Commerce Committee Chairman Ted Stevens Addresses the American Bar Association Forum on Air & Space Law

February 2, 2006

WASHINGTON, DC – Focusing on the increased number of mini-jets that will soon revolutionize the country’s air traffic business and the need to upgrade America’s Air Traffic Control system, Senate Commerce Committee Chairman Ted Stevens addressed participants at the American Bar Association Forum on Air and Space Law.

 Following is a transcript of his remarks:

Thank you very much Sandy. I kept looking around to see if you were talking about the next speaker. It is nice to be with you and I get a little embarrassed when I hear those introductions. Time passes sort of quickly in the Senate, let’s put it that way. Every day passes slowly, but the years go by fast.

About this time last year, Senator Dan Inouye and I took over as Co-Chairs of the Commerce, Science, and Transportation Committee. I feel really very fortunate to be able to work with Dan. We have similar backgrounds and represent offshore states. We had a very successful first year as Co-Chairmen and we continue to work as we have on the Defense Appropriations Subcommittee in a bipartisan way to try to encourage our colleagues on each side of the Committee to address the top priorities and to avoid political conflict as much as possible.

Since we come from offshore states and all of our colleagues are from what we call the South 48, Dan doesn’t seem to have any trouble getting people to go visit his state. They’re a little slow to come to Alaska in the wintertime, 51 (degrees) below in Fairbanks just a week ago. That’s supposed to come down here and join us soon, so get ready for it.

We’ve tried to tackle some of the important issues on our Committee and this year, because of the election process, the time we have available is shortened. Our primary focus is to improve our telecommunications laws, address transportation security challenges, and begin the process of modernizing our national aviation system.

As Sandy says, it’s obvious to most people that aviation has been a major part of my life and it has been accelerated by the fact that Alaska depends on aviation more than any other state. Seventy percent of our cities, towns, and villages cannot be reached on a road system. Where you use cars and buses, we use private planes and air taxis. The number of licensed pilots in Alaska is seven times the national average. And, we have some 21,000 active pilots and nearly 10,000 registered aircraft in the third smallest population in a state that is one-fifth the size of the United States.

Aircraft deliver our basic goods and services and connect us to the Lower 48 and Hawaii. We really do have a unique understanding of the importance of aviation safety and aviation security.

We’ve held several hearings on transportation security matters and we’ll once again address the subject of this increase in the TSA fee that the President indicates he will recommend. It’s an increase that I still oppose. I think that passengers on airways systems already pay into the security system of our country and no one else does on a specific basis. Over the next several months, we are going to direct our attention to that aviation security problem and the plans that TSA has for passenger screening, plans incidentally which I do support in terms of registered travel concepts.

I happen to live in a little town called Girdwood of about 1,900 people, about 38 miles south of Anchorage. And I fly in and out of the state’s largest airport. And, as Sandy mentioned, with air travel having now exceeded the pre-2001 levels, Anchorage ranks fourth among world cargo airports. By weight, it is the first among all U.S. gateways. Twenty-six percent of U.S. international air freight moves through our Anchorage airport.

And, because of that we’re the testing ground for the next generation of safety and air traffic management technology. Working with the FAA, Alaskans tested the Capstone Program, which I hope you’re familiar with. It provide pilots with state of the art satellite-based navigation and surveillance capabilities onboard the airplane.

Capstone I mention because the FAA can no longer delay modernizing its infrastructure. With the return to pre-9/11 levels of air transportation, the FAA estimates the number of passengers will reach over one billion by 2015.

The entire aviation paradigm is evolving so quickly, some would say that the United States is finally beginning to see the real effects of deregulation.

The point-to-point low cost carriers are prospering domestically. Traditional hub-and-spoke carriers transit more lucrative international routes. In response, the jet and business jet markets are growing significantly. Since 1998, the number of regional jets has increased over 500 percent. And, that will probably double again by 2015. It is a staggering increase.

There will be new aircraft that will utilize the same or similar altitudes and the ATC system. The increase in aircraft are the major contributing factor to the increased congestion in the whole system.

We have a new demand in terms of capacity of our current system from what I call the “mosquito fleet.” This is the new jet, it’s the mini-jet market that will soon take over our skies. I hope you’re familiar with them. Two have been tested just within the past month. One capable of almost 3,000 miles. It will carry 10 passengers and use 35 percent of the fuel and weigh 40 percent of the current version of an aircraft that carries 10 passengers.

The first major wave of this mosquito fleet is expected to hit the market next year. And, that increase will revolutionize the air traffic business. At under two million dollars each, on an estimated basis, these new mini-jets will reach and provide new transportation to thousands of American companies and individuals.

This new addition will require an addition to the infrastructure or its complete modernization. Now, we can increase the capacity of our system by new runways and airspace redesign. Both are costly, but the runways are one matter. They can increase capacity by 30 to 60 percent, I’m told. But, the tens of billions of dollars needed to upgrade the entire Air Traffic Control system is really the problem. That’s far more than any annual FAA budget can support. We have to find a way to get new capital into the system. Capital financing has been suggested as a way to kick start the modernization process. And, it is my feeling that the FAA or another entity created for the purpose could issue bonds, like the TVA, the Authority, the basic concept of an independent corporation to provide the capital needed to purchase the major equipment to upgrade these systems. Such bonds could be secured by a future cash flow such as the ticket tax or other revenue streams, but it will have to be repaid by the funds allocated to the FAA from the Airways Fund.

I have had a series of conversations with Marion Blakey of the FAA and industry leaders about this concept, and our staff is developing legislative proposals, which Dan and I hope to have ready for the upcoming FAA reauthorization process. That authorization expires on October 1, 2007. We want to announce a series of hearings to get the ball rolling on this modernization concept as soon as possible.

Historically, the FAA has endured revenue shortfalls and cost control problems. I think anyone familiar with this knows that. The revenue shortfall resulted from the rapidly declining receipts from the ticket tax, the 7.5 percent tax. Since ticket prices have fallen in recent years, that has lowered the revenue going into the Aviation Trust Fund. And, the Fund’s uncommitted balance now has decreased rapidly. It’s declined almost 50 percent in the past three years.

With the FAA’s cost control problems that are well known, the FAA has management problems in the procurement area, and there is real worry about how this modernization can be financed.

With the federal budget deficit problems, the general fund contributions to the FAA’s budget probably will not increase. We rarely, but do from time to time take money from the Treasury and augment the monies available to the FAA. But, that process is very improbable now with the budget problems we all know. And, under the law, obviously, the FAA cannot spend in excess of its revenues. But this system absolutely must be revised. Our nation’s economic health depends on it. Nine percent of the United States’ Gross Domestic Product is tied to aviation. Worldwide, our aviation system is estimated to bring in $1.4 trillion at least annually now. Congress and the FAA must work closely together to address this challenge and to try to assure that this industry has the future it’s capable of providing.

Now, I want to close by saying this, I have great confidence in the FAA’s current leadership. The Administrator Marion Blakey and the ATO Chief Operating Officer Russ Chew are really good leaders. They’ve addressed these issues head on. Our Committee looks forward to working with them and with you and others interested in the subject to modernize America’s Air Traffic Control System and help assure that the agency’s fiscal house can sustain the changes required to keep up.

To begin the debate on how to finance the FAA modernization of the system, the Aviation Subcommittee of our Committee hopes to schedule a hearing on March 28th to review the FAA budget and the future of the Aviation Trust Fund. On April 4th the Subcommittee hopes to hold hearings on the funding options and that will be difficult for us, even more so, because as I indicated we will continue to oppose an increase in the TSA ticket charge that has once again been proposed by the Administration.

Now it’s my hope this organization and all those interested in the future of aviation in this country will work with us. If we do not modernize this system, I think we are going to be in for some increased restrictions on the availability of both landing opportunities and the number of aircraft that can enter the system at one time. This is a very difficult system, as you know, and it will take some time to modernize and it will take some time to properly design. So, we look forward to your assistance. And, if you have any questions of me, I’d be pleased to try and answer them. I want to tell you, I sort of skipped the National Prayer Breakfast to be with you this morning, so you can say a prayer for me, okay? Thank you very much.


Please note: References to Sandy are to Sandy Sinick, who introduced Chairman Stevens prior to his remarks.