"Pivot Point"
Marion C. Blakey, Chicago, IL
October 19, 2006

Chicago Leadership Summit

Good morning, and thank you, Glenn [Tilton]. It’s terrific to be here in what I’d have to say is one of America’s biggest and most important gateways to the world. Back at the air traffic control command center outside D.C., we put it this way:  So goes Chicago, so goes the system. And, to tell you the truth, I think there are some strong parallels to this great city and what I’ve come to talk about today.

Back in the mid-60s, the Monsters of the Midway had two guys who were among the best of all time. Gale Sayers and Dick Butkus. One smooth, one — well — mean. Now, I’ll admit up front that much of what I know about the Bears back in the day comes from movies like “Brian’s Song.” But I do know that even with two of the all-time greats, those Bears didn’t make it to the top like many thought they should.

Fast forward about 20 years. Same city, same team. Another great running back, Walter Payton. Another angry man, Mike Ditka. And Jim McMahon for an even mix of the two. But those Bears did make it to the top, and they did so for a while.

One group was in a situation where the time wasn’t right, the mix wasn’t there. The other? Well, the planets lined up, and the Super Bowl trophy was in Ditka’s right hand.

Aviation’s at one of those pivot points. The elements are coming together where we are faced with the need to change the system. Not tweak the system. Not massage it. I’m talking about something radical.

This is a group that knows business, and this is a town that knows aviation. In a nutshell, the taxes that fuel the aviation trust fund are about to expire. We have a revenue structure that ties FAA income, through that trust fund, to the price of a ticket. Since 9/11, the face of aviation has changed. Low-cost carriers and new entrants are making headway. Fleet mixes are changing. Soon, we’ll have very light jets and unmanned aerial vehicles. And when the price of tickets goes down, our income goes down.

The context for what I just told you is that passenger totals are up — and going higher — with a billion expected by 2015. More planes. More passengers. From our standpoint, more work. A revenue stream unrelated to the cost of doing business. And the system needs a total overhaul technology-wise.

This is not a woe-is-me tale, because the time is ripe for a new way, a new approach. But I’ll get to that in a second.

The last time we had this discussion was more than ten years ago. At the time we weren’t ready for the types of changes I see coming now — the changes that must come. Back then, the excise taxes that fuel the aviation trust fund were about to expire. The FAA’s track record for delivery of modernization of our system was often the subject of page one, above the fold, and as you know, that’s almost never good. And it wasn’t altogether unfair.

But the time wasn’t right. The system wasn’t at the breaking point capacity-wise. The FAA didn’t, couldn’t function as a business. The result was gridlock on Capitol Hill. As a result, nothing changed. No taxes or fees came into the coffers for almost two years. The trust fund got spent down in ways that took us years to recover.

I stand before you today knowing that the time is right. We are operating like a business, with the credibility that comes from doing things right. We’re paying closer attention to the numbers in the workplace. We’re using pay for performance — almost unheard of in the federal government. Almost 80 percent of FAA employees have raises and bonuses tied to the organization’s ability to reach our goals. The gravy train that used to make raises automatic, regardless of productivity or performance just didn’t cut it for us, or the taxpayer.

We haven’t stopped there. We contracted out our network of 58 automated flight service stations that help general aviation pilots with flight plans and weather, saving $2.1 billion, and now providing better service. We’ve consolidated administrative, staff and support functions to save another 400 million. A new controller contract we put in place saves nearly two billion dollars while giving us new managerial flexibility to safely manage the system and better serve you, our customers. And finally — and this is huge — our major capital programs are on track. We wanted them to come within ten percent of being under budget and on time. We’re hitting both at 97 percent.

This type of turnabout goes to credibility. It shows that we’re in the position where we can handle change. We’re in the position to be a strong partner, and we intend to be. It’s time to step up, and we’re doing that with a major initiative called NextGen. Government sometimes suffers from acronymonia, but NextGen isn’t one of the typical efforts. We brought together five Cabinet level organizations, the President’s Office for Science and Technology and NASA to design and develop a plan that will take us to and through 2025. The fact is, the system’s on the ropes now. Anyone of us who travels on any given day sees the lines on the tarmac and the lines at the counter both getting longer and longer.

NextGen is a radical approach to develop a system that can handle two to three times the amount of traffic we’ve got now. And it does it with technology that’s not ground-based — like our radars today. It emphasizes computer networking, satellite navigation and tracking, the ability to handle microjets and unmanned aerial vehicles and whatever else comes down the pike. It takes safety to a higher level.

And there’s something else. NextGen embeds security into the system in a way fundamentally different from today. You know, NextGen needs to be about more than just air traffic control. We’ve all been in this spot with our shoes off. A great air traffic system won’t be any good if it takes two hours to get through security.

To make these happen, we’ve entered into some unique partnerships. NextGen is slicing through what was a government-made mountain of red tape with a unique form of public/private partnership all its own. Let’s be plain about this. The assumption is that no longer does the government have to be in the driver’s seat. The fact is, the government just plain can’t do this alone. We’ve formed a partnership structure with our NextGen Institute that allows companies to be there on the ground floor when the new system is designed.

We have about 200 companies hard at it designing the system of tomorrow. It’s thousands of people — the best and the brightest from industry, academia and government — making sure that we’ve thought of all the possibilities, all the potential, all the whys and the wherefores. While it may be uncharted waters, I’m confident that it’s going to work.

The idea of these type of partnerships isn’t new. Let me give you an example around the corner, and another across the pond.

Midway. The city’s decision to file a preliminary application with the FAA to lease the airport to a private operator is a major break with business as usual in this country. It could unleash the potential of a major aviation asset. We approved that application just a little over two weeks ago. To be fair, there’s a lot more process ahead, with the city’s selection of a winning bidder. And then, of course, the FAA’s review of the full details of the proposed lease.

But let me say this. We are very interested to see what proposals the city receives. We stand ready to provide any assistance the city needs in working through the application process.

No question, the track record’s there. In January, the city leased the Skyway toll-road/bridge facility to a private consortium for 99 years. They received $1.83 billion up front. That’s not easy to walk away from. Better said, that’s a deal that you need to make.

Internationally, private sector partnerships in aviation management are growing by leaps and bounds. Our plan for modernization is NextGen and the European’s plan is SESAR. Each of these programs have more than a snazzy acronym in common. They are both based on the fundamental assertion that government and industry each have a role in ensuring the future of a safe and efficient global air traffic system.

We’re talking about the ability of aircraft across the globe to transit safely and seamlessly across regional boundaries. We’re talking about the ability of pilots of any nationality to operate their planes with a reassurance that there are no technological or procedural surprises across the horizon or anywhere else. NextGen is going to provide lots more useful information to pilots, in real time, while maintaining a centralized system for managing conflicts and congestion. With this increased information flow, we’ll be able to manage more traffic more efficiently — just the same way that the increased information flow has helped increase productivity.

Plainly, that’s an expectation of flexible use of airspace, integrated airspace design, interoperable flight planning and flight messaging, and seamless air traffic control. In essence, the nuts and bolts of what the system is, how it works, and how the controllers and pilots use it, they’re all going to take a step up — a big step up.

We have our own goals to make these things happen. Just this year, we signed a landmark agreement with the European Commission that will enable us to work cooperatively on our future air traffic systems planning so that we can learn from each other and not spend time reinventing the proverbial wheel. In Asia, not only are we pushing for access to markets and technology adoption, especially with respect to satellite navigation, but we are negotiating with key partners to facilitate NextGen cooperation as well. I’m talking about promoting important technologies like ADS-B and WAAS. For those of you who aren’t in the aviation business, those two pieces of technology take aviation from ground-based systems into the era of satellite-based applications.

Let me tell you, these agreements don’t happen overnight. In fact, we recognized that agreements can be just a piece of paper if money and plans are not part of the process. For almost three years now, I’ve had the honor of working with the Minister of Transportation for China. Minister Yang Yuanyuan is a pilot and a visionary. He sees the problems that China faces in its extraordinary growth. I am proud to tell you that we announced a new program during that visit — the China aviation cooperation program — the ACP — to provide a structure for dialogue and support between the government and U.S. industry in China. This partnership has been a tremendous success by anyone’s standards. We’re helping the Chinese prepare for the aviation demands for the 2008 Olympics. In the longer term, we’re helping the civil aviation authority to prepare for the demands of an air traffic system that will rival our own in the next 20 years. And I will tell you, we see the benefits of these ACP programs elsewhere in the world. Last year, we announced the creation of an ACP in India. In fact, I am going to Delhi next month and the work of the ACP is one of our primary topics of discussion.

Where next? The possibilities are endless. And we are looking to you, the industry that can provide the answers.

You don’t need an international ticket to find opportunities for partnership. The time is ripe on several fronts. Consider leasing. Consider competitive markets for services like automatic dependent surveillance. It’s not beyond the pale. The FCC has much the same role when it comes to the airwaves.

Consider airports taking over and providing navigational aids, replacing obsolete equipment, or equipment that’s just plain worn out.

Consider the certification of third parties to develop approach procedures, which require aircraft to use certain advanced routes when landing. Does the government really need to corner the market on this one? I don’t think so.

So, it’s clear that we’re at a unique time and place, a pivotal place, a place where all the things that need to come together actually are, putting us in the position where we can take aviation to the next level. Economically, the airlines appear to be headed out of turbulent waters. General aviation is on the rise, and it’s never been safer. Two days ago, I spoke to the National Business Aircraft Association, and the buzz was all about deliveries and new aircraft. Manufacturing is doing well. There’s international interest in how we’re operating.

But let’s be absolutely clear about this:  In order for us to take the next step, the FAA needs a revenue stream that’s linked to what it costs us to run the safest, most complex transportation system in the history of the world. You know, almost six percent of America’s GDP is tied up in aviation. Plain and simple, this is about American jobs and competitiveness. Unless we have fundamental funding reform, the FAA’s not going to be able to keep up with what it takes to keep it that way. Chicago knows a thing or two about aviation. We need you to weigh in on this debate. Without funding reform, it’s awfully hard to keep the economic engine of aviation operating on all cylinders.

So, indeed, we are at a pivotal point, the right time when the time is right to make change happen. We’re there. We need to begin exploring opportunities for new partnerships. In order for these to happen, states, localities, airports and the businesses that partner with them need to step up. Not just federal and state partnerships, but international partnerships, public/private partnerships.

When I began speaking this morning, I talked about the Super Bowl team from 1985. Let’s take a look at the Bears today — that is, the Bears of Monday night. When you’re down 20 to nothing and your quarterback’s having trouble, and you win, that’s a sign that the time is right, that the stars are lining up for you. This Bears team has Rex Grossman, a smooth player, and Brian Urlacher, a Butkus-type guy. Those two are breaking the mold for the Bears. Who’s to say where the Bears will end up come January? You can ask the same question about aviation. The pieces for radical change are there for the taking. The time is ripe. Let’s move on it, shall we?