"Steady and Reliable"
Michael Huerta, Washington, DC
March 13, 2014

AAAE Forecast Conference

Remarks As Prepared for Delivery

Good morning.  Thank you, Todd, for the introduction.  It is a pleasure to be here, and I would like to express my gratitude to you and AAAE for hosting this conference.  The forecast for aviation looks good, which, given the vibrancy of this industry, is not surprising.  We anticipate steady growth and a healthy international market.  That is very good news for all of us.  The impact of aviation literally touches every aspect of our lives.  It is indeed the tie that binds our national economy. 

The Forecast points to a very busy future.  Managing the National Airspace System is becoming increasingly complex, and not just because of the activity that we see in the system.  While we’re not facing the capacity and delay challenges that burdened the system years ago, we are facing a fundamental change in the complexity of the system overall which includes the integration of new users in the system—commercial space vehicles and unmanned aircraft systems. 

Concerning the Forecast itself, as the economy recovers from the recession, aviation grows as well.  Air carriers are maintaining their profitability, from a combination of strong yield and fees. They have learned new ways of managing the ever-changing mix of passengers and destinations, and we see that load factors continue at record highs, contributing to both profitability and congestion. 

Keep in mind that aviation is more than a 5 percent chunk of America’s GDP.  It’s a 1.3 trillion dollar industry with 10 million jobs.  That’s an impact that makes this business a driving force, an economic engine with a lot of horsepower.  In a lot of ways, America’s bottom line and aviation’s bottom line are inextricably linked.  We don’t often stop to think about this, but it’s true:  There are very few products that haven’t been touched at some point by an airplane on their journey to our homes and our businesses.  That’s a broad swath, and with that as context, this forecast is a very clear mandate for the strategic actions we’re taking to shape aviation over the coming decades. 

We anticipate steady growth in passengers and operations.  We expect passengers to grow at an average rate of just over 2 percent, with even higher growth rates in international travel and nearly 4 percent for enplanements. 

The international market is indeed a bright spot as growth in passengers for all world regions is strong, with the Latin region growing fastest and the Pacific region just behind. 

Today, the number of international passengers on U.S. airlines is 50 percent greater than in 2000, and more than 80 percent higher than it was 20 years ago. The advent of faster, more efficient jets is literally changing our ideas about what a “long flight” is.  Lindbergh crossed the Atlantic in 34 hours.  Nowadays, the flying public doesn’t think twice about an early morning flight out of Paris that gets them to Washington, D.C. for lunch.

Our domestic airports … especially the busiest ones … are on an upward trend.  At our top 30 airports we see passenger numbers growing 2 percent a year over the forecast period.  Take a look at the names that are popping to the top of the list:  Newark, Washington Dulles, Orlando, New York’s Kennedy Airport and Las Vegas.  We’re seeing new faces at the table when we’re talking about the hot spots.  Time was when that was a discussion about New York, Chicago and Atlanta.  As the forecast shows, the rest of the system is growing as well.

In thinking about forecasts for aviation, it’s important to remember we are not only talking about the Commercial National Airspace System.  Our forecast shows why.  GA includes everything from two-seat trainers to intercontinental biz jets.  In the U.S. alone, GA racks up 24 million flight hours … and much of those are for businesses that deliver employees and services to communities across our country. 

General Aviation is a proving ground.  It’s the place where our commercial pilots get valuable training.  All of that is to say that this isn’t just a commercial forecast, it’s an aerospace forecast, and it would be unwise to overlook the role GA plays in forming the backbone of aviation and aviation safety here in the U.S. and abroad.

The forecast tells us the GA is alive and well, with more than 200,000 active aircraft in the U.S.  While pistons dominate, there is a decided upward tick in the number of turbine aircraft.  That’s confirmation that investments we’re making in technology are the right thing at the right time. 

Stepping back just a bit from the numbers … system safety continues to be strong.  That’s a tribute not just to how well we maintain the infrastructure, but it shows quite clearly that the players … all the players … are bringing their A game to work.  Pilots, mechanics, flight attendants, dispatchers, technicians, engineers and controllers … every person who touches the airplane has a direct hand in the safety of the system.

Our goal is to continue to proactively become smarter about safety and recognize and mitigate hazards before they become a problem.

What the forecast shows is a growing industry.  What it doesn’t show yet is the growing complexity in the system and the need to accommodate new entrants.  There was a time when that phrase – new entrant – referred to an airline.  But in this context, we need to think directly about the advent of commercial space travel and the increasing use of unmanned aircraft systems.  We’re taking steps to establish processes and procedures to integrate space traffic into the system.  As the headlines have been indicating lately, there’s also a need to integrate unmanned aircraft into the national airspace system.   Frankly, these are a new breed of “new entrants,” and they bring a kind of complexity to the system that we’ve never faced before.  Integrating them into the system is a challenge that we’ll be facing now and into the future, but one that I'm confident we'll be able to meet. 

We’ve developed a set of strategic initiatives that will lay a foundation for the aerospace system of the future, today.  We stand at a unique point in time. The industry is changing.  In addition to new users we face a much more constrained and unpredictable fiscal environment.  And new technologies that bring benefits to the system are rapidly evolving.  I believe that this confluence of events puts us at a unique point in time where the decisions we make today will shape aviation for a very long time.      

We’ve adopted four strategic initiatives … four goals that were crafted with our stakeholders in mind.  And we’ll be looking to our stakeholders as we move forward with refining and implementing them. 

As always, safety needs to come first, and we need to make aviation even safer by being smarter about how we do safety.  To do this, we must focus on risk-based decision making.  When you’re faced with a system in which commercial fatalities are the rarest of the rare events, moving forward with safety management systems is the right thing to do.  We need to rely on safety data from the people who work in the system … the pilots and flight crews, the controllers and technicians, the mechanics, the manufacturers.  Instead of waiting for accidents, we’re instead studying data … looking for emerging trends … identifying the hazards before they become an accident. 

We’re not tip-toeing into this.  We’re pushing to decrease the safety risk, decrease the commercial fatal accident rate, and to put a priority on our resources based on where we see the risk.  Ultimately, I expect us to develop a new safety oversight model that prioritizes safety inspection efforts based on risk.  This model will provide us with the tools to consider stopping certain oversight activities for known system operators that have strong safety management systems and safety management cultures.  This is a bold step, but as we all know, it’s the right step.

Following on the heels of safety is our second strategic priority … the pledge to deliver benefits through technology and infrastructure.  We’re talking about completing NextGen’s foundational programs by 2015 … upgrading our en route airspace with ERAM, completing the instillation of ADS-B ground stations, and upgrading our terminal airspace with TAMR.  Those might be unfamiliar acronyms, but what those systems do is deliver improvements that directly address the requests from the people who use the system most.  Better software, smoother transitions, putting us in a better position to handle the forecast that we see. 

This priority also entails integrating new types of users into the our airspace—namely unmanned vehicles and commercial space operations…ensuring that these operations are safe while balancing their needs with the needs of current airspace users. 

It’s also time to take a look at the national airspace system so we can deliver more efficient, streamlined services.  Historically, the FAA has provided all services to all users in many different locations with little differentiation.  We are increasingly being asked to do more and do it with less.  It’s time for us to have a robust discussion about what services the FAA should be providing … and what we might be able to stop doing … or do differently through innovative business methods and new technologies.  This approach will require a shift in traditional thinking.  We’ll have to prioritize services, knowing that the agency cannot continue doing everything we’ve done in the past the same way. 

Internationally, you heard that the numbers are up.  Our third initiative – global leadership – recognizes the increasing globalization of the aviation industry.  Frankly, it’d be shortsighted of us not to spread the net of safety as far as we possibly can.  As the global marketplace becomes more and more of a reality, we need to take specific and direct steps to influence the standards for safety and technology throughout the world.  But just like our other initiatives, there is no blank check.  We have to be more strategic about how and where we spend.  You can’t establish yourself as a global leader from the back seat.  This initiative keeps us at the forefront.

None of these initiatives is possible without all of us in the industry supporting a first-class workforce, a workforce that’s pushing the envelope with creativity and innovation.  We know that the need to establish a workforce for the future is upon us.  At the FAA, we must ensure that the technical, functional and leadership skills are in place.  We are moving to make sure that happens.  We’re moving to make sure that we hire the right people and that we retain them. 

In closing, let me say with emphasis that aviation has never been stronger.  The numbers point to a brighter future.  We anticipate steady growth in passengers and steady growth in operations.  The international market is up.  General aviation is also trending upward.  Each of these confirm the need for us to focus on how we plan for that future.  As prospects go, steady and reliable is a very good place to be.  What you’ll hear today and tomorrow is that we are indeed headed in that very direction.  What we are looking at is a very bright future.