interest in developing other launch facilities in Florida, Texas, and Colorado, to name just a few.

XCOR Aerospace has begun advertising the capability of its Lynx spacecraft to take people and payloads on a half-hour suborbital flight. Boeing, Sierra Nevada, and SpaceX continue to work on their own designs for a commercial crew vehicle to take astronauts to the International Space Station. And Bigelow Aerospace is working toward giving spaceflight participants new destinations in orbit. These are all impressive developments.

While we have seen many developments in space transportation, a challenging road remains ahead for the FAA. We all know that we are in a very tough fiscal situation. Congress has given us the ability to move funds around to end furloughs of FAA employees, but we still have to meet significant mandated sequester cuts. We have instituted a hiring freeze and significantly cut travel, and we continue to reduce contract expenses.

The FAA Office of Commercial Space Transportation continues to experience a significant increase in the number of requests and applications for new licenses or permits. However, we have notified all of our stakeholders that actions could be delayed due to the effects of the sequester. Despite these major challenges, we remain focused on our mission at hand, which is safety.

Our activity shows our commitment to space transportation. There have been a total of over 200 commercial launches licensed since 1989 with no loss of life or serious injury or property damage to the public. The level of launch activity is increasing rapidly. In fiscal year 2012, the total number of licensed and permitted launches was three, and in fiscal year 2013, there have already been 13 licensed and permitted launches.

As this business continues to grow, we face important decisions. One of our main tasks will be the continued safe integration of commercial space operations into our airspace. Usable airspace is a limited resource, and safety considerations require the careful coordination of aviation and space activity.

We will continue to work with the broader community on commercial space transportation activity in our airspace. And, well continue to work with other nations on the potential hazards of space launches and reentries. We will also continue to manage the hazards to aircraft from reentering space debris.

We will accomplish these goals by not only working with industry partners, but also with other government agencies. |
This past year, the FAA signed a Memorandum of Understanding with NASA to cover the future licensing of commercial crew vehicles to the International Space Station. Under the terms of the MOU, the FAA will license the launch for the safety of the public, while NASA will ensure human safety on board and mission assurance.

The FAA itself cannot propose any new regulations on human spaceflight safety until 2015. However, thanks to you here at COMSTAC, we continue to prepare for the future together in multiple ways. And, you continue to inform us of potential issues that we will need to address.

In December, Congress passed a one year extension to the public-private risk sharing regime that is generally referred to as space launch indemnification. In a license, the FAA requires that a launch provider purchase insurance to cover the maximum probable loss that could result from a launch failure. In the event that third party losses exceed that, the government would seek to appropriate funds for the payment of these claims.

Although there have been no claims involving a request for Congressionally appropriated funds, the potential liability exposure of launch operators far exceeds the available private insurance coverage.

We understand that a one-year extension is challenging for industry, as it does not provide the needed long-term certainty gained from an extension of three, four, or more years. We continue to be engaged in conversations with Congress regarding the length of this indemnity clause.

Working together, we will continue to address matters of concern. This open dialogue serves us well. When industry and government join together at events like todays meeting, we are able to move forward.

Watching the space transportation industry grow is truly remarkable. And, you here in this room are at the forefront of this industrys success. We ultimately have the same goal the safety of flight and the successful integration of innovative space transportation into our airspace.

I appreciate you inviting me to be here today, and Id be happy to take any questions.

Thank you.

Thank you, Chris [Lehman], and thank you all for coming.

We live in a day and age where its possible to get about anything instantly. There is a generation coming up thats really unaccustomed to the concept of waiting. Their yardstick is whether or not a page loads in 3 seconds or less. There was a time not that long ago when you listened to the radio in my case, WNEW in New York hoping against hope that maybe, just maybe, your favorite song would be on next.

Thats the stuff of ancient history. Now, theres no waiting. Your favorite song doesnt have to be next. With an Pod or Sirius XM or your cell phone, your favorite song is always right there, right now. And you can hear it 10 times in a row. You can stream your favorite movie right to this very room, right here, right now. So those of you with iPads I know what youre doing.

Technology has brought us perhaps pushed and maybe even pulled us into what we all used to call the Future. In our cars, were starting to think about our blind spot less and less, because the driver side mirror is checking it for us. When youre backing up, a camera pops up in the rearview mirror, and an audible beep grows louder and louder as that car in the spot behind you grows closer and closer.

It would be foolish not to acknowledge that technology has made our lives easier and better but easier and better shouldnt suggest perfect. Its easy to develop a mindset and this is something we all do to think that technology is or could be the answer to all our problems. But if you read through enough NTSB accident reports, you see pretty quickly that technology is not the answer to every problem. But to be fair, Im not suggesting that technology is the root cause of all evil, either.

Its just this shift to relying solely on technology and the risk that comes with it is something that falls in everyones lap each and every one of us all of us. In way too many parts of our lives, weve started to rely on technology to tell us what to do and when to do it. Its an all-too-comfortable slide to the place where we start thinking that technology will somehow identify every problem before it happens. And of course, the danger in all of this is that we begin to think that we must rely on technology and only on technology to tell us what to do to fix the problem. And then we expect life to continue uninterrupted.

I think we can all agree its not that simple. Not only is that not how it works, we know that it cant work that way. By thinking that technology has all the answers or that technology is the only way to get the answer we may have gotten further away from the basics than we realize. If were not careful, we will disengage the most important piece of technology in our toolkit our brains and thats not good. There is no place in safety for a set-it-and-forget-it mentality.

We see examples of the need for the human in the loop in too many accidents and incidents. Failure to execute the proper techniques for stall recovery. Failure to effectuate crew resource management. A disregard for airmanship. A lack of professionalism. All of these are what happen when you take your eye off the ball. Accident causes are like dominos. When one or two or three of them fall, its not surprising to find that catastrophe is looking over your shoulder.

Other groups have faced this issue, and they handle it by going back to the basics. John Wooden won 10 NCAA championships at UCLA in 12 years. But every year, he started his practices by teaching players the proper way to tie their sneakers. Vince Lombardi would hold up a football and yell, This is why were here. Before they hit a single ball, pro golfers will walk the entire course. The military calls it basic training. The NFL calls it training camp.

From where I stand and in this room, I am very clearly not standing alone what we all need to focus on is the very thing that brings us all to Orlando: training. Proper, efficient and professional training is what creates reflex. Somebody once asked Michael Jordan about how he felt after hitting a long jumper at the buzzer. He said, I take that shot 30 times a day in practice.

It needs to be the same way for every one of us in this business. Given the safety record that the men and women in this room have put together, it happens well over 99 percent of the time. Thats because of training and professionalism. But as great a record as that is, we cant be satisfied. The small increment thats between where we are now and a perfect score needs a double dose of training and an even mix of professionalism.

This conference puts a very bright spotlight on training, and that is as it should be. I was very pleased to see the agenda with separate segments for maintenance, cabin crew and pilots. Sessions about e-learning and event tracking, pilot supply and demand, how to create a training culture. These are bread and butter issues that weve got to talk about, regardless of where we are in this industry.

You know when we were watching the miracle on the Hudson, Captain Sullenberger got a ton of credit for pulling off a masterful exhibition of what it means to be a pilot in command. But when I looked at the passengers standing on those wings, I could see a few other heroes among them the cabin crew. Flight attendants are safety professionals. When something goes wrong, we rely on them to follow through on their training. The Captain took that plane safely into the water, but the crew made the difference once it touched down. Accidents are more survivable because of the training weve put in to make them that way. And flight attendants are key part of that equation. Thats why sessions like training for challenges in the cabin or training solutions from lessons learned are so important.

And our maintenance colleagues are key contributors to our safety record. But heres an area where change is a constant, so sessions like MAPS to APS or industry composite training requirements open our minds to what the future might be.

So with all that said its not only about the pilot community its all of us. At each stage of the game, you have a personal responsibility to make sure youre trained and ready. The mechanics, the flight attendants, the dispatchers, and the pilots anyone who touches the equipment before, during or after takeoff and touchdown.

Youre all here because you believe it too. The training professionals in the room will tell us that when you train, when you prepare again and again and again, you create muscle memory and you create those neural pathways we call habits. Training creates habits habits become reflex, and this kind of reflex is at the very root of the safety record weve got today. Over the years, we developed and followed things like check lists. Because we know thats an effective way to make sure we dot every eye and cross every tee. This is a business that doesnt just expect that, it demands it.

But how does each generation learn our expectation and demands? In a just culture, safety has to be a shared responsibility. Mistakes arent covered up: theyre identified, they addressed and they are fixed. Youve heard a lot about mentoring over the last couple of years, and Im a big believer in that approach. Lets face it: the more years you have on the job, the more youve experienced. Been there, done that. That phrase isnt to be taken lightly. The smart young ones among us really need to push us to share our secrets. Dont just learn the ropes, master the ropes. Talk to the men and women with years of experience under their belts, and learn that the tricks of the trade arent really tricks at all. Theres a right way and a wrong way, and to make it in this business, youve got to know the difference between the two.

So my challenge goes to two groups of people. To the new kids on the block, learn what you can while you can. When you see a craftsman, watch, listen and learn. Ask questions. Find out the how and more importantly, the why. You are working with living, breathing, walking, talking examples of how to get it done. And they enjoy nothing more than talking about their craft. Theres nothing quite like the opportunity to learn from the person who actually wrote the book youre trying to read.

To those whove been around the block a time or two, Im making a personal plea to ask you to become a mentor. If youre not mentoring, youre cheating the next generation of the nuggets that make this system the safest in the history of the world. We are safe because you are safe. Im just asking you to teach the next generation what you did to lay that foundation of safety.

I think this all comes down to something called aviation citizenship. Having the right attitude is as important as having the right training. Aviation citizenship involves recognizing your limitations, knowing when youre fatigued. You have to have an awareness of self especially in the human-machine environment. As a business, weve got to know our limits and stay there. What we cant have is people who just arent paying attention. People too eager to check the box rather than check to see whats inside a box. Complacency kills, its that simple. As professionals, we cant let it happen.

We know, for example, that training has a shelf life. If too much time passes between intervals, youre off your game. Mistakes are sure to follow the complacency thats bound to set in. And theres also the potential to fall into thinking that advances in technology will shore up the gap in training. That kind of thinking isnt just wrong, its potentially fatal.

While automation makes us safer, and its a tremendous tool for safety, it is not now nor do I ever think it will be a substitute for technical training. And technical training is no substitute for the situational awareness you need to carry with you on the job. Not just in the cockpit, but in the hangar, in the cabin, in the galley, under the cowling. And we can help each other not in a punitive way but in the spirit of making sure that everybody is keeping an eye out for everyone else. A just culture allows this, and it helps us to better understand the risks we face.

In closing, let me underscore a point that you will hear many times throughout these sessions: Safety needs to be the bottom line at every turn, in everything we do. As professionals, we know that there are no shortcuts, no quick fixes especially when it comes to safety. Its only through the constant and continuous pursuit of professionalism the very thing we need to make safety a reflex that gets us there and keeps us there. Enjoy WATS 2013. Thank you.

Good morning everyone. Thank you, Sarah (MacLeod, Executive Director of ARSA).

It is a pleasure to be here with you today for what sounds to have been a very productive symposium. I want to take a moment to thank all of you for the vital work you do and for your professionalism. I often talk about the importance of doing the right thing, even when no one is looking. America has a very high standard for the aviation community and expects perfection from the aviation industry every hour, every day, all year long.

From the largest repair station down to the line mechanic, it all rests on our trust in the individual. The technicians have the knowledge and the tools. And while the FAA writes the rules, it really does come down to each one of you. We cannot regulate personal responsibility and pride. That is something that has to come from within each individual. ARSA members are experts in maintenance and design and production.

And there is a real professional satisfaction and personal pride in being part of aviation. I hope you realize that you are all part of something very special.

The FAAs number one priority is safety. Its our mission, and we focus on it 24 hours a day.

We have had a lot of focus on the Boeing 787. We are continuing the review of the critical systems of the aircraft, including the design, manufacture and assembly of the Dreamliner.

Our certification team has worked more than 3,600 hours to support the safe return of this aircraft to service. As part of this review, last week we approved Boeings certification plan for a redesigned battery system. This is the first step in the process to evaluate the 787s return to flight.

What the plan includes is a redesign of the internal battery components to minimize a short circuit within the battery and has insulated the battery cells to prevent propagation from one cell to another. There are a total of eight cells in the battery. They also have added a robust battery containment and venting system to prevent a problem in the battery from spreading to the aircraft.

The certification plan includes a variety of ground tests and reviews that will enable Boeing to demonstrate whether the proposed fix is going to work as designed, and whether it complies with our regulations. We wont allow the plane to return to service unless were satisfied that the new design ensures the safety of the aircraft and its passengers.

Certification of the 787, as with certification of any new aircraft, will continue to be a collaborative effort between the FAA and manufacturers.

Aviation, from its very beginning, has stretched technological boundaries. For more than five decades, the FAA has compiled a proven track record of safely introducing new technology and new aircraft, and that is really a credit to the aviation industry.

As we continue to do this, I want to make one thing crystal clear. The FAA takes very seriously its responsibility to establish aircraft safety standards and certify new products and technologies. When we have a concern, we will analyze it until we are satisfied.

Some have asked the question whether the FAA has the expertise needed to oversee the Dreamliners cutting edge technology. The answer is yes, we have the ability to establish rigorous safety standards and to make sure that aircraft meet them. The best way to do this is to bring together the best minds and technical experts in aviation to work on understanding how these new systems work and how to establish and meet appropriate safety standards.

The way to enhance safety is to keep the lines of communication open between business and government to foster the ability and willingness to share information about challenges we might be facing. We want to create an atmosphere where people feel they can share what they know, all in the pursuit of maintaining the highest level of safety. Thats why were all here.

We all want the same outcome. We want to harness advances in technology to produce safe aircraft. We will never lose sight of our respective roles, but that does not mean that there is not a seat at the table for bright minds from industry to help inform the best way to navigate the complex technological issues we encounter. It would be short-sighted to overlook anyones valuable expertise.

In addition to certification, we are also benefiting greatly from the sharing of ideas on aviation rulemaking committees. You are helping us to solve problems and I want to thank members of ARSA and Sarah who has played a big role in this for your service on these aviation rulemaking committees.

These include the ARC on Consistency in Regulatory Interpretation; the ARC on airworthiness directives and the Safety Management Systems ARC. We convene these committees to work with the best minds in industry and to create the best policies to guide us in the future. So again, thank you for your involvement.

The best way to enhance safety across the board is to enhance the safety culture of an organization, and that is what we have been doing at the FAA. Part of this effort involves self-reporting by our own employees on safety issues. We are making a cultural shift inside the agency for more transparency and dialogue.

We have put programs in place for air traffic controllers and aviation technicians to report a problem, even a mistake they might have made and not fear retribution. The goal is to encourage people to share information that we would not normally get in order to make the system even safer. This is a key element to taking a smarter, risk-based approach to safety.

We are taking many other actions to enhance safety across the board including promoting safety management systems and sharing more information between industry and the FAA. By analyzing data, we are better able to identify trends and hazards that exist all across the system and mitigate issues before something happens.

Our goal at the FAA is to take aviation to the next level of safety and to leverage technology to make air travel more efficient and much more sustainable.

As you all know, we are trying to do this now in a very challenging fiscal environment. The sequester is requiring the FAA to make significant cuts in services and investments.

These cuts will impact air traffic control services, our implementation of NextGen, and our certification and safety services.

Because we are in an especially difficult budget environment right now, I do want to set realistic expectations for certification and oversight efforts under the sequester.

While we will manage them as best we can, there will be impacts.

Our aviation safety inspectors will have to focus their attention on the most pressing priorities and devote their time to overseeing current activities to ensure continued safety. We are not in a position to take on a lot of new projects.

The sequester requires us to cut more than $600 million from the FAAs budget. We are looking at all options to reduce costs we have implemented a hiring freeze, we are cutting contracts, and were reducing travel and other items not related to day-to-day operations.

But, to reach the large figure we need to cut, we have sent notices to 47,000 FAA employees letting them know that they could be furloughed up to one day every two weeks. Furloughs will begin on April 21, and are expected to continue for the remainder of the fiscal year, which runs until Sept. 30th. Unlike government shutdowns that we have seen before, the furloughs include critical personnel such as air traffic controllers and safety inspectors.

This also means we will have to cut back on preventative maintenance, meaning that critical airfield equipment might not be repaired as quickly. This could lead to delays.

Safety remains the FAAs top priority, and we will only allow the amount of air traffic we can handle safely to take off and land. This translates into probable delays for travelers.

Flights to major cities like New York, Chicago, and San Francisco could experience delays up to 90 minutes during peak hours. The reason for this is because controllers will be working fewer hours, and there will be limited flexibility in shifting or reassigning controllers to other duties. Delays in those major airports will ripple across the country.

We are aware that these service reductions will adversely affect commercial, corporate, and general aviation operators. And we also expect that airlines will consider changes to their schedules, or even cancel flights as they realize the effects of the furloughs.

The FAA has notified 189 airports across the country with federal contract towers that their facilities could be closed. These towers, when taken together collectively, handle less than 3 percent of commercial operations nationally and less than 1 percent of passengers. We expect to make a final decision today on whether any of these towers should remain open. We are taking into consideration whether closing them would adversely affect the national interest.

It is my hope, and the hope of everyone at the FAA and the Department of Transportation that our leaders can work together to rally around the improvements that we need for our air transportation system.

We all know that its important for us to work together to protect the great contribution that civil aviation makes to our economy. Aviation is our largest export industry. It strengthens our balance of trade. It adds $1.3 trillion to the economy and provides 10 million jobs.

As we move forward in uncertain times, I think we all need to remember that we share the common bond of aviation. We may face budget and other challenges, but we are all part of a very special and historic time in aviation. Many of you have heard me say before that we are making critical decisions over the next several years that will affect the air transportation system in this country for decades to come.

Whether you are a mechanic or whether you run a repair station; whether you design or produce aircraft, I look forward to working with you on our common goal to ensure that America continues to operate the largest and safest aviation system in the world. The coming months will be challenging, but well get through them together.

Thank you, Todd (Todd Hauptli), for that introduction. It is great to be here today, and I appreciate the invitation to share my views on airports and their important contribution to the economy.

Airports are the gateways to locations near and far. It is at the airport where we greet arriving family members, or depart for that important business trip. It is where we experience all facets of our global village: vacationers, business travelers, students departing to study abroad, or people traveling to far off lands to visit relatives. And airports are the place where so many components of aviation converge.

We all know the importance of aviation to America and the global economy. Airports big and small are part of this economic engine they contribute to local, national, and global economies alike. Aviation and airports fuel jobs and trade.

Our goal at the FAA is to take aviation to the next level of safety and to leverage technology to make air travel more efficient and more sustainable.

We are trying to do this now in a very challenging fiscal environment. The sequester is requiring the FAA to make significant cuts in services and investments. These cuts will impact air traffic control services, NextGen implementation, and our certification and safety services.

The sequester requires us to cut more than $600 million from the FAAs budget. We are looking at all options to reduce costs we have implemented a hiring freeze, we are cutting contracts, and were reducing travel and other items not related to day-to-day operations.

But, to reach the large figure we need to cut, we have sent notices to 47,000 FAA employees letting them know that they may be furloughed up to one day every two weeks. Furloughs will begin on April 21, and are expected to continue for the remainder of the fiscal year. Unlike government shutdowns that we have seen before, the furloughs include critical personnel such as air traffic controllers and safety inspectors. We are also cutting back on preventative maintenance, meaning that critical airfield equipment might not be repaired as quickly. This could lead to delays.

Safety remains the FAAs top priority, and we will only allow the amount of air traffic we can handle safely to take off and land. This translates into probable delays for travelers.

Flights to major cities like New York, Chicago, and San Francisco could experience delays up to 90 minutes during peak hours. This is because we will have fewer controllers on staff, and there will be limited flexibility in shifting or reassigning controllers to other duties. Delays in those major airports will ripple across the country.

We are aware that these service reductions will adversely affect commercial, corporate, and general aviation operators. We also expect that airlines will consider changes to their schedules and cancel flights as they realize the effects of these furloughs.

The FAA has notified 189 airports across the country with federal contract towers that their facilities could be closed. These towers handle less than 3 percent of commercial operations nationally, and less than 1 percent of passengers. We expect to make a final decision Friday on whether any of these towers should remain open. We are taking into consideration whether closing them would adversely affect the national interest.

An area that is exempt from the sequester, however, is the Airport Improvement Program and the staff that run the FAAs Office of Airports. This not only includes the AIP grant program staff, but also personnel that manage airport safety standards, improvements, and programs. And now that we have a four-year reauthorization, the AIP has much more predictability and stability.

We fully obligated 100 percent of AIP funds available for grants in fiscal year 2012 to support airport planning and infrastructure projects. That amounted to nearly $3.4 billion dollars for critical investments and upgrades to improve our nations aviation infrastructure. A strong infrastructure is the foundation for healthy commerce and a robust economy.

Over the last four years, the FAA has issued grants totaling more than $14 billion. During that time, airports throughout the United States have successfully completed many development projects. This has included the rehabilitation or extension of runways, taxiways and aprons. Some of these airports have also received grants to enhance runway safety areas, to build and improve airport terminals, and to reduce environmental impacts. These improvements are extremely important to the enhanced safety and efficiency of our entire national airspace, and to meet the demands of growing air travel. They are critical to preserving our airport infrastructure, and for helping expand the benefits of NextGen.

Let me give you some examples of how AIP has contributed to our nations airports. Last year, the FAA awarded $1.3 million in grants for Chicago OHare, Denver and San Francisco International Airports to buy vehicle surveillance equipment that will increase safety by helping to reduce the risk of conflicts between airport vehicles and aircraft.

In another grant, $14 million was given to rehabilitate the main runway at the Tri-Cities Regional Airport in Blountville, Tennessee. And, $2.5 million was awarded to the Raleigh County Memorial Airport in Beckley, West Virginia to relieve congestion on the parking area for transient aircraft. It will also accommodate aircraft that now have to park on taxiways, and it will accommodate current airport users and future growth.

Many other grants are helping us make the changes needed to improve infrastructure and to build NextGen capabilities at airports throughout the U.S.

As we know, NextGen is about creating a more efficient, environmentally sound, and ultimately safer aviation system. It is helping us evolve from the ground-based radar system of today to a satellite-based system of tomorrow.

Automatic Dependent Surveillance-Broadcast, for example, is one of the key developments in NextGen. It is now available in about two thirds of the United States, and in 2014, coverage is expected in all areas currently served by radar. ADS-B transmits the location of aircraft to controllers and other ADS-B equipped aircraft with a faster update rate than radar.

With NextGen, more precise departure and arrival paths will optimize routing and operations, especially for metropolitan areas, and improve access to locations previously challenged by terrestrial-based navigation.

We are also changing the way we handle air traffic in congested metropolitan areas with NextGen. We are working with airports, airlines, air traffic controllers, and other federal agencies to improve air traffic flow around all of the airports in busy metroplexes.

At several airports around the United States, we are using satellite-based procedures that allow aircraft to descend with engines almost idle all the way from cruising altitude to just before landing. This system, called optimized profile descents, is an environmentally friendly procedure that allows an aircraft to reduce engine power as it descends from cruising altitude. These descents save fuel and cut emissions. For example, in Phoenix, these new approaches are reducing environmental impact, and are creating a better passenger experience.

In Atlanta, we are using new NextGen departure routes to improve operations at the worlds busiest airport. Hartsfield-Jackson can clear an additional 10 planes per hour thanks to these improvements. This reduces the amount of time planes wait to take off. In fact, we estimate PBN saved customers 700,000 minutes, or a total of 1.3 years, waiting in line to take off in Atlanta last year.

But under the sequester, arrivals into Atlanta could slow down. Right now, Atlanta can handle triple arrivals, but that ability may be limited in light of air traffic controller furloughs.

Weve also seen dramatic changes at other airports because of NextGen. Under our Greener Skies Over Seattle program, for example, weve partnered with the airport, Boeing, and airlines to reduce the amount of time needed to descend into SEA-TAC. This initiative is saving airlines an average of six minutes per flight. This reduces the amount of fuel used, and ultimately, saves money.

All of these upgrades are happening because of the hard work and great collaboration of many. NextGen requires a strong partnership with all aspects of the aviation industry to evolve our airspace and how it is used. Working with all stakeholders is crucial as we maximize benefits for everyone. And, we will work to minimize the impacts of the sequester on NextGen implementation.

Despite these uncertain times, I am confident in aviations ability to connect the world, and to provide economic benefits to many. Airports are at the center of this activity. They create impressions of our nation for arriving and departing passengers. And, ultimately, they symbolize the rapid advancement in aviation that weve all benefitted from over the last several decades.

Thank you for inviting me here today, and I am happy to answer any questions.

Thank you, Chip (Barclay, CEO of AAAE), for the introduction. It is a pleasure to be here, and I would like to express my gratitude to you and your colleagues at AAAE for hosting and arranging this conference.

We all know the importance of aviation to America and the global economy. Aviation fuels jobs and trade, and it connects us to destinations near and far. The forecast we released today shows that aviation will continue to experience steady, moderate growth. We expect aviation to expand both domestically and internationally over the coming decades.

Our forecast predicts the demand for aviation over the next 20 years, both in terms of volume of operations and the number of passengers expected to fly on U.S. carriers. This is important, because it helps us determine our infrastructure needs.

The aviation industry continues to show resilience even during difficult economic times. Domestic and international activity of U.S. carriers increased by about one percent in 2012. And traffic volume for U.S. carriers is expected to rise by more than 75 percent in the next two decades. We measure this by revenue passenger miles - one passenger paying to travel one mile.

Last year, 737 million people flew on U.S. carriers, and we anticipate that number to hold steady this year. Our future outlook shows continued positive growth. In fact, we can expect roughly 400 million more people flying
20 years from now, an increase equal to more than today's U.S. population. You will hear more details later today about the specific trends, analyses, and estimates in this year's forecast report.

I should note at this point that our forecast is an unconstrained forecast - in other words it does not take into account capacity constraints that may exist in the system. And, unfortunately, some of those constraints are likely to be imposed as a result of the sequester. The forecast assumed that the U.S. fiscal crisis would be resolved.

The sequester was implemented last Friday and the FAA will have to cut $637 million this fiscal year. Almost all of our FAA accounts are involved. Therefore, this will affect nearly all of our employees.

These cuts will need to be distributed proportionately across all budget line items in the affected accounts. This significantly decreases our flexibility in managing the budget reductions. However, the Airport Improvement Program - AIP - is exempt from the sequester. So, the AIP and staff working on it will carry on with business as usual.

As you've heard from Secretary LaHood, we are looking at all options to reduce costs. We have instituted a hiring freeze, and have begun to cut contracts, travel and other items. But, to reach the large figure we need to cut, we have little choice but to make up the rest through furloughing employees. This is not something that we take lightly.

We are sending letters to nearly all of the FAA's 47,000 employees this week, notifying them that they will be furloughed. We anticipate each affected employee could be furloughed for approximately one day every two weeks starting in April until the end of September.

Under a furlough action, controllers would work fewer hours, and flights to major cities like New York,ChicagoandSan Francisco could experience delays up to 90 minutes during peak hours. This will have ripple effects throughout the United States. Budget cuts will also delay preventative maintenance and quick repair of certain equipment.

As we begin implementation of the requirements of the sequester, we are also considering the elimination of midnight shifts at more than 60 air traffic control towers across the U.S. And, we are contemplating the closure of a large number of the 238 air traffic control towers that have fewer than 150,000 total flight operations. The towers on this list also have fewer than 10,000 commercial flight operations per year.

It is my hope, and the hope of everyone at the Department of Transportation that our leaders can work together to rally around the improvements that we need for our nation's air transportation system.

We must keep in mind that this forecast is for the next 20 years. The forecast results show that our world is becoming more and more interconnected every day. New technologies, more open markets, and growing prosperity around the globe have spawned more air travel. The report reflects this. We predict higher growth in flights between the United States and other countries.

We anticipate this continued trend of growth in our international traffic, especially with AsiaandLatin America. In the emerging economies in these regions, there is a growing middle class that has the means for air travel. Many international visitors come to the United States for business, education, and tourism.

This growth in international traffic calls for continued collaboration with our foreign partners. The FAA continues to work closely with other countries and regions as we all develop new technologies, share ideas, and harmonize programs. Not only are we working with our international partners to bridge gaps in technologies, but we are also doing more in the area of safety harmonization and data sharing. For example, under the safety agreement we have with Europe, we are able to better streamline safety oversight between the United States and the European Union.

And, there is consensus from many of our international partners that air traffic modernization is necessary. With the expected growth in the international market, it is especially important to continue on the global path of modernization. We all seek a safe and seamless global aviation system.

It is important that we here in the United States stay the course with NextGen, despite the fiscal challenges. We are moving from an aviation system of ground-based navigation aids to the satellite-based system of tomorrow. This will help us move more air traffic efficiently, while reducing flight times and emissions. We are already seeing the benefits around the country.

With NextGen, more precise departure and arrival paths will optimize routing and operations, especially for congested metropolitan areas.

Increased use of Performance Based Navigation, or PBN, will give aircraft more freedom in the sky to choose more direct and fuel-efficient routes. Not only does PBN give us benefits for domestic flights, it will also make those long international flights more efficient.

In metropolitanWashington, D.C, aircraft are flying new NextGen routes named to honor our troops and commemorate September 11. These direct routes cut flight miles and reduce costly level-offs. We anticipate fuel savings of $2.3 million per year-and even more savings across the country as more users take advantage of NextGen.

And in Seattle, as part of our Greener Skies initiative, airlines are using precision routes to shave four to eight minutes off flight times, providing projected annual savings of more than $13 million.

In Atlanta,we are using new NextGen departure routes to improve operations at the world's busiest airport. Hartsfield-Jackson can clear an additional 10 planes per hour thanks to these invisible improvements to our highways in the sky. This reduces the amount of time planes wait to take off. In fact, we estimate PBN saved customers 700,000 minutes of waiting, or a total of 1.3 years waiting in line to take-off inAtlantalast year.

But under the sequester, arrivals into Atlantacould slow down. Right now, Atlantacan handle triple arrivals, but that ability may be limited in light of air traffic controller furloughs.

NextGen brings more efficient operations in and around major metropolitan areas. This is crucial given that our forecast predicts a higher growth rate at large airports than at medium and small ones. These procedures save millions of gallons of fuel and reduce greenhouse gas emissions. They will also help reduce congestion at our busiest airports throughout the country as the amount of air traffic grows. And, consolidation of carriers may also place extra demand on major airports that are already stretched.

Forecast numbers may change from year-to-year, but the fact remains that we must modernize. The cost of not transforming our system is greater than the cost of the actual upgrades.

Despite these uncertain political times, I am confident that the demand for aviation and its services will continue to grow, and that is why it is critical that we invest smartly. Our world will continue to be evermore interconnected, and aviation will continue to be a pillar of the global economy. NextGen will help us meet the challenges that lie ahead. We are seeing its benefits already, and will continue to do so in the coming years as it becomes an even more integral component of our aviation system.

In closing, let me state the obvious-even without the coming impacts of the sequester over the next few months-the U.S. aviation industry faces a number of challenges and opportunities in the next few years. At the FAA, we recognize the choices we are making today will have impacts for decades to come.

We face some tough choices in our investment and operations of our airspace. Let me assure you that we are committed to working with our stakeholders and employees on how we move forward. It's vital for us to work together to protect the great contribution that civil aviation makes to our nation.

Thank you for inviting me here to speak to you today. I'd be happy to take any questions you may have.

Good morning everyone. Thank you, Marc (Warren), for that kind introduction.

It is a pleasure to be here with you today. I'm not a lawyer, but I am quite at home in the company of lawyers, particularly aviation and space lawyers.

You are a relatively small and distinguished group, and I think there is something remarkable about those who devote themselves to aviation law. You are experts in statutes and rules and regulations, but you also share the common bond of aviation. Many of you are pilots; many of you have experience in government, industry and private practice. You play a critical part in ensuring that our aviation system is safe, properly regulated and efficiently run. And you do it by providing wise counsel to your clients - to airlines, airports, manufacturers, leasing agents, labor unions and many more within the industry.

There is a real professional satisfaction and personal pride in being part of aviation, and I hope you realize that you are all part of something very special.

Our goal at the FAA is to take aviation to the next level of safety and to leverage technology to make air travel more efficient.

A year ago this month, Congress reauthorized the FAA with the goal of restoring the predictability of our funding so that we could continue to work towards these incredibly important goals. After four and a half years of uncertainty and stop-gap measures, this was very welcome. A multi-year reauthorization has given us the ability to plan better - to invest in NextGen and to invest in the future of our air traffic system.

But just one year later, we are again facing fiscal uncertainty and unpredictability. Sequestration is looming, and massive across-the-board budget cuts are set to go into effect just two days from now.

The sequester would jeopardize many of the positive benefits that we sought to create with last year's reauthorization.

It is my hope, and the hope of everyone at the Department of Transportation that our leaders can work together to rally around the improvements that we need for our air transportation system. We hope that we can continue to support the programs that we all acknowledged were so important just a year ago.

Under the sequester, the FAA would have to cut $627 million in this fiscal year. Those cuts would be distributed proportionately across all budget line items in the affected accounts, which significantly decreases our flexibility in managing the budget reductions.

As you've heard from Secretary LaHood, we are currently considering actions that would include furloughing a majority of the FAA's nearly 47,000 employees for approximately one day per pay period until the end of the fiscal year in September. This is not an action we take lightly, and we are looking at all options to reduce costs, including contracts and non-operational expenses-but given the magnitude of the reductions we face, it does not appear possible to avoid these furloughs.

Flights to major cities like New York, Chicago and San Francisco could experience delays in some instances of up to 90 minutes during peak hours, because we will have fewer controllers on staff.

Delays in those major airports will ripple across the country.

Cuts to budgets mean preventative maintenance and quick repair of air traffic equipment might not be possible, which could lead to further delays.

We would need to consider eliminating midnight shifts at more than 60 air traffic control towers across the country. And we would have to consider closing a large number of the 230 air traffic control towers at airports that are less busy - those that have less than 150,000 flight operations per year. This includes airports such as those in Boca Raton, Florida; Joplin, Missouri; Hilton Head, South Carolina and San Marcos, Texas.

Our aviation safety inspectors would have to focus their attention on the most pressing priorities and would devote their time to overseeing current activities to ensure continued safety. They would not be in a position to take on a lot of new projects.

We very much hope that Congress will pass an alternative debt reduction strategy that would eliminate the need for indiscriminate cuts.

Aside from the possible sequester, the FAA does not have a budget for fiscal year 2013. Congress passed a continuing resolution which keeps the government running until March 27 at a rate equal to last year's budget. After March 27, the FAA, and in fact the entire government, would need an approved budget or another continuing resolution to keep operating.

So as you can see, we are in a very challenging fiscal environment. But despite these challenges, we are committed to working towards our goal.

Safety
At the FAA the number one mission is safety, and we are striving to be even smarter about how we enhance safety. We are continually working to gather and share operational data so that we can identify and address potential hazards and mitigate issues before they occur.

Let me say that with regard to the Boeing 787, we are working around the clock to conduct a comprehensive review of the critical systems of the aircraft, including the design, manufacture and assembly of the Dreamliner. As part of that review, we are working closely on a data-driven process to identify the cause of the recent battery issues and the mitigations for them.

Last week, we met with senior executives from Boeing to discuss the status of ongoing work to address the 787 battery issues. We're carefully analyzing Boeing's proposal to address these issues. The safety of the flying public is our top priority and we won't allow the 787 to return to commercial service until we're confident that any proposed solution has addressed the battery failure risks.

More broadly, in the last few years, we have accomplished a lot in our continuous effort to enhance aviation safety. The FAA overhauled flight and duty rules to ensure that airline pilots have the opportunity to get the rest they need to operate safely. And we are raising the required hours of experience before a pilot can operate the controls of any airline flight. We expect to meet the August statutory deadline to complete this rule. We are also finalizing a rule that will require more rigorous and realistic training so that flight crews can better handle rare but serious scenarios they do face.

The best way to enhance safety across the board is to enhance the safety culture of an organization. This is what we have been doing at the FAA. Part of this effort involves self-reporting by our employees on safety issues. We are making a cultural shift inside the agency for more transparency and greater dialogue. We have put programs in place for air traffic controllers and aviation technicians to report a problem, even a mistake they might have made - and not fear retribution.

The goal is to encourage people to share information to make the system safer. This is a key element to taking a smarter, risk-based approach to safety.

Technology
Now, while we are advancing the safety of the system that we know today, we are also working to deliver the benefits of new technology to create the aviation system of tomorrow.

We are working to safely integrate Unmanned Aircraft Systems into our national airspace.

This month we requested proposals to host six test sites across the country to test unmanned aircraft systems.

We need to better understand the operational issues to safely integrate unmanned aircraft into our airspace. We need to explore pilot training. We need to make sure that unmanned aircraft sense and avoid other aircraft. And if an unmanned aircraft loses the link to its ground-based pilot, we need to make sure it operates safely.

This is why developing more data sources is so important. We need to make sure we use these test sites to obtain the best data that we possibly can.

In addition, we are requesting comments from the public about how to address privacy concerns associated with these test sites. Each site operator will be required to obey all laws regarding the protection of an individual's right to privacy.

We are dedicated to working with stakeholders in this growing industry and with our government partners - the Departments of Defense and Homeland Security, NASA and the Joint Planning and Development Office.

Just as with unmanned aircraft, the FAA is working to safely integrate commercial space operations into the national airspace system as well.

The FAA believes in this industry and we're committed to supporting its safe growth and development.

To date, the FAA has licensed 214 commercial space launches and reentries. They have gone off without a fatality, a serious injury, or significant property damage.

Last year, we licensed the historic launches of the SpaceX Falcon 9 rocket - marking the first time a commercial company delivered cargo to the International Space Station. The vehicles then returned safely to earth. Missions like these continue to demonstrate the viability of the commercial space industry.

The FAA has also licensed a total of eight commercial spaceports. And we've provided grants to support the development of spaceports across the country which will help create the infrastructure necessary for the success of this industry.

For commercial human space flight, we've established an historic partnership with NASA. The FAA's responsibility is to ensure public safety, while NASA will take responsibility for crew safety and mission assurance.

The key ingredient to introducing unmanned aircraft and to integrating commercial space launches is collaboration.

Collaboration
And collaboration is also the key to realizing the benefits of NextGen. We have made great strides in collaborative efforts on many fronts.

And we have worked with our labor unions to lay the foundation for NextGen, with the En Route Automation Modernization, or ERAM. The collaboration has been exceptional. We are now using this new computer system to guide airplanes at high altitudes in nearly half of the nation.

We are collaborating with industry to improve our aviation system and have convened several aviation rulemaking committees to discuss important challenges. These include ensuring a more consistent interpretation of our regulations by officials in regional offices, and the transition to unleaded aviation fuel for piston-engine aircraft. We convene these committees to work with the best minds in industry and to create the best policies to guide us in the future.

As a result of the work that we are doing with many partners - airlines, airports, air traffic controllers and other federal agencies - we are producing satellite-based navigation procedures much more quickly. And we are using these NextGen procedures right now and with great benefit. We are reducing the miles aircraft must fly; creating more direct routes; reducing fuel burn and cutting greenhouse gas emissions.

In fact, right here in metropolitan Washington, D.C. airlines have started using these NextGen procedures to fly into Dulles and Reagan National. And we estimate they'll save $2.3 million in fuel per year.

Cost Effectiveness
Now, to better implement NextGen and to prepare for the many changes that aviation will undergo in coming years, we know that the FAA must change to better handle these challenges. We have already done a lot of work - we have created 36 initiatives to change the way we do business and to eliminate duplication and waste. And we're continuing to make our agency more efficient and effective for the long term.

Reauthorization laid out a vision intended to address the future needs of our aviation system. We all know that these needs have not gone away. It's important for us to work together to protect the great contribution that civil aviation makes to our economy. Aviation is our largest export industry. It strengthens our balance of trade. It adds $1.3 trillion to the economy and provides 10 million jobs.

Conclusion
I hardly need to tell this group that there is a legal component to everything we do at the FAA. We are at once a regulator but at the same time an operating agency, and the demands of the FAA for legal support are tremendous. We are very fortunate to have a capable legal team at the FAA, and I am so fortunate to have Katie Thomson and Marc Warren leading our Chief Counsel's office. Katie and Marc both serve the FAA as great lawyers and wonderful leaders, and I rely on them as key advisors and sounding boards on a very wide range of issues.

As we move forward in uncertain times, I think we all need to remember that we share the common bond of aviation. We may have budget and other challenges, but we are all part of a very special and historic time in aviation. Many of you have heard me say before that the decisions we make over the next several years will affect the air transportation system in this country for decades to come.

Now, I ask you, as air and space lawyers, to work collaboratively and creatively to reach the next level of safety. And whether you're a lawyer or a pilot, or both, I look forward to working together with you on our common goal to ensure that America continues to operate the largest and safest aviation system in the world.

Remarks as Prepared for Delivery

Thanks for that introduction. It's great to be here with all of you. I have a special place in my heart for Salt Lake City and for Utah going back to my days on the organizing committee of the winter Olympics.

Today we have students and faculty visiting from Utah Valley University.

These students are studying Aviation Administration and are here to observe how industry and the federal government discuss the issues involving NextGen - the Next Generation Air Transportation system. Welcome to all of you. I am glad that you are interested in NextGen. Today you will get some insight into the challenges that you will face as aviation professionals.

As you saw at the tour of the en route center yesterday, Salt Lake City and its controllers have played an important role in testing, refining and using ERAM - that's En Route Automation Modernization.

ERAM is one of the foundations of NextGen. It's the new backbone of the air traffic control surveillance system, and it's now operational at nearly half of the en route centers in the nation. This is a big improvement over where we were four years ago.

We are making progress in realizing the benefits of NextGen now. Another place we are really seeing progress is Seattle. And one of the airlines that has embraced satellite navigation from the early days is Alaska Airlines. That kind of commitment is due to strong leadership and vision.

I want to welcome Bill Ayer as the new chairman of the NAC. And I want to thank him for his dedication and hard work to make Greener Skies Over Seattle a reality.

Next month, we will start using new satellite-based procedures into SeaTac that will save fuel, cut track miles and reduce noise and greenhouse gas emissions. Ninety-five percent of all airlines that fly into Seattle will be able to use these new procedures.

The work we're doing with satellite-based navigation in Seattle will provide a template for how to roll out these benefits at airports across the country.

So thank you, again, Bill, for your leadership and support.

FAA/DOT Personnel Updates

As you all know, Secretary LaHood has announced that he is leaving his Cabinet position. He said it's the best job he's ever had. We have made significant progress at the DOT under his leadership in reducing distracted driving, providing pilots the opportunity for the rest they need, and reducing roadway fatalities to historic lows.He'll stay on until the Administration names a replacement to assure a smooth transition.

We're also going to miss Vicki Cox. Vicki led the way in moving NextGen from concept to reality.

She figured out a way to pay for it, assembled a team that could make it happen, and made sure new technologies and procedures would blend safely with the existing system. She had to build a road map, and the roads too.

Now Pam Whitley has taken up the reins as Acting Assistant Administrator for NextGen. She is continuing down the path that she helped to set in motion as Vicki's right-hand. Pam joined the FAA in 1993 and has been involved in NextGen from the start. She sees the big picture and knows how all of the pieces fit together. I appreciate that she's agreed to step up and take on the challenge.

Still on the to-do list is naming a new Deputy Administrator for the FAA, who will act as the agency's champion for NextGen. We are working on that. In a change from previous years, this position will not need Senate confirmation so we're optimistic the process will be smooth. We hope to have more information on that - and hopefully even an introduction - at our next meeting.

Boeing 787

The FAA's number one priority is the safety of the traveling public. So, before I go any further, I want to address recent developments with the Boeing 787 aircraft.

As I've said before, I have confidence in Boeing's ability to create a safe aircraft. At the FAA, our job is to make sure every aspect of an aircraft meets the highest possible safety standards.

We need to get to the bottom of the recent issues with the batteries in the 787 and ensure their safety before these aircraft can be put back into service.

We are working diligently with Boeing to figure out the problem and to find a solution. Our goal is to get this done as quickly as possible, but we must be confident that the problems are corrected before we can move forward.

Budget/Sequestration

As you know, we are hopeful that Congress will reach a solution and avoid sequestration. As it stands right now, the budget cuts are scheduled to happen on March 1^st.

As you may recall, on New Year's Eve, Congress reached an agreement on the taxation portion of the fiscal cliff. In addition, they postponed sequestration for 60 days in order to give the new Congress time to act. The original estimate of an 8.2 percent across-the-board cut has been reduced now to a 5 percent across-the-board cut for FAA. That is because part of the New Year's Eve deal included a $24 billion package that cuts spending and raises revenues. Still, we would have less time to make the sequestration cuts because fiscal year 2013 will be nearly half over by March 1^st.

We anticipate that the Office of Management and Budget would implement sequestration across the board. This would require the FAA to make the cuts equally across all budget line items in the affected accounts. This significantly minimizes the flexibility we would have in managing the budget reductions.

Sequestration would force the FAA to cut back on operating costs by reducing the core services we provide.

We anticipate that in the upcoming weeks the newly seated 113th Congress will address the remaining components of the fiscal cliff. Congress would need to pass an alternative debt reduction strategy that would eliminate the need for the sequestration. Congress did tackle one important item already, by agreeing to raise the federal government's debt ceiling so that our country will not default on its debts.

Apart from possible sequestration, the FAA does not have a budget for fiscal year 2013. Congress passed a continuing resolution which keeps the government running until March 27 at a rate equal to last year's budget. After March 27, we will need an approved budget or another continuing resolution to keep operating.

If Congress keeps our spending level the same through the end of fiscal year 2013 it would be enough to maintain the FAA's basic operations with minimal impacts.

The release of the 2014 budget has been delayed because of uncertainty over sequestration and the fiscal cliff. We are continuing to work with the Office of Management and Budget to develop this budget.

Also, on January 29 President Obama signed the $50 billion aid package for areas hit by Superstorm Sandy. The bill includes $30 million for the FAA to make needed repairs to air traffic control systems and facilities damaged in the storm.

This includes damage to fiveair traffic control towers such as Philadelphia and Richmond, and the Boston Air Route Traffic Control Center.

The funding also allows FAA to fix 23 navigation and lighting systems across New York and Connecticut, including those at LaGuardia and Kennedy airports.

Update on DataComm

We have made significant progress on DataComm. This is a capability that has been on the drawing board for a long time - for years - and I am proud to say that the FAA has committed to DataComm as the way of the future.

The full benefits of NextGen - increased efficiency and safety, the ability to make complicated re-routes in mid-flight, the reduction in wait times to take off - all of these rely on the capabilities of DataComm. The FAA formally decided last May to adopt this program and to make it part of the way we operate.

And last September, we awarded a contract to integrate DataComm into the many parts and pieces of our airspace system - I'm talking about ground automation, telecommunications, security firewalls, air-ground network services and aircraft avionics. It all has to be integrated to work together.

The big picture is that we are moving forward with DataComm in towers at 41 major airports starting the roll out in 2016. A few years later, we plan to start the roll out at en route centers that cover the entire country.

More immediately - just last month, we started DataComm trials in Memphis. We have been testing the departure clearances that controllers issue from the tower to pilots ready to takeoff. We'll continue testing for the next year.

The FAA and FedEx made history January 17 when a FedEx MD-11 received a departure clearance to fly from Memphis to Miami using written instructions from the air traffic controller rather than a clearance spoken over the radio.

At 3:09 pm that day, the FAA controller pressed "CLEARED AS FILED," letting the FedEx plane know it was cleared.

The pilot "WILCO'd" in writing, and thus a small, but significant step was taken to providing Data Comm to our airspace system.

Flight crews and controllers reported the system performed as expected.

We'll expand these trials in coming months to include more FedEx flights.

We'll also expand the Data Comm trials to Newark starting in April, working with United Airlines and others. Again, we'll test the departure clearances with a limited number of airplanes at first, then move on to passenger flights as the trial progresses over the course of the coming year.

Now, while we are working more immediately on departure clearances from the towers, we intend to use DataComm when controlling high altitude traffic as well.

And we're making progress. We have a team of experts from different lines of business inside the FAA - everyone who needs to be onboard to implement our plan for DataComm in the en route environment. We have created this new process to ensure that DataComm moves forward inside the FAA in a way that's coordinated and expedited.

A year ago, you gave us recommendations for how to move forward with DataComm and we heard you. We're acting on it. The recommendations are not sitting on a shelf gathering dust. This team of experts from across the agency is analyzing and debating those recommendations in an orderly manner.

Other Relevant NextGen News

We are on track to publish the 2013 update to the NextGen Implementation Plan next month. This year, we'll publish it electronically: as an e-book and as a downloadable PDF.

We're trying to reduce printing costs and save trees. Plus, the electronic version includes links to supplemental info on the FAA website.

We will still print a brochure of the plan with the executive summary. And we'll also print the Appendix A tables.

Presentations:

• David Grizzle will now update you on our response to the Metrics Report that we received from you last fall.
• Nancy Kalinowski will then brief you on the FAA's effort to develop a list of Harmonized Metrics.
• Lynn Ray and David Surridge (US Airways) will provide a briefing on the new NextGen arrival routings we have been using in the Washington D.C. metro area since last August.
• We used a very collaborative process to create these fuel-saving arrivals. And we're seeing benefits already.

Thank you very much, Mr. Secretary.

I am truly honored by the trust and responsibility that have been placed in me.

And it is such a privilege to work in such an innovative industry that is dedicated to excellence day in and day out.

We all know that as an industry, there are significant challenges that we will face in the next five years.

• We are operating in a more complex business environment.
• We must deliver NextGen.
• And we all know we face more difficult fiscal challenges.

Yet these challenges also present us with a great opportunity to make decisions that will influence aviation for decades to come.

We have to tackle these challenges together.

As you know, the FAA's top mission is safety, and we work to advance safety in every way that we can. Everyone in this room is part of an important network and knowledge base that is going to help us as an industry to move to the next level of safety.

You've heard me talk before about three areas we, at the FAA, are focused on. We aim to enhance safety, and to be smarter about how we approach safety issues. This means taking a proactive and data-driven approach, rather than a reactive, forensic approach.

Safety management systems are an excellent example of how to identify and address issues before they become problems. Airlines and the FAA are already implementing SMS.

Second, we are leveraging the benefits of technology and making these benefits available to the traveling public now. As you heard from the Secretary, we are employing NextGen technologies and are seeing the benefits in fuel savings, time savings and lower emissions now.

The transition to NextGen is not a government program alone. We all know that. It is a partnership with industry to deliver an evolution of our airspace and how we use it. And, it requires collaboration across the board to realize the maximum benefits for everyone.

Lastly, we're committed to changing the way we do business to meet the demands of growth and to stay abreast of the latest advances in aviation. We are encouraging all of our employees at the FAA to work more creatively to meet these challenges. Aviation is a dynamic industry where the one thing we can count on is constant change.

We all have a lot to accomplish in the next five years. We're going to raise the bar on safety. We're going to continue to increase efficiency. And we're going to improve the predictability of service.

As technology advances, our aircraft become more complex. It's the same with our cars - they are more computerized. And our cell phones hold the computing power of what was once held in a large old main frame computer.

Everything has become more advanced. This places a premium on transparency and communication between the FAA and those that we regulate. We need to assure the highest level of safety and to create the best methods and procedures.

We are accustomed to a system of orders, to a system of rules, and to a system of regulations. That is how aviation has been managed for the last 50 years. And while we must be mindful of our respective roles, government and industry need to work together in today's aviation world.

This might be a new place for some of us. It might be slightly uncomfortable for us to stretch ourselves and create a bridge to where we can appreciate experts from all parties inside and outside of government. But this is essential.

We are all dedicated to ensuring the safest aviation system in the world. And we are all committed to fostering progress and to fostering innovation. If there's a better way to build something, we're open to it.

Aviation from its very beginning has stretched technological boundaries. And technological change in aviation comes in waves. For more than five decades, the FAA has compiled a proven track record of safely introducing new technology and new aircraft.

As we continue to do this, I want to make one thing crystal clear. The FAA takes very seriously its responsibility to certify aircraft safety standards.

We are moving forward with a review of the critical systems of the Boeing 787, as you all know. When we have a concern, we will analyze it until we are satisfied.

Some have asked the question whether the FAA has the expertise needed to oversee the Dreamliner's cutting edge technology. The answer is yes, we have the ability to establish rigorous safety standards and to make sure that aircraft meet them. The best way to do this is to bring together the best minds and technical experts in aviation to work on understanding how these new systems work and how to establish and meet the highest safety standards.

The way to enhance safety is to keep the lines of communication open between business and government - to foster the ability and willingness to share information about any challenges we might be facing and that arise. We want to create an atmosphere where people feel they can share what they know, all in the pursuit of safety.

We all want the same outcome. We want to harness advances in technology to produce the safest aircraft possible.

We will never lose sight of our respective roles, but that does not mean that there is not a seat at the table for bright minds from industry to help inform the best way to navigate the complex technological issues we encounter. It would be short-sighted to overlook anyone's valuable expertise.

Changing our culture and the way we see ourselves, and refining our respective roles towards a greater collaborative approach, is the best tactic to maintaining the safest aviation system in the world.

I thank you for your willingness to participate and to improve the best and safest aviation system in the world.

Thank you for coming today.

As the Secretary said, safety is our mission, and we take this responsibility very, very seriously.

The Dreamliner is a new aircraft with many innovations. A total of 50 are in service worldwide, with six delivered to a U.S. carrier.

From day one, we have worked with Boeing to certify these systems and further ensure that this innovative aircraft meets our high level of safety for the flying public.

We believe this is a safe aircraft. To validate the work conducted during the certification process, we are going to work with Boeing to conduct a review of all critical systems of the 787, including design and production.

A team of experts will jointly evaluate these aspects of the airplane. We want to make sure that the approved quality control procedures are in place and that all of the necessary oversight is done.

We want to see the entire picture and do not want to simply focus on individual events. We want to determine the root causes of these recent events so they won't happen again.

We will put an emphasis on the electrical system in the airplane. This includes components such as batteries and power distribution panels. We'll also look at how the electrical and mechanical systems of the airplane interact with one another.

Last month, we issued an airworthiness directive that required inspection of fuel line couplings in the engine pylons to verify that they were correctly assembled and installed.

That work has been completed on all 787s operated by the U.S. carrier.

Again, I want to emphasize that the 787, like all aircraft, has numerous back-up systems and redundancies, and these are there for safety.

The Boeing 787 is an innovative aircraft and the FAA logged 200,000 hours of technical work on the type certification. Our crews flew on numerous test flights.

We're confident about the safety of this aircraft. But we are concerned about these incidents and we will conduct this review until we are satisfied.

Before we open it to questions, I'd like to introduce the president and CEO of Boeing Commercial Airplanes Ray Conner.