On wednesday, following the chaodents speech, elaine testified before the senate commerce, science and Transportation Committee on the future of the federal Aviation Administration and the president s proposal to privatize the air Traffic Control system. This is just over two hours. Good morning. I want good morning. I want welcome elaine chao back today. We are working hard on a bipartisan basis to produce a bill ropefully during the work period and we appreciate the administrations end in gagement. A range of topics. One of the key governance issues we have not focused on this year which has been discussed over the last two years and commonly occurs in other parts of the world whether the United States should separate the provider function from the faa create a nongovernmental not for profit to do the job. Outside auditors have ding the governments performance. This week the president used to join the proponents of significant reform. The president has challenged congress. And it is hard to ignore the many independent studies and reviews that document the flaws with the current structure and look forward on the merits as well as ways the administration will seek to address concerns at Key Stakeholders with the rural perspective. While reform has garnered the attention this week, there are plenty of other important issues that require the situation of the d. O. T. And this committee. The department administers several key programs including essential air Service Program and is response for conle soar protection oversight for the aviation industry. Last month, aviation subcommittee chairman blunt held a hearing on consoom ser issues and i am interested on what step this is the department has taken to address the matter. We craft our bill. We will continue to focus on start ication reform and the integration of drones in the air spis and Airport Infrastructure development and aviation safety and rural air service. There is still a lot of work to be done. I look forward to working with the colleagues throughout the process. With that, i reate the thanks to secretary choo for being her and turn to Ranking Member nelson for the opening statement. Thank you, mr. Chairman. In which we dispatched the subject matter last year and exceptionally bipartisan way and almost unanimous way madam secretary, welcome. The current extension of the faa set to expire the end of september. I am hopeful that we are going to have a bipartisan and longterm reauthorization bill ready to go in the coming weeks and what i would express my preference to you just a few minutes ago, a bill somewhere in the range of five years to give you certainty over time that you have the operation to execute the executive branch of government. I remind our committee, that we passed this oneyearential tension, with a lot of stuff in it. 95 to 3 in the senate. At the time, the chairman and i focused on areas of agreement. This resulted in legislation that addressed the safe integration of drones in the National Airspace, significant reforms to the faas certification process and broad ranging aviation consumer issues. This was a win for aviation stakeholders as well as the traveling public, which was reflected in that overwhelming vote. Now, any further progress on that bill was thwarted in the house by the proposal of privatization of air Traffic Control. So we now operate just on a oneyear bill with a new looming deadline. Madam secretary, i understand that you will present the administrations support for the shifting atc services from the faa to an independent entity that will be governed in part by the airlines. My views on this matter, i have already shared with you are the same as i expressed rather vigorously last year when this subject was up for debate. Why . Because we have the safest air Traffic Control system in the world. Why would we risk that by happened listening the whole thing over to unproven entity . Why give away billions of dollars in governmental assets to in ty that will be governed in large part by the airlines . Even some of our colleagues on the other side of the aisle, which really is not so much applicable to this committee as it is to the full senate have not rallied behind this proposal because they understand the potential harm to general aviation as well as to small and roral communities. And a fundamental breakup of the faa cannot advance when there is such Strong Division among aviation stakeholders and in congress. So this entire discussion over atc privatization distracts from the legitimate matters that must be addressed by the congress on the part of faa. The secret that the traveling public is frustrated and i want to grant what the chairman has said about this matter. There are certainly ways we can be more efficient. We are right at the point of handing over a lot of this communication buy a radar to the gps satellite system. That is, as i understand it, it is going to occur in about three years, where as the remaining implementation over of the entire next generation is going to be over a dozen years. That can certainly be made more efficient and effective and indeed it will save time and fuel and money for the traveling public as well as the airlines. If you can go from. A to c instead of having to go because of a radio beckon from a to btoc and you can cut off the dog lag with a beeline straight to your destination, then it saves a lot of time, fuel and money. And that is the point of next gen, plus having Situational Awareness in the cockpit, so that you know at all times. And Communication System in the cockpit that you know what other traffic is around you. At the same time, the traveling public is frustrated. Look at what we are seeing everyday. They are frustrated. They cannot check the bags or board flights with increasingly shrinking sizes of and or overbooked seats without paying fees. So on one of the airlines is ordering a whole new set of boeing 73 70s and instead of 31 inches between the seats and tourists, in fact, they are going to get it down to 29 inches because they are going to put in this new boeing 737, and additional 12 seats in the same amount of cabin space. Passengers are expressing their frustration. They are frustrated that airlines wont design their websites that clearly communicate their fees and policy. They are frustrated that failing airline i. T. Systems result in canceled and delayed flights for days on end and i see a lot of our members with very intricated, interested expressions on their faces because it happened to us as well. So this is why this years faa reauthorization legislation must once again include strong Consumer Protections to address these growing frustrations. After all, if the airlines cannot even manage their own i. T. Systems, you can imagine, if you took and put all of that over into air Traffic Control, and that doesnt give us a very good result. So, so lets deal with the real problems look the way passengers are treated as valuable customers which the airlines obviously want to do. Lets just dont go around trying to find a solution in search of a problem that is not a problem. So willings keep the focusing on a bipartisan longterm and i would say fiveyear comprehensive faa reauthorization bill and try to do it to show that actually in this congress we can get something done and something passed and passed in a bipartisan way, and so as usual madam secretary, all of us look forward to working with you, are an excellent public servant. You have given yourself to Public Service over the years and we appreciate that very much. Thank you. Thank you, senator. He gave you a lot to chew on there. We look forward to hearing from you. If you would proceed with the remarks then open it up to the panel for questions. So thank you for being here. Welcome. Thank you very much. Chairman, Ranking Member nelson, members of the committee. Thank for inviting me to testify before this committee on the future the federal Aviation Administration and the fa reauthorization ledge slags. Now know, near lay century has passed since the federal government began regulating the nations air space. We have come a long way since the Transcontinental Airway system, from the 1920s. Pilots flying at might with light towers and huge concrete arrows painted yellow, in the decades sense, a progression of congressional and president ial initiatives has resulted in the air Transportation System we know today. And altered the Regulatory Framework along the way sometimes quite dra matley. To keep up with evoking technology. New reg lag torienties were created and old ones were restructured. To make more efficient and effective use of our nations airspace and to improve aviation safety. We can all take pride in the premachine douse gains that have been achieved, but as you all know. The pace of technological change has increased dramatically over the past several decades at the same time. The traditional model of Government Procurement and budgeting is making it more and more difficult to keep up. Air Traffic Control ises a perfect example. Despite billions of dollars of taxpayer investments over several decades to implementation of stateoftheart air Traffic Control technology is not where it needs to be. So this administration has taken a bold step and joined many of our counterparts worldwide bicep operating air Traffic Control operations from the safety oversight functions of the faa. This administrations proposal would create separate nongovernmental, nonprofit cooperative to operate our countrys air Traffic Control system. The new in ty would be a fullycapitalized, financially selfsustaining, entity funded bayousers of the services. All surpluses for our revenues would be reinvested back into the system because just because it is nonprofit doesnt mean it doesnt accumulate surpluses. Mindful that the key to any organizations success is the employees, the administrations proposal poses that the new in ty honor existing labor agreements and that employeesrance fer from the faa to be kept whole in terms of pay and benefits, although, they would no longer be federal employees. These reforms will accelerate the deploy of new air Traffic Control technology that is so critical to managing the National Airspace with more precision, thereby enhancing safety, passengers will benefit because these reforms will speed up the delivery of new technology that will delay, that will reduce, delays and congestion. Air Traffic Controllers will benefit because the reforms will ensure they have the most uptodate tools and technology. I want to single out, thank the dedicated professionals, who are, indeed, the best in the world. They are true heros, keeping the flying public safe every day. And taxpayers will benefit because the system will be fully financed with user fees. And let me mention again, that 100 of the surplus will be able to be reinvested back into the system. We also believe the positioned new in ty is necessary to acome adult the expected dramatic increase in passenger traffic over the next decade. And to integrate new entrant has to the airspace such as Unmanned Aircraft systems and commerce space operations. My written testimony contains more detailed information on the proposal and of course legislative language to be submitted will contain many more details. It is worth noting that over the past 20 years, more than 60 countries have successfully managed similar atc, air Traffic Control reform efforts. Each country is different, we recognize that. We also recognize that the u. S. National airspace is the biggest and most complex in the world. Nevertheless, there are lessons to be gleamed from the experience of other countries and we need to embrace transformational reform. Innovation, and the ability to change with changing times is one of the hall marks of our country and part of our aviation history. The proposed reforms will ensure that remains the worlds ladder in aviation Going Forward into the future and this is an industry that we pioneered, so thank you for the opportunity to appear before you today. I will be happy to take any questions that you may have. Thank you, madam secretary. As i mentioned in the owing statement. There have been many concerns raised regarding the recent proposals for atc reform and the impact on Small Community air service. I was glad to see that the principles announce by the president this week underscore the need to maintain access and services for Rural Communities and my question is how does the vision, this proposal for a new atc entity ensuring that there are such safeguards in place for Rural America. The administrations proposal will enhance safety and improve access and also increase efficiency. All of these features will help make the system better, as we have already heard, the congestions and delays that we are seeing in our airspace can be alleviated by different government structure, so tardiness with which were implementing technological advances can be addressed through taking this air Traffic Control and entity out of bureaucratic Government Procurement rules and we have the best and the safest system in the world. We want to maintain that. To enable the system, in the future to maintain the supremacy. Weed that he to have much needed technol low cag call advances. We need to have technological advances. We need to have a different way for the air Traffic Control system to be able to space airplane, for example, and on the rural front, i am very concerned about access for Rural America. Currently, the rural areas are most hurt buy the status quo. In terms of low traffic towers, air Traffic Control tower, many of which are the first to be cut in any budget cutbackses so Rural America, if prit accesses to Rural America, would actually be enhanced the air Traffic Control system would be taken out of the bureaucratic government and procurement processes. Well, yeah, i guess the only thing i would add is you would understand and look at the composition and represent rural states that are with a lot of geography. Not a lot of people in smaller airports and communities where gen rave i have a is is important. I, look you shall i think, share a concern that rural areas be treated fairly and there would be safeguards put in police and i guess pacifically my question was as to what safeguards in the administrations proposal, in what ways would they go about in shoring the rural areas would have access and that access to the nations air system would be affordable. And, so if it, if you have, hean, you know, at this point, you know, since there is no legislation specifically to look at, and sort of gain that out. That is something, obviously, a lot of this committee would be interested in knowing about. There were editorials in yesterdays washington post, several other pap ares that echoed the president s call to spin out the atc function are the faa anothe basic consince has been around for listening to emand enjoyed support by democrat and republicans at various times. What would you say, for instance, to those who argue that next gen is working out fine, that reforming the atcs system will actually slowdown the modernization process . Well, we respectfully disagree. Men and women who work on next gen are doing their very, very best. We do not want to criticize them. The next gen effort has been going on for quite awhile and it has expended billions of dollars. Were still facing many, many delay, procurement issues that existed decades ago. I was the deputy secretary in 1989 and coming back, into the department in 2017, i am hearing the same arguments, the same descriptions of the problem as i did then. The row scurment issues are real. We need to make sure that the hardworking men and women who man our air Traffic Control system have the latest technology. Rooting now the air Traffic Control system is operating from vacuum tubes and paper strips at an age where we have Digital Technology available, so we need to, again, equip our, um, tremendous air Traffic Controllers for the best tools they have going to the future. Senator nelson . Thank you. Haddam secretary madam secretary. We will have a a disagreement on this. And, and respect you, as you go about your duties, i would point out that one o one of the reasor the delays on the next gen implementation is lack of money. And lack of money also gets in the way, for example, a lot of rural airports are covered by contract towers, they are not faa. And we went through that drill a couple of years ago, and had to, had to really get with it because some of those contract towers were being cut out simply as savings. A lot of the rural airports that dont have them now would lake to have contract towers, but again, a function of money. I dont think that when you compare that to the organization of the implementation that that is the reason why you suddenly turn all of the government assets over to a private in ty. That is my opinion and we will certainly in the crucial of debate and amendments proceed and see where it comes. I want to, i want to give most o