Newsroom

Steady Growth Projected for Domestic and International Air Travel Over the Next 20 Years

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.

Before the House Transportation and Infrastructure Committee, Subcommittee on Aviation, concerning FAA Reauthorization – One Year Later

Oral Testimony:

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.

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.

Washington Update on Safety and Efficiency

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

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

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

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

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

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

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

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

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

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

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

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

Delays in those major airports will ripple across the country.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

NextGen Advisory Committee

Remarks as Prepared for Delivery

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

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

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

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

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

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

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

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

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

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

FAA/DOT Personnel Updates

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

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

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

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

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

Boeing 787

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

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

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

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

Budget/Sequestration

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

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

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

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

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

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

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

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

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

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

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

Update on DataComm

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

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

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

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

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

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

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

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

Flight crews and controllers reported the system performed as expected.

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

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

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

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

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

Other Relevant NextGen News

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

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

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

Presentations:

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

Fostering Open Lines of Communication

Thank you very much, Mr. Secretary.

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

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

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

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

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

We have to tackle these challenges together.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Boeing 787 Design and Production Review

Thank you for coming today.

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

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

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

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

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

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

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

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

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

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

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

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

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

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