Three years ago, Congress enacted the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR 21) to reauthorize Federal Aviation Administration (FAA) programs and unlock the Airport and Airway (Aviation) Trust Fund. AIR 21 established the principle that the revenues contributed by aviation users into the Airport and Airway Trust Fund should be fully invested for its intended purpose of developing the aviation system, and that these funds should not be diverted to supporting other programs. The Committee intends to build upon this principle in its reauthorization of Federal aviation programs this year.
Since airline deregulation in 1978, air travel has become an essential form of travel for much of the nation. The annual number of commercial air travelers grew to 696.3 million in 2000, a 123 percent increase from the number of travelers in 1980.
This unprecedented usage pushed our nation’s air traffic control system and over-crowded airports to the brink of gridlock in 2000, when one in every four commercial flights was delayed, cancelled, or diverted. The slowing economy and the terrorist attacks of September 11, 2001, have since caused the number of travelers to decline, but this is a temporary reprieve. As the economy strengthens and passengers’ fears about security fade, traffic will rebound. The FAA’s forthcoming aviation forecast (to be published in March 2003) will show passenger traffic returning to the 2000 levels in 2005, and reaching nearly one billion by 2014. Absent further improvements in aviation system capacity and efficiency, delays will quickly return to the unbearable levels experienced in 2000.
Improvements in aviation system capacity and efficiency will require capital investment in both our airports and air traffic control system. The FAA’s National Plan of Integrated Airport Systems (NPIAS) estimates total airport development costs for projects that are eligible for Federal assistance under the Airport Improvement Program (AIP). The most recent FAA NPIAS indicates that airports must invest about $9.2 billion annually from 2001 through 2005 to meet AIP-eligible capital needs. This estimate was developed prior to the September 11th terrorist attacks.
A more comprehensive assessment of airport capital needs was made by a recent survey of U.S. airports by an airport trade association. The survey estimates total airport capital development costs – including the cost of non-AIP-eligible projects – to be about $15 billion per year from 2002 through 2006. This compares to the average annual capital funding available to airports (mostly from airport bonds) of about $12 billion, resulting in an annual investment gap of $3 billion.
This investment gap does not include significant additional airport security costs that must be funded in the near future. Neither the trade association’s nor FAA’s estimate includes funding for terminal modification projects that are needed to integrate the new explosives detection systems (EDS) into baggage screening systems. In-line installation of EDS will be necessary in the long run for reasons of throughput rate, screener productivity, airport lobby space, and passenger security and convenience. The trade association estimates that such terminal modifications will cost about $4 - $5 billion. The FY 2004 President’s Budget for the Transportation Security Administration requests no funds for such terminal modifications, leaving these costs unfunded.
Since September 11th, airport security projects in general have claimed an increasing share of AIP funds, crowding out the capacity-enhancing projects that are needed to avoid the return of unbearable passenger delays once aviation traffic recovers to year 2000 levels. According to the General Accounting Office (GAO), during FY 2002 the FAA awarded a total of $561 million, 17 percent of total AIP funding, to airports for security projects related to the events of September 11, 2001. This is the largest amount awarded to airports for security projects in a single year since the program began in 1982. In contrast, FAA awarded an average of less than 2 percent of total AIP funds to security projects for fiscal years 1982 through 2001. The $561 million awarded in FY 2002 is a $504 million increase above the amount awarded in FY 2001. The AIP program’s ability to address airport safety and capacity needs will be dangerously undermined should this trend continue. Security costs such as those borne by airports since September 11th are national security costs. The appropriate source of funding for national security activities is general fund appropriations, not the AIP program or airport revenues.
Therefore, the Committee recommends that airport security costs be funded outside of the AIP program, from the general fund of the U.S. Treasury. This would allow the AIP program to begin to address the investment gap in airport safety and capacity needs with relatively modest funding increases. Specifically, the Committee recommends AIP funding increases of at least $100 million each year, beginning with a funding level of $3.5 billion in FY 2004, and totaling $18.5 billion for the five-year period from FY 2004 – 2008.
The Committee also recommends the FAA’s Facilities and Equipment (F&E) program be funded at least at the President’s request level of $2.916 billion to ensure that our nation’s air traffic control system remains safe and efficient. The FAA’s capital investment program, which includes air traffic control modernization, calls for investment to grow from $2.916 billion in FY 2004 to $3.177 billion in FY 2008, for a total investment of $15.2 billion over the five-year period from 2004-2008.
The Committee recommends the FAA Operations and Maintenance account be funded at least at the President’s request of $7.59 billion. Increased funding in this account is necessary not only to maintain current operations, but also to improve system efficiency and reduce delays, increase safety oversight, hire additional air traffic controllers, and return management of the internal security and hazardous materials program from the Transportation Security Administration to the FAA.
The Committee recognizes that greater efforts must be made to ensure that scarce resources are used as effectively as possible. Toward that end, the Committee included in AIR 21 several management reforms that were intended to improve the FAA’s performance, especially with regard to the acquisition and distribution of air traffic control equipment and services. These reforms included the establishment of a Chief Operating Officer position responsible for day-to-day operations of an Air Traffic Services Performance Based Organization, and creation of an Air Traffic Services Subcommittee, which is part of the FAA’s Management Advisory Council, to oversee the FAA’s management of the air traffic control system. The Committee intends to redefine the role of the Chief Operating Officer and make other modifications to the structure of the FAA so these reforms will work as intended and ensure the FAA meets its mission to provide a safe and efficient air traffic control system.
The current economic climate and weak financial condition of the major airlines have exacerbated a problem that has been a concern since airline deregulation – lack of service to small communities. The benefits of airline deregulation have been significant, but they have not been evenly distributed. In certain small- and medium-sized communities, the lack of competition among airlines has resulted in significantly higher fares. In many instances, the airline fares in these communities are so high that businesses are choosing to relocate to areas with more affordable airfares. Section 203 of AIR 21 addressed this problem by establishing a pilot program to help underserved communities develop public-private partnerships to promote service to their communities. This pilot program received $20 million in the FY 2002 Department of Transportation Appropriations Act. Demand for these funds far exceeded the amount available. The Department of Transportation (DOT) received 180 applications totaling over $142.5 million from communities in 47 states. By December 2002, the Department had awarded about $20 million in grants to 40 small communities to implement air service improvement programs. The FY 2003 Omnibus Appropriations Act provided $20 million for the program. The Administration did not request funding for this program in FY 2004. The Committee recommends this pilot program be continued in FY 2004 at the FY 2003 authorized level of $27.5 million.
The weak economy and financial condition of the airlines have also increased the demands on the Essential Air Service (EAS) program. As of July 2002, DOT subsidized service to 114 communities. Between September 2001 and September 2002, carriers had notified DOT of their intent to discontinue service to 15 subsidy-eligible communities. The EAS program received $113 million in funding in each of FYs 2002 and 2003. The FY 2004 Budget request of $50 million represents a significant cut, and is insufficient to meet communities’ air service needs. During the upcoming reauthorization of AIR 21, the Committee intends to examine the EAS program and the reforms the Administration has proposed. However, even if the Committee reforms the program, we believe that significantly more than $50 million will be required to sustain a revised EAS program.
Since airline deregulation in 1978, air travel has become an essential form of travel for much of the nation. The annual number of commercial air travelers grew to 696.3 million in 2000, a 123 percent increase from the number of travelers in 1980.
This unprecedented usage pushed our nation’s air traffic control system and over-crowded airports to the brink of gridlock in 2000, when one in every four commercial flights was delayed, cancelled, or diverted. The slowing economy and the terrorist attacks of September 11, 2001, have since caused the number of travelers to decline, but this is a temporary reprieve. As the economy strengthens and passengers’ fears about security fade, traffic will rebound. The FAA’s forthcoming aviation forecast (to be published in March 2003) will show passenger traffic returning to the 2000 levels in 2005, and reaching nearly one billion by 2014. Absent further improvements in aviation system capacity and efficiency, delays will quickly return to the unbearable levels experienced in 2000.
Improvements in aviation system capacity and efficiency will require capital investment in both our airports and air traffic control system. The FAA’s National Plan of Integrated Airport Systems (NPIAS) estimates total airport development costs for projects that are eligible for Federal assistance under the Airport Improvement Program (AIP). The most recent FAA NPIAS indicates that airports must invest about $9.2 billion annually from 2001 through 2005 to meet AIP-eligible capital needs. This estimate was developed prior to the September 11th terrorist attacks.
A more comprehensive assessment of airport capital needs was made by a recent survey of U.S. airports by an airport trade association. The survey estimates total airport capital development costs – including the cost of non-AIP-eligible projects – to be about $15 billion per year from 2002 through 2006. This compares to the average annual capital funding available to airports (mostly from airport bonds) of about $12 billion, resulting in an annual investment gap of $3 billion.
This investment gap does not include significant additional airport security costs that must be funded in the near future. Neither the trade association’s nor FAA’s estimate includes funding for terminal modification projects that are needed to integrate the new explosives detection systems (EDS) into baggage screening systems. In-line installation of EDS will be necessary in the long run for reasons of throughput rate, screener productivity, airport lobby space, and passenger security and convenience. The trade association estimates that such terminal modifications will cost about $4 - $5 billion. The FY 2004 President’s Budget for the Transportation Security Administration requests no funds for such terminal modifications, leaving these costs unfunded.
Since September 11th, airport security projects in general have claimed an increasing share of AIP funds, crowding out the capacity-enhancing projects that are needed to avoid the return of unbearable passenger delays once aviation traffic recovers to year 2000 levels. According to the General Accounting Office (GAO), during FY 2002 the FAA awarded a total of $561 million, 17 percent of total AIP funding, to airports for security projects related to the events of September 11, 2001. This is the largest amount awarded to airports for security projects in a single year since the program began in 1982. In contrast, FAA awarded an average of less than 2 percent of total AIP funds to security projects for fiscal years 1982 through 2001. The $561 million awarded in FY 2002 is a $504 million increase above the amount awarded in FY 2001. The AIP program’s ability to address airport safety and capacity needs will be dangerously undermined should this trend continue. Security costs such as those borne by airports since September 11th are national security costs. The appropriate source of funding for national security activities is general fund appropriations, not the AIP program or airport revenues.
Therefore, the Committee recommends that airport security costs be funded outside of the AIP program, from the general fund of the U.S. Treasury. This would allow the AIP program to begin to address the investment gap in airport safety and capacity needs with relatively modest funding increases. Specifically, the Committee recommends AIP funding increases of at least $100 million each year, beginning with a funding level of $3.5 billion in FY 2004, and totaling $18.5 billion for the five-year period from FY 2004 – 2008.
The Committee also recommends the FAA’s Facilities and Equipment (F&E) program be funded at least at the President’s request level of $2.916 billion to ensure that our nation’s air traffic control system remains safe and efficient. The FAA’s capital investment program, which includes air traffic control modernization, calls for investment to grow from $2.916 billion in FY 2004 to $3.177 billion in FY 2008, for a total investment of $15.2 billion over the five-year period from 2004-2008.
The Committee recommends the FAA Operations and Maintenance account be funded at least at the President’s request of $7.59 billion. Increased funding in this account is necessary not only to maintain current operations, but also to improve system efficiency and reduce delays, increase safety oversight, hire additional air traffic controllers, and return management of the internal security and hazardous materials program from the Transportation Security Administration to the FAA.
The Committee recognizes that greater efforts must be made to ensure that scarce resources are used as effectively as possible. Toward that end, the Committee included in AIR 21 several management reforms that were intended to improve the FAA’s performance, especially with regard to the acquisition and distribution of air traffic control equipment and services. These reforms included the establishment of a Chief Operating Officer position responsible for day-to-day operations of an Air Traffic Services Performance Based Organization, and creation of an Air Traffic Services Subcommittee, which is part of the FAA’s Management Advisory Council, to oversee the FAA’s management of the air traffic control system. The Committee intends to redefine the role of the Chief Operating Officer and make other modifications to the structure of the FAA so these reforms will work as intended and ensure the FAA meets its mission to provide a safe and efficient air traffic control system.
The current economic climate and weak financial condition of the major airlines have exacerbated a problem that has been a concern since airline deregulation – lack of service to small communities. The benefits of airline deregulation have been significant, but they have not been evenly distributed. In certain small- and medium-sized communities, the lack of competition among airlines has resulted in significantly higher fares. In many instances, the airline fares in these communities are so high that businesses are choosing to relocate to areas with more affordable airfares. Section 203 of AIR 21 addressed this problem by establishing a pilot program to help underserved communities develop public-private partnerships to promote service to their communities. This pilot program received $20 million in the FY 2002 Department of Transportation Appropriations Act. Demand for these funds far exceeded the amount available. The Department of Transportation (DOT) received 180 applications totaling over $142.5 million from communities in 47 states. By December 2002, the Department had awarded about $20 million in grants to 40 small communities to implement air service improvement programs. The FY 2003 Omnibus Appropriations Act provided $20 million for the program. The Administration did not request funding for this program in FY 2004. The Committee recommends this pilot program be continued in FY 2004 at the FY 2003 authorized level of $27.5 million.
The weak economy and financial condition of the airlines have also increased the demands on the Essential Air Service (EAS) program. As of July 2002, DOT subsidized service to 114 communities. Between September 2001 and September 2002, carriers had notified DOT of their intent to discontinue service to 15 subsidy-eligible communities. The EAS program received $113 million in funding in each of FYs 2002 and 2003. The FY 2004 Budget request of $50 million represents a significant cut, and is insufficient to meet communities’ air service needs. During the upcoming reauthorization of AIR 21, the Committee intends to examine the EAS program and the reforms the Administration has proposed. However, even if the Committee reforms the program, we believe that significantly more than $50 million will be required to sustain a revised EAS program.
