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.

Chairman LoBiondo, Ranking Member Larsen, and Members of the Subcommittee: A year ago, Congress reauthorized the Federal Aviation Administration after four and a half years of uncertainty and stop-gap measures. The biggest benefit of reauthorization was that it would provide predictability and allow us to invest with greater certainty in the future. So were grateful for your effort on this, and we have been working very diligently in the past year to implement the provisions of reauthorization.

Safety

As we move forward, the number one mission of the FAA is safety. That will always be our priority.

In the last few years, Congress has given us much guidance on how to advance aviation safety. And we have accomplished a great deal. The FAA overhauled flight and duty rules to guarantee that airline pilots have the opportunity to get the rest they need to operate safely. And we are raising the required number of hours of experience before a pilot can operate the controls of any airline flight. We are also finalizing a rule that will require more rigorous and training so that flight crews can better handle rare but serious scenarios.

We are also improving our safety culture at the FAA and throughout the industry by voluntarily reporting hazards before they become a problem, and by adopting safety management systems. Internally, we created the Aviation Safety Whistleblower Investigation Office. One of the cornerstones of our safety culture is to ensure that employees can provide information without fear of reprisal.

Technology

While we are enhancing 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, through NextGen.

We are working to safely integrate Unmanned Aircraft Systems into our airspace. Earlier this year as directed by Congress in the reauthorization we requested proposals to host six sites across the country to test unmanned aircraft systems. This is a matter of significant public interest. We need to better understand operational issues to safely integrate these aircraft into our airspace. We need to explore pilot training and make sure that unmanned aircraft sense and avoid other aircraft. And, if they lose the link to their ground-based pilot, these aircraft need to operate safely.

Collaboration

If we are going to continue to move aviation forward, and remain a world leader, we need to collaborate across the FAA, as well as with other government agencies, and also with industry. Reauthorization asked us to do this, and we have made great strides in collaborative efforts.

Chairman LoBiondo, as you know, Atlantic City is a leader in NextGen research. The William J. Hughes Technical Center plays a key role in fostering NextGen, and we appreciate your support.

We have worked with our labor unions, industry, airports and others to address the problem of congested airspace over busy metropolitan areas. We are producing satellite-based procedures much more quickly. And were using these NextGen procedures right now to reduce the miles that aircraft must fly; to create more direct routes, cut delays; and to reduce fuel burn and cut greenhouse gas emissions.

We are pleased that the President has announced his intent to appoint Michael Whitaker as Deputy Administrator of the FAA. Mr. Whitaker is a veteran of the airline industry and would serve as the FAAs Chief NextGen Officer, responsible for fostering the transformation of our nations airspace.

The FAA has an initial set of NextGen metrics available on our website, and we expect to publish additional performance metrics in the coming months. Our NextGen Performance Snapshots show that NextGen is happening now.

For example in Chicago, we have been able to reduce delays at OHare International Airport in bad weather thanks to NextGen. OHare and nearby Midway International have overlapping airspace at times. We made better use of this congested airspace in the past two years with a satellite-based procedure that aircraft use when flying into Midway. This procedure has allowed OHare to improve its arrival rate by eight to 12 aircraft per hour when its rainy or foggy and the ceilings are low. And aircraft flying into Midway travel fewer miles and save fuel. This is one of the many positive effects of NextGen and the type of improvement that reauthorization supports.

The reauthorization laid out a vision to address the future needs of our nations aviation system. And these needs have not gone away. Its important for us to work together to protect the great contribution that civil aviation makes to our economy of $1.3 trillion and 10 million jobs.

As you know, we are again facing fiscal uncertainty and unpredictability. The sequester is requiring the FAA to make sizeable budget cuts that affect our operations and our future. While we are grateful that Congress found a temporary solution to the FAA furloughs, this stop-gap measure does not end the sequester.

We will not enjoy the benefits or the stability that reauthorization provides until we end the sequester and find a sensible long-term solution.

I sincerely hope that we can work together to ensure that America continues to operate the safest and most efficient aviation system in the world.

Mr. Chairman, this concludes my prepared remarks. I would be pleased to answer any questions you may have.

Chairman Latham, Ranking Member Pastor, and members of the subcommittee, thank you for the opportunity to be here today to discuss the FAAs 2014 budget request.

As you are aware, this is my first appearance before you as the confirmed Administrator of the FAA. We have a great number of challenges and opportunities ahead, and I look forward to a long and effective relationship with this subcommittee.

The FAAs fiscal year 2014 budget request is $15.6 billion. The budget upholds our critical safety programs, while also deploying key NextGen benefits to our stakeholders, and modernizing our aviation infrastructure. It does this at funding levels that are $351 million lower than fiscal year 2012. This is a 2.2 percent decrease, which is part of the Presidents overall effort to reduce the deficit.

The FAAs proposed budget for 2014 assumes a long-term solution to our nations budget deficit and no sequester.

The 2014 proposed budget would allow us to maintain staffing for air traffic control and aviation safety. It would allow us to maintain capital investment in both airport infrastructure and FAA facilities and equipment, and fund research and development.

The budget requests $1 billion for NextGen, which is an increase of about 7 percent above 2012. This request would help us to continue to mitigate congestion in busy airspace above metropolitan areas. And it would help us with the continued deployment of radio transceivers that allow us to use very precise satellite-based information to control air traffic.

The FAA is requesting $9.7 billion in our Operations account. This represents an increase of just about a half a percent above the FY 2012 level. This request will enable us to run the agency on a day-to-day basis. It ensures the safe operation of the airlines and the certification of new aviation products. It would also enhance the safety of the commercial space transportation industry, and provide overall policy oversight and management of our airspace.

The Operations budget includes an additional $30 million to maintain and operate the new En Route Automation Modernization system, or ERAM, that became operational in the last two years.

ERAM is at the heart of NextGen. It helps us to advance our transition from a ground-based system of air traffic control to a satellite-based system of air traffic management.

The 2014 budget also allows the FAA to meet the dual challenge of maintaining the capacity and the safety of the current system while moving forward with our comprehensive modernization and transformation efforts.

The majority of the $2.8 billion requested for facilities and equipment is to sustain legacy areas. This includes aging infrastructure, power systems, information technology, navigational aids, and weather systems.

This years request for Research, Engineering, and Development is $166 million, a decrease of 1 percent from2012. We intend to continue critical research in NextGen and other areas such as: fire research and safety; propulsion and fuel systems; advanced materials research; alternative fuels; aging aircraft; and unmanned aircraft systems.

Our budget emphasizes cost efficiency and reflects the hard choices we must make to provide the most benefit to the flying public.As a result, we are proposing to modify the mix of funding available for airport development projects.

The budget would allow commercial service airports to increase Passenger Facility Charges from the current maximum of $4.50 to $8.00. This gives airports greater flexibility to generate more of their own revenue. And it allows us to reduce our request for the ongoing airport grants program by $450 million.

This change focuses federal resources on smaller airports that dont have the passenger volume to generate their own revenue, yet are still important to our nations air transportation network.

The Presidents 2014 budget request represents a balanced approach to achieving a long-term solution to our nations budgetary challenges. This is critical when one considers the impact of the sequester on our aviation system. The cuts required by the sequester have forced us to slash contract expenses and furlough 47,000 of our employees for up to one day every two weeks.

With 10 percent fewer hours available from each employee, there will be impacts on all FAA operations.

At air traffic facilities, this imposes limits on the amount of air traffic that we can safely allow to take off and land.

It means that our safety inspectors will work fewer hours and it will take longer to certify new aircraft for the market.

I want to emphasize that as we undergo the difficult process of implementing these deep cuts, we refuse to sacrifice safetyeven if this means less efficient operations. Since February we have publicly described the possible effects of the sequester. And over the past few weeks we have been working with our industry partners, including the airlines, to share more detailed information on the impacts we expect at our nations largest airports. We are tracking airport delays throughout the system and making adjustments where possible to minimize delays.

It is my hope that we can work together to rally around our nations air transportation system and protect the great contribution that civil aviation makes to our economy.

Mr. Chairman, this concludes my prepared remarks. I would be pleased to answer any questions you may have.

As you are aware, this is my first appearance before you as Administrator of the FAA. I appreciate the support of the Senate in moving my confirmation forward. We have a great number of challenges and opportunities ahead, and Isincerely hope to enjoy a long and effective relationship with this subcommittee.

The FAAs fiscal year 2014 budget request is $15.6 billion. The budget upholds our critical safety programs, while also deploying key NextGen benefits to our stakeholders and modernizing our aviation infrastructure. It does this at funding levels that are $351 million lower than fiscal year 2012. This is a 2.2 percent decrease, which is part of the Presidents overall effort to reduce the deficit.

The FAAs proposed budget for 2014 assumes a long-term solution to our nations budget deficit and no sequester.

The 2014 proposed budget would allow us to maintain staffing for air traffic control and aviation safety. It would allow us to maintain capital investment in both airport infrastructure and FAA facilities and equipment, and fund research and development.

The budget requests $1 billion for NextGen, which is an increase of about 7 percent above 2012, in order to continue to support near-term progress. This request would help us to continue to mitigate congestion in busy airspace above metropolitan areas. And it would help us with the continued deployment of radio transceivers that allow us to use very precise satellite-based information to control air traffic.

The FAA is requesting $9.7 billion in our Operations account. This represents an increase of just 0.6 percent above the FY 2012 enacted level. This request will enable us to run the agency on a day-to-day basis and maintain and support our air traffic control and air navigation systems.

It ensures the safe operation of the airlines and the certification of new aviation products. It would also enhance the safety of the commercial space transportation industry, and provide overall policy oversight and management of our airspace.

The Operations budget includes an additional $30 million to maintain and operate the new En Route Automation Modernization system, or ERAM, that became operational in the last two years.

ERAM is at the heart of NextGen. It helps us to advance our transition from a ground-based system of air traffic control to a satellite-based system of air traffic management.

The 2014 budget allows the FAA to meet the challenge of both maintaining the capacity and the safety of the current system while keeping our comprehensive modernization and transformation efforts moving forward.

The majority of the $2.8 billion requested for facilities and equipment is to sustain legacy areas. This includes aging infrastructure, power systems, information technology, navigational aids, and weather systems.

This years request for Research, Engineering, and Development is $166 million, a decrease of 7 percent from2012. Nonetheless, we intend to continue critical research in NextGen and other areas such as: fire research and safety; propulsion and fuel systems; advanced materials research; alternative fuels; aging aircraft; and unmanned aircraft systems.

Our budget emphasizes cost efficiency and reflects the hard choices we must make to provide the most benefit to the flying public.As a result, we are proposing to modify the mix of funding available for airport development projects.

The budget would allow commercial service airports to increase the Passenger Facility Charge from the current maximum of $4.50 to $8.00. This gives airports greater flexibility to generate more of their own revenue. And it allows us to reduce our request for the ongoing airport grants program by $450 million.

This change focuses federal resources on smaller airports that dont have the passenger volume to generate their own revenue, yet are still important to our nations air transportation network.

The Presidents 2014 budget request represents a balanced approach to achieving a long-term solution to our nations budgetary challenges. This is critical when one considers the impact of the sequester on our aviation system in the current fiscal year. The cuts required by the sequester have forced us to slash contract expenses and furlough 47,000 of our employees. With employees working fewer hours, we will have less efficient air traffic operations and less time for safety inspectors to certify new aircraft for the market.

It is my hope that we can work together to rally around our nations air transportation system and protect the great contribution that civil aviation makes to our economy.

Madam Chairman, this concludes my prepared remarks. I would be pleased to answer any questions you may have.

As you are aware, this is my first appearance before you as Administrator of the FAA. I appreciate the work of this committee and of the full Senate in moving my confirmation forward. We have a great number of challenges and opportunities ahead, and I look forward to enhancing our productive working relationship.

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

First let me briefly address the Boeing 787. The company has redesigned the internal battery components and conducted extensive testing. This includes limited test flightswithout passengersusing the redesigned battery prototype. The FAA is reviewing these test reports and analysis to make sure that the 787s new battery system ensures the safety of the aircraft and its passengers.

Turning to broader safety considerations, while aviation safety encompasses many technical issues, we cannot overlook the role of human beings in aviation and how they interact with sophisticated technology.

In the last few years, Congress has given us much guidance on how to advance aviation safety. And we have accomplished a great deal. The FAA overhauled flight and duty rules to guarantee that airline pilots have the opportunity to get the rest they need to operate safely. And we are increasing the required hours of experience a pilot must have before operating the controls of any airline flight. We are also finalizing a rule that requires more realistic training so that flight crews can better handle rare but serious scenarios.

The best way to enhance safety across the board is to improve the safety culture of an organization. Part of this effort involves self-reporting by our own employees on safety issues.

We have put programs in place for air traffic controllers and aviation technicians to report a problem, or even a mistake they may have made and not fear retribution. This makes the system even safer.

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

As you know, we are in a very uncertain and unpredictable fiscal environment.

The sequester is requiring the FAA to make significant cuts in services and investments. These cuts will impact air traffic control, NextGen implementation, and our certification services.

We are exercising all options to reduce costs a hiring freeze; cutting contracts; cutting travel and other items not related to day-to-day operations.

One of our largest contracts is the Federal Contract Tower Program. We have notified 149 airports across the country that federal funding for their air traffic control towers will end in mid-June. These airports have lower activity levels, and together, these contract towers handle less than 3 percent of the commercial operations nationally and less than 1 percent of the passengers. Communities still have the option to keep their tower open if they are able to provide the funding, and the FAA stands ready to help with that transition.

I want to emphasize that as we undergo the difficult process of implementing the deep cuts required by the sequester, we refuse to sacrifice safetyeven if this means less efficient operations.

In addition to contract towers, large facilities will also be affected. To reach the figure we need to cut from our payrollwhich is our largest operating costwe have to furlough 47,000 of our employees for up to 11 days between now and September.

The furloughs will reduce controller work hours at all airports with towers, but also at radar facilities across the country. Again, safety is our number one concern. We will only allow the amount of air traffic that we can handle safely to take off and land. This means travelers should expect delays. Today we are meeting with air carriers to go over specific operational impacts related to the furloughs facility by facility.

Furthermore, our aviation safety inspectors will have to focus their attention on the most pressing priorities and will devote their time to overseeing current activities to ensure continued operational safety of the existing fleet. These activities will take precedence over new projects.

Our overarching principle in making these difficult decisions is to maintain safety and offer the best air traffic services to the largest number of people both now and in the future.

It is my hope, and the hope of everyone at the Department of Transportation that our leaders can work together to rally around our nations air transportation system and protect the great contribution that civil aviation makes to our economy.

Mr. Chairman, this concludes my prepared remarks. I would be pleased to answer any questions you may have.

The FAA issued a supplemental type certificate for the avionics, which were developed as a result of a January 2009 agreement between the three parties. Under that agreement, the FAA awarded ACSS $6.3 million to equip the 20 aircraft with ADS-B In and ADS-B Out. ADS-B In, which the FAA does not currently mandate, provides pilots with a cockpit display showing the location of other aircraft. ADS-B Out, which will be required for all aircraft operating in transponder airspace in 2020, broadcasts aircraft positions to air traffic controllers and aircraft equipped with ADS-B In. Nine of the 20 US Airways A330s are equipped with ADS-B Out.

The ADS-B In avionics will significantly improve the situational awareness for pilots of the 20 aircraft by allowing them to see with satellite precision the other planes flying nearby. This in turn will allow pilots to take advantage of airspace procedures that will let them fly more directly from point A to point B, such as enhanced merging and spacing, and to fly at more efficient altitudes using In-Trail Procedures. As with other NextGen technologies and procedures, this will save time and money and will reduce fuel burn.

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.

Chairman LoBiondo, Ranking Member Larsen, and Members of the Subcommittee: A year ago, Congress reauthorized the Federal Aviation Administration. After four and a half years of uncertainty and stop-gap measures, the predictability that reauthorization provided was very welcome. It allowed us to invest with greater certainty in the future of our aviation system. We're grateful for your efforts on this, and we have been working very diligently in the past year to implement the provisions of reauthorization.

A year later, however, we again face fiscal uncertainty and unpredictability. The sequester is looming, and massive budget cuts are set to go into effect just two days from now.

I want to make a clear distinction about how sequestration differs from previous government shutdowns that have been caused by failure to pass a budget, or by the temporary lapse in our authorization in July 2011.

First, almost all of our FAA accounts would be affected. Therefore, this would affect almost all of our employees.

We are looking at all options to reduce costs. We're looking at a hiring freeze, and at cutting contracts and travel and other items not related to day-to-day operations. 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.

Unlike a government shutdown, under the sequester, almost all of our employees would be affected, even what we would traditionally call "essential personnel." The vast majority of our employees, including "essential workers" would have to be furloughed.

Under sequestration our flexibility is very limited because we must cut proportionately from all affected accounts. We can't move money around and we have limited flexibility to choose what it is that we're able to cut.

Now a very large portion of the DOT's budget is exempt from the sequester. What this means is that the FAA will take more than 60 percent of the sequester cuts for all of the DOT, even though our agency makes up only about 20 percent of the department's budget. Now, within the FAA, the airport grant program also is exempt from the sequester. So this again limits the choices we have on where to cut the money.

Finally, we have a very short time frame to make the bulk of these massive cuts - about six months. And that means the cuts would need to be deeper to have the same effect as if we could spread them out.

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 hope that we can continue to support the programs that we've all acknowledged were so important just one year ago.

Safety
As we move forward, the number one mission of the FAA is safety. That will always be our priority.

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.

I appreciate the expression of confidence in the FAA's actions from House T&I Committee Chairman Shuster and from Ranking Member Rahall, as well as from Subcommittee Chairman LoBiondo and Ranking Member Larsen. We all had a productive briefing just a couple of weeks ago.

Last week, we met with senior executives from Boeing to discuss the status of ongoing work to address the 787 battery issues. We will carefully analyze Boeing's proposal to address these issues. But 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.

In the last few years, Congress has given us much guidance on how to advance aviation safety. And we have accomplished a great deal. The FAA overhauled flight and duty rules to guarantee 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 are also finalizing a rule that will require more rigorous and realistic training so that flight crews can better handle rare but serious scenarios.

Technology
While we are enhancing 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 through NextGen.

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

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

We need to better understand 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.

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

Collaboration
To bring NextGen to fruition we need to collaborate across the FAA and across the industry. Reauthorization asked us to do this, and we have made great strides in collaborative efforts on many fronts.

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 our centers across the nation.

Chairman LoBiondo, as you know, a lot of the research that propels NextGen takes place in Atlantic City. The William J. Hughes Technical Center plays a key role in fostering NextGen and we appreciate your support.

We are collaborating with industry, and as a result of the work we are doing with our many partners, we are producing satellite-based navigation procedures much more quickly. We are using these NextGen procedures right now to reduce the miles that aircraft must fly; to create more direct routes; and to reduce fuel burn and cut greenhouse gas emissions.

Right here in metro Washington, D.C. airlines have started using these NextGen procedures to fly into Dulles and Reagan National. We estimate they will save $2.3 million in fuel per year.

Reauthorization laid out a vision to address the future needs of our nation's aviation system. 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 it provides 10 million jobs.

I look forward to working with you. And I sincerely hope that we can work together to make sure that America continues to operate the largest and safest aviation system in the world.

Mr. Chairman, this concludes my prepared remarks. I would be pleased to answer any questions you may have.