May Speaks to NAA: '2007 Reauthorization: It’s Time for a
Change'
ANN Analysis:
ATA Boss James May hasn't been shy about his serving as
messenger for the airline industry's desire to see the rest of
aviation pay user fees, but a recent speech spells it out even more
stridently... and makes it clear to segments of the aviation
world that are being asked to pay more of the burden,
that the airline industry (which wants to pay less), WANTS IT
THAT WAY.
To many, May (pictured lower right) seems more and
more willing to split the aviation world down the middle when the
business really seems to need to offer a single united front to the
world. This allegedly 'penny-wise and pound-foolish' approach is
already drawing rumblings among GA and Biz-Av adherents that
boycotts of those airlines that espouse such allegedly
narrow-minded positions may be in the wind.
This is the complete text of the speech (as provided by ATA)
that May gave to the National Aeronautic Association, in
Washington, DC, on January 27, 2006. Let us know what you think of
his positions and sentiments...
May's NAA Speech
Good afternoon.
It’s good to be here. With all of the problems facing the
airline industry, I’m delighted to visit with true aviation
enthusiasts who appreciate its allure and value – its
unparalleled record of individual, commercial and military
successes. I don’t need to tell you how our culture and
quality of life have been enhanced by, what NAA so aptly describes
as, the “art, sport and science of aviation and space
flight.” As the nation’s oldest aviation association,
NAA plays a unique role of bringing together diverse segments of
the industry. From daredevil flyers to air-sports enthusiasts to
corporations, NAA preserves tradition by honoring those who have
significantly advanced aviation, recording unmatched aviation and
space flight accomplishments and facilitating the industry’s
growth.
I’m proud to say that ATA has been a member of NAA for
decades. I am equally proud to recognize Jack Cole, NAA president
in 1994-1996, who currently serves as ATA’s executive planner
and liaison for JPDO, FAA’s Joint Planning and Development
Office. Every day Jack teaches me a little more about how the
industry works – and helps us find ways to fix it when it
doesn’t. Jack’s work with JPDO has been tireless. He,
along with many of you in this room, is molding a strategy for
addressing unsurpassed demands on air space in the next few years.
A tough job – we owe you our thanks and
support.
This brings me to a dilemma that we’ve all thought a good
bit about lately: Will our air transportation system be able to
handle what’s coming? No. Will the current infrastructure
– designed and, in many respects, implemented in the 1950s
– be able to accommodate commercial air-service demand along
with the onslaught of business jets, micro jets or SUVs with wings,
pilot-less vehicles and regional jets in the next few years? No
again. And it really is time for a change. Our goal is not to
exclude, but rather to create a system that includes all users.
Now, rather than launch into a lofty “inside the
beltway” discussion on concepts and, frankly, wishful
thinking, let’s spend a few moments cutting to the chase
about what we can do about future demands on the system. To use
Sgt. Joe Friday’s Dragnet approach: “Just the
facts, ma’am.”
There are lots of opinions about how to solve the “too
many planes for too little space” dilemma, but few disagree
on the following basics – not even the pragmatic Sgt.
Friday.
Fact number one: People love to fly. And
for many of you, that may mean sitting at the controls of your own
airplane, or soaring overhead in a balloon. And while business
travelers may dread that fifth trip to Los Angeles in two months,
they still would much rather get there by plane. We all want to
attend our grandson’s graduation or enjoy that fishing trip
to Alaska or weekend football game like the upcoming Superbowl
– particularly when fares are so low. Contrary to those who
say carriers are hiking fares, domestic fares in 2005 averaged 19
percent below 2000 levels while inflation rose 13 percent during
that same period. It’s hard to say fares are moving up when
you can fly from coast to coast for $139 round trip. You sure
couldn’t drive for that amount – yet the public fully
expects these rock-bottom air fares to continue.
As people fly more and more and as businesses ship more and
more, the demands on air traffic management continue to grow,
faster than ever. From 1970 to 2004, the annual number of U.S.
airline passengers quadrupled to 700 million. But when it comes to
air traffic control, commercial airlines are only part of the
picture. During that same period, FAA workload increased from
23,000 flights per day to 44,000. Looking out 10 years, FAA
projects 57,000 flights per day, and that’s before factoring
in the potential for an additional 20,000 VLJ flights. So whether
you talk people or planes…demand is skyrocketing.
Fact number
two: We have the safest, most reliable air traffic
management system in the world. That said, what’s in place
today won’t last forever. Although the existing
infrastructure works in picture-perfect conditions, even minor
detractions have devastating ripple effects throughout the entire
system. One reason the system works today is that commercial
airlines know the system and its pressure points, and develop
workarounds – like schedule adjustments – to keep the
system moving. Even so, massive flight delays and rescheduling
threaten the system’s integrity, let alone its efficiency.
Today’s infrastructure is stretched to the limit – it
just can’t accommodate the surge in traffic expected in the
very near future. We are at the proverbial “fork in the
road.” We either make fundamental changes or accept an
inferior air traffic management system that doesn’t deliver
what we all need. You know, Yogi Berra once said, “When you
come to a fork in the road – take it!”
Unfortunately, we don’t have that luxury.
In large part, today’s system is dependent on voice
communications between aircraft and controllers, enhanced by
ground-based radar surveillance and navigational aids. Radar,
developed in the 1940s for defense purposes and refined
continuously, is the primary way aircraft are located and tracked.
While it is true that system components have improved over the past
60 years, it is hard to believe that we still rely on technology
– while incredibly safe and proven – that forces
aircraft to fly inefficient, less direct routes, with significant
separation requirements. That means more fuel and emissions, wasted
time and money for everyone – the FAA, the military, business
travelers, weekend flyers and the public. We’re all
paying the price.
To meet the challenge, FAA constantly fights an uphill battle.
It must fully utilize existing technologies while investing in
next-generation technologies, including satellite-based navigation.
FAA is working to increase productivity while rationalizing an
increasingly costly workforce. And finally, they are implementing
an effective cost-accounting system that demands fiscal discipline
while continuing to operate the safest air transportation system in
the world.
Further, change will not happen overnight. Modifying
technologies in a $30 billion national infrastructure takes time,
just like modifying technologies in the large fleet of aircraft in
operation today. And as you all know, changing technologies alone
won’t fully resolve system constraints.
FAA and the industry must design and implement fundamental
changes to pilot and controller procedures that the new
technologies are designed to support. Although the concepts
of this newly integrated design system are in place, experts are
working hard to determine how they will actually work. Again, that
takes time, a lot of it, as well as money, tenacity and
ingenuity.
Fact number
three: FAA’s funding structure is obsolete and
unpredictable, and just doesn’t make sense. FAA is forced to
use more of its funds to pay for ongoing operations than to explore
and implement new technologies. Those who say the status quo is
working just fine are ignoring the facts, pure and simple. The
constant struggle between funding FAA through General Fund
appropriations or through the Airport and Airway Trust Fund is
taking its toll. It’s hard to plan for operational and
technological modernization when you don’t know how much
money you’ll have from one year to the next, and you
don’t know how large chunks of that money will be earmarked.
That’s not FAA’s fault – that’s how the
current funding structure works, or should I say, doesn’t
work.
For the past 15 years, the portion of FAA operating costs coming
from the General Fund has declined, accounting for only 20 percent
in FY 2005. With current strains on the budget from hurricane
relief efforts and the wars in Iraq and Afghanistan, and efforts to
reduce a projected $337 billion federal deficit, there’s
every reason to believe that, despite our best efforts and
intentions, FAA will not get the General Fund contribution it
requires – meaning that FAA will be forced to rely even more
on trust fund revenues.
To be blunt, because of other congressional and administration
priorities, the trust fund is running out of money. From FY 2001 to
FY 2004, the uncommitted balance dropped from $7.3 billion to $2.4
billion. The administration predicts that by FY 2006, it will drop
to approximately $1.2 billion, the lowest in its history. Now FAA
tells us that its expenses will exceed its anticipated revenue in
2006. In response, Congress, the FAA and the administration will be
forced to make some very tough decisions – decisions that
will directly impact the future of our economy, our country and
those of us in this room today.
We have a dilemma that we need to solve. The most direct and
potentially most successful line of attack is to figure out a way
to ensure that FAA has the resources and the will to get the job
done.
The good news is that the FAA knows it and has taken the point
in providing leadership. The administrator is working hard to
reform FAA, trying to accelerate the transition from a ground-based
to a satellite-based system, improve air-traffic control
performance, eliminate inefficiencies and management layers,
leverage communications technologies and streamline overall
operations – and ultimately to involve the system users in
mapping a course for the future. It’s not easy and it
won’t be done overnight. But, with the administrator,
ATO’s Russ Chew, and many others at FAA and within the
industry focused on this mission, real progress is in sight.
Next, let’s
consider how to best and most fairly fund FAA’s efforts.
I’m talking about how to reallocate the trust fund
contributions because, as I mentioned earlier, we can’t count
on General Fund contributions, even though we all know a vibrant
air traffic management system is vital to everyone – not just
those who operate airplanes. Clearly, the current trust-fund
funding structure – a maze of taxes and fees put in place
decades ago when commercial airlines and the military were the only
significant users of the air traffic control system – is
neither fair nor sensible. According to FAA, commercial airlines,
including passenger, freight and charter operations, contributed
more than 90 percent of the total user taxes in FY 2004. Yet their
total operations made up only about two-thirds of flights under FAA
control in the en route system. That means that commercial airlines
and their customers subsidized other users of the system by about
$3 billion last year alone. You can slice this any way you want and
you wind up at the same place: Some users of the system are
not paying their fair share of the costs and that’s making
matters difficult for all of us.
The status quo is not working. The trust fund balance is
dangerously low and predictions for beefing it up are dim, at best.
I know that some so-called experts are suggesting that because more
people will be flying, revenue from the excise tax will be
sufficient to cover FAA’s costs. I disagree – so do the
FAA and OMB. Even though fares may increase, FAA’s costs will
far outpace anticipated revenues. That means revenue from the
excise tax is simply not the panacea some say it is. It’s
equally silly to say, as other experts have stated, that there is
no evidence to justify radical changes in the aviation tax-and-fee
system. It flies in the face of what the current and past FAA
administrators, presidential commissions and well-respected
economists have been saying for years – there must be a
better, more stable, transparent way to fund FAA’s efforts
– one that imposes costs based on system use, rather than
completely unrelated factors such as ticket cost and fuel
consumption.
I believe that there is a straightforward funding mechanism that
accomplishes just what is needed - imposes a fee on users for
services they use and FAA’s cost to provide those services.
We must establish a fair, equitable and simple cost-based system
for establishing national air space system funding. The funding
should be based on proportional use and, ultimately, fund systems
that provide incentives for efficient use of scarce resources.
Simple. That means an aircraft operator’s use of air traffic
control resources determines the amount owed to the FAA, whether
the aircraft is carrying three or thirty or three-hundred
passengers. Providing an assured and reliable revenue stream also
will increase financing flexibility.
Before you decide that my user-fee proposal is an assault on
general aviation, remember that, in my view, this should not apply
to recreational general aviation pilots operating out of
uncontrolled airports under visual flight rule conditions. They
should be essentially exempt, paying only aviation gasoline or some
equivalent tax. Piston general aviation users generally do not
utilize the same air-traffic resources as the airlines, so they are
not significant cost drivers. It’s a “pay for what you
use” system that allocates costs fairly among system
users.
And, finally, before you accuse me of ignoring the broad
benefits of a strong air traffic control system and related FAA
functions to society and to the economy, let me assure you that I
understand that some FAA services and programs should not be funded
exclusively by system users. It is up to Congress to decide what
falls into that category and fund those efforts appropriately,
including with the General Fund. But whether we like it or not, it
is quite likely that most of FAA’s work necessarily will be
funded by sources other than the General Fund.
So, where does this
leave us? First, we must quit kidding ourselves into thinking that
the current air traffic control system – rapidly nearing
gridlock with a distorted, insufficient and unstable funding base
– will, in the next few years, somehow morph into one that
meets the needs of GA pilots, business jets, the military and
airlines. Second, we must accept that limits on the current system
will prevent it from ramping up to meet the volume and unbelievable
diversity of future demands. Third, we must realize that in order
to develop and implement a workable plan, FAA must get its house in
order and we must agree on a fair way to pay for FAA’s
efforts. That’s the only way we’re going to get what we
all agree we need.
We all know that the U.S. economy cannot afford an air traffic
management system that fails to meet the needs of users. Period. If
we are to continue to lead the world in business ingenuity and
opportunities, we have to figure out how to accommodate huge
increases in air traffic – or growing congestion, flight
delays and general frustration will shut the system down,
figuratively if not literally. If U.S. industry is going to
continue to compete in an increasingly sophisticated international
marketplace, then businesses, consumers, airports, airlines and the
public must be able to depend on air-traffic services to get them
and their products where they want to go when they want to get
there.
It involves change. It is an exercise in hard choices. And
it’s time!