Web actors, increasingly important, but we dont have strategies for how to bring them together. Watch after words, sunday at 9 00 p. M. Eastern on cspan to the tv. Transportation secretary elaine chao testified before the senate and Transportation Committee on the proposal to privatize the air Traffic Control system. [inaudible conversations] good morning. I want to welcome secretary child back today. This is her first time before the committee since being confirmed. Madam secretary, i want tong thank you for appearing to discuss reauthorization. R we are working hard on a bipartisan basis to produce a bill. Hopefully during this work. We appreciate the engagement. The committee has held hearings on a range of topics underpinning this effort including safety, drone policy, role issues, aircraft concerns and infrastructure financing. One of the key issues we have not yet focused on this year but that has been discussed atet pensively occurs in other parts of the world is whether the United States should separate the air Traffic Control provider system from the f aa incom create a Nonprofit Corporation to do the job. 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. For the opening statement. In the way that it is so interested in this subject and with which we dispatched the subject matter last year in an exceptionally bipartisan way and an almost unanimous way. Madam secretary, welcome. The current extension of the faa set to expire the end of september, im hopeful that we were going to have a bipartisan and a longterm reauthorizationn bill ready to go in the coming weeks. And what i had expressed my preference to you just a few minutes ago, a bill summer in the range of five years to give you certainty over time that you have the authorization with which you need to execute the executive branch of government. I remind our committee that we passed this one year extension with a lot of substantive stuff in it. 95 to three in the senate. And at the time the chairman and i focus on areas of agreement. This resulted in legislation that addressed the safe integration of drones in the National Airspace, significant reforms to the faa 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 hybridization of air Traffic Control. So we now operate just on aneyb 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 handling the whole thing over to an untested, unproven entity . And why give away billions of dollars in government assets to an entity that will be governed in large part by the airlines . Even some of our colleagues on the other side of the aisle, is which really is not so much applicable to this committee as it is to the full senate, have not rallied nine this proposaln because they understand the potential harm to general aviation as well as too small and Rural Communities. And a fundamental breakup of the faa cannot advance when there is such Strong Division amonggress. Aviation stakeholders and in eni 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 reauthorization. Now, its no secret that the traveling public is frustrated, and i want to grant what the chairman has said about this cet matter. M there are certainly ways that we can be more efficient. We are right at the point of handing over a lot of the communication via radar to the gps satellite system. Ersta that is, as i understand it, is going to occur in about three years, whereas the remainingf 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 t fuel and money for the traveling public, as well as the airlines. If you can go from point a to see instead of having to go on route because of the radio beacon from a to b to c, and you can cut off that dog lag with a beeline straight to your destination, then it saves a lot of time, youll, and money. Fuel. Thats the point of nextgen, plus having Situational Awareness in the cockpit so that you know at all times because you have a much improved Communication System in the cockpit, that you know what of the traffic is around you. At the same time the traveling public is frustrated. Look what we are seeing everyday. They are frustrated they cant check their bags or board flights with increasingly shrinking sizes of, and or overbook seats without paying oe fees. So one of the airlines is ordering a whole new set of boeing 737s. And instead of 31 inches between the seats in tourist, in fact, theyre going to get it down to 29 inches because they are going to put in this new boeing 737 an additional 12 seats in the samea amount of having space. Passengers are expressing their frustration. They are frustrated that the airlines wont design their websites that clearly communicate their views and policies. F they are frustrated that failinn airline i. T. Systems result ints canceled and delayed flights foa days on end. And i see a lot of our members with very interested expressions on their faces because its 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. Ven after all, if the airlines cant even manage their own i. T. If systems, you can imagine if you took and put all that over into air Traffic Control. That doesnt give us a very gooe result. So lets deal with the real problems like the way passengers are treated as valuable customers, which the airlines obviously want to do. Lets dont go around trying to find a solution in search of a problem thats not a problem. So lets keep the focus on a bipartisan longterm, and iy fie would say, fiveyear comprehensive faa reauthorization bill and lets try to do it and show actually w in this congress we can get something done and something passed and passed in a bipartisan way. L and so as usual, madam secretary, all of us look forward to working with you. You are an excellent public servant. N you have given yourself to Public Service over the years, and we appreciate that very much. Thank you. Thank you, senator nelson. Madam secretary, he gave you a lot to chew on there, so we will look forward to hearing from you. If you would proceed with the remarks and then well open it up to the panel for some questions. So thank you again for being here. Welcome. And he very much. Chairman thune, Ranking Member nelson, and members of the committee, thank you for inviting me to testify before the federal aviation administration, and the faa reauthorization legislation. Nearly a century has passed since the federal government began regulating the nations airspace. We have come a long way since the Transcontinental Airway system of the 1920s. Pilots flying at night withe light towers and huge concrete arrows painted yellow. In the decades since, a and 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 dramatically. To keep up with the evolving technology, new regulatory entities 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 t tremendous gains that have been achieved, but as you well know, the pace of technological changs has increased dramatically over the past several decades. Th at the same time, the traditional model of the Government Procurement and a budgeting is making it more and more difficult to keep up. Air Traffic Control is a perfect example. Despite billions of dollars of taxpayer investments over several decades, theofth implementation of stateoftheart air Traffic Control technology is not where it needs to be. So this administration has taken a bold step and enjoyed many of our counterparts worldwide by c separating air Traffic Control operations from the safetys oversight function of the faa. This administrations proposal will create a separatet nongovernmental, nonprofit cooperative to operate our countrys air Traffic Control system. The new entity would be a fully capitalized financially funded selfsustaining entity funded by users of its services. All surplus revenues would bek n reinvested back into the system. Because just because its not proper doesnt mean that it doesnt accumulate surplus. Cess mindful that the key to any organizations success is itsis employees, the administrations proposal poses that the new entity existing labor agreements and that employees transferred from the faa will be kept all in terms of pay and benefits. Although they will no longer be federal employees. These reforms will accelerate the deployment 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 of 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 these reforms will ensure that they have the most uptodate tools and technology. And i want to single out and thanked these dedicatedt in professionals who are indeed the best in the world. They are true heroes keeping the flying public safe everyday. And taxpayers will benefit because the system will be fully financed with user fees. G and let me mention again that 100 of the surplus will be able to be reinvested back into the system. We also believe that the proposed new entity is necessary to accommodate the expected dramatic increase in passenger traffic over the next decade. And to integrate new entrance into our airspace, such as Unmanned Aircraft systems and commercial 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, and we also recognize that the u. S. National airspace is the biggest and most complex in the world. Be nevertheless, are lessons to be gleaned 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 hallmarks of ourst country, and part of our aviation history. The proposed reform will ensure that the United States remains the world leader 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, and ill be happy to take any questions that you may have. Thank you, madam secretary. As i mentioned in my opening statement, there been many concerns raise regarding the recent proposals for atc reform, and the potential impact i i should send smoke unity air service. Pr i was glad to see that the principles announced by the president this week underscore the need to maintain access and services for Rural Communities. And my question is how does the administration invision this proposal for a new atc entity insuring that there are such safeguards in place for Rural America . The administrations proposal will enhance safety, improve access, and also increased efficiency. All of these features will help to make the system better. As weve already heard, the congestion and delays that we o are seeing in our airspace can be alleviated by a different governance structure. Tardiness with which are implementing technological advances can be addressed through taking this air Traffic Control entity out ofcratic g bureaucratic governmentafest procurement rules. We have the best and safestt system in the world. We want to maintain that. And to enable the system in the future to maintain its supremacy, we need to have the muchneeded technological advances. We need to have a different way for the air Traffic Control system to be able to space airplanes, for example. C and on the rural front im very concerned about axes for Rural America. Currently the rural areas are most hurt by the status quo inri terms of low traffic towers, a Traffic Control towers, many of which are the first to be cut iu any budgetary cutbacks. So Rural America, access to Rural America would actually be enhanced if the air Traffic Control system were taken out of the bureaucratic government budgeting and procurement processes. Well, i guess youll think i would add is, as you would understand, look at the composition, a lot of people represent rural states that are with a lot of geography, smaller tumors were generally the aviation is very important. I like you, i think sherry concern that rural areas bee treated fairly and that there be safeguards put in place. I guess specifically my question was to what safeguards in the administration proposal, in what ways would they go about insuring that rural areas will continue to have access and have access to the nations ssn wouli be affordable . So if you have, maybe at this point since theres no legislation specifically to look at sort of game that up at that something a lot of people on this committee would be interested in knowing about. There were editorials in yesterdays Washington Post and several other papers that echo the president s call to spin out the atc function from the faa. They note the basic concept has been around for a long time, as enjoyed support by both immigrants and republicans at various times dick still there some equate the need for major change. What would you say, for instance, to those argument nextgen is working out fine andd that reforming the atc system will actually slow down the modernization process . We respectfully disagree. The men and women who work on nextgen are doing their very best pick and we do not want to criticize them. But the nextgen effort has been going on for quite a while. It has expended billions of dollars and we are still facing many, many delays, congestion, procurement issues that existed decades ago. I was a deputy secretary of transportation in 1989. Coming back into the departmente in 2017, i am hearing the samedh arguments, the same descriptions of the problem as i did then. The procurement issues are real, and we need to make sure that the heart of working men and women have the latest technology. Right now the air Traffic Control system is still operating from vacuum tubes and also paper strips, in an age where we have Digital Technology available. So we need to again equip our treatment this air Traffic Controllers with the best tool that they have going into the future. Senator nelson. Madam secretary, we will just have a disagreement on this, and i appreciate the position that you have to articulate for the administration, for the white house. And entirely respect you as you go about your duties. I would point out that one of the reasons for the delays on the nextgen, implementation, is a lack of money. And lack of money also gets in the way, for example, a lot of e rural airports are covered by contract towers. They