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Testimony

Statement of Marion C. Blakey, Administrator

Before the Senate Committee on Finance, on Financing the Next Generation Air Transportation System (Oral Testimony as Prepared for Delivery)

Good morning, and thank you, Chairman Baucus. It is a pleasure to address you, Senator Grassley and the members of this committee. Thank you for your focus on aviation safety. U.S. aviation is the safestin the world. The FAA continues to strive to keep that record intact.

What brings me here today is the very real concern faced by industry, government and passengers alike: As you know, the taxes that fuel the Airport and Airway Trust Fund will expire on September 30, just 80 days away. We need the Congress to act. Indeed, the flying public is depending on this committee for the leadership and support for which you have been known over the years.

To be sure, America’s aviation system is reaching critical mass. Unless we transform it with state-of-the-art technology and provide a stable revenue stream to pay for it America will be unable to handle the growth that is headed our way. Forecasters anticipate a billion passengers by 2015. With the airlines using smaller aircraft and the advent of personal taxis and very light jets, there’s little question that aviation activity will grow dramatically across all segments of the industry.

And we have before us the lessons of 2000 and 2006 and so far, 2007. Long lines on the tarmac, wasted fuel, wasted time, a system that quietly, steadily grinds to a slower and slower pace, delays, missed connections, frustration. What’s more, the annual cost of delays is nine billion dollars.

We can prevent this gridlock. But we must take action now. The time is right, and the FAA has shown over the past several years that we are capable of managing the effort.

In the mid-1990s, Congress freed us from antiquated personnel and acquisition rules, slicing miles of red tape. Your direction was to operate moreefficiently. We’ve done so. Over 90 percent of our major capital investment programs are on schedule and within budget this year.

With all of this as context, we know the linchpin of our success in launching a next generation air transportation system lies in our reauthorization. Our best efforts at operating more like a business will fall short without a specific and direct link between our revenues and the cost of operating the system.

As this committee well knows, aviation is critical to our economy. Indeed, failure to put NextGen in place could cost the United States over $22 billion per year in lost economic activity by 2025. That means delayed flights, undelivered packages, gridlock — none of which we can afford. Every segment of aviation agrees we need NextGen as soon as possible. The capacity, safetyand environmental benefits are enormous. The tough issue — the issue that brings me here today — is how to pay for it.

Today’s tax system is unfair to commercial airline passengers, while the fastest growing segment of aviation — business jets — is paying very little. It’s a matter of equity, and this chart is a finger in the eye of every airline passenger.

The tax revenue is also vulnerable to fluctuations in ticket prices because of our reliance on the 7.5 percent excise tax on airline tickets. Ticket prices have nothing to do with the cost to provide service, and trying to fund the long-term capital investments of NextGen from this tax is inherently unpredictable and unstable.

The primary goal of the Administration’s comprehensive reform legislation is to tie the cost of providing service to our revenue and to ensure we have adequate funding for the major capital investments coming up. The key to success is to have a clear link between costs and revenues. To operate more efficiently, this system will have to be flexible as costs change, allowing the FAA to be nimble when it comes to making adjustments as our customers require. The plain truth of the matter is that NextGenand cost-based financing aren't ends unto themselves, but means to the goal of a more efficient aviation transportation system with more capacity and fewer delays.

I know that the Senate sees the importance of the issue at hand. Let me say how pleased we are that S.1300 supports the need to transform the aviation system. It has the foresight to provide dedicated funding, and that is crucial.

Senators, this [ADS-B ground-based transceiver] is what the future of aviation looks like. This particular navigation device has another component, but I can’t show it to you because it’s orbiting the Earth thousands of miles up. To be clear, without NextGen, aviation is stuck on terra firma — figuratively and literally.

In closing, it’s plain that we have been presented with an historic opportunity to alter the future of the FAA and aviation by creating a stable, cost-based, and equitable revenue stream. I look forward to working with you to make that happen. We have 80 days of which the calendar has the Senate in session for 51. The viability of the system depends on our ability to get the job done.