I. COMMISSION FINDINGS AND RECOMMENDATIONS
The aviation system of the United States is at a critical crossroads. Aviation activity
is growing, the technology of aviation is changing rapidly, and the business of aviation
is becoming more complex.
Yet, a critical piece of aviation's future is in doubt. The Federal Aviation
Administration (FAA) currently lacks the organizational, management, and financial
wherewithal to keep pace with the dynamic aviation community. Unless the FAA and various
aviation stakeholders -- the Congress, the Executive Branch, and the aviation community --
change the status quo, internal and external to the FAA, our nation's aviation system will
succumb to gridlock. Delays will skyrocket while we reminisce about the
"reliable" flight schedules of the past. This current course will impair our
domestic economy, reduce our standing in the global marketplace, and result in a long-term
deterioration of aviation safety. In this regard, the Commission has made several critical
A. Commission Findings
- Gridlock is near and will be expensive: Traffic data and trends indicate
that adding just a few minutes of delay to each airline flight in the United States will
bring the aviation system to gridlock with dramatic negative impacts on the economy. The
airline industry's complicated schedules are based on precise and efficient air traffic
control technology and management. Rapidly growing demand combined with a reduction in
capacity, as the result of outdated equipment, will bring our nation's aviation system to
gridlock soon after the turn of the century. Gridlock could also have safety implications
as pressures to meet flight schedules grow just at a time when capacity is increasingly
- Budget rules are crippling: The present system of federal budget
regulation is inappropriate for a system controlling commercial operations that needs to
be driven by demand for services. Budget rules that govern the federal aviation system
must be revised. The money problem that faces the FAA is an inability to access the
revenues collected for its use.
- Too many cooks: Authority and accountability are too diffused to run a 24
hour-a-day, high technology, rapidly changing operating system for a major commercial
industry. Everyone responsible for the current ATC system -- the FAA, the DOT, the
aviation industry, the Administration and the Congress -- want to make the system work.
But there are too many people in charge. The problems are systemic and require basic
changes in command and control.
- FAA is nearsighted: While the vast majority of FAA employees remain
dedicated and professional, the FAA itself impedes needed modernization by not focusing
enough on determining and meeting its external users' needs for high quality and modern
services at reasonable costs. Modern business tools such as a cost accounting system that
tie specific costs to services and measurement tools to assess how well services are
provided are not yet available. Incentives are needed to change the FAA culture to be more
externally focused on users and services and more businesslike and responsive.
- Increasing operational costs overshadow capital investments: The funding
system forces trade-offs which substitute operational costs for capital investments. The
system is in a downward spiral where increasing operation and maintenance costs, driven by
outdated equipment, are "freezing out" new investments under current federal
budget cap assumptions. Future system capacity will be reduced in real terms from today's
- Airport needs are not being met: Airport related congestion will increase
in the future without a strong, federal commitment of resources. Airport capital
investments must be hand-in-hand with ATC investment to maintain system capacity.
- International competitive stature will be hurt: Historically, the U.S. has
been the leader in air traffic management and technology. However, other countries are
moving ahead of the United States in making improvements to their aviation infrastructure.
Falling behind other countries in making critical capital investments will certainly
affect our international competitive position
The National Civil Aviation Review Commission believes these problems can be rectified,
but it will take dramatic changes in the way that the air traffic system and airport
development are managed and financed. Institutional relations within the FAA and among the
various stakeholders must be altered if we are to increase accountability at the agency,
improve management performance, and ensure sufficient resources are used effectively.
The Commission notes that the identification of these problems is not new, and that
previous Commissions and analyses have pointed to them. Among these are The National
Commission for a Strong Competitive Airline Industry (1993), The Clinton Administration
Air Traffic Control Corporation Study (1994), The White House Commission on Safety and
Security (early 1997), and the Coopers & Lybrand FAA Independent Financial Assessment
(early 1997). While these problems are not new, there is now a realization and a consensus
as to their seriousness and implications.
B. Commission Recommends an Integrated and
Meeting the demands of a growing, complex aviation system is no small task. In this
report, the Commission recommends broad and sweeping changes in the ways the FAA is
managed, sets its priorities, assesses and achieves performance outcomes, and is financed.
As a package, these reforms put the FAA and aviation stakeholders in position to take
advantage of industry growth and technological change.
The Commission has agreed on a set of five broad recommendations that stem from their
findings. The recommendations are viewed as a comprehensive package and strongly supported
by all Commissioners. Any alternative to the Commission's proposal must demonstrate
singular consensus to be credible. It must be recognized that the strong consensus within
the Commission for these recommendations exists because they are viewed as a comprehensive
package. Moving forward on implementing some elements of the package without the others
being addressed would result in a loss of this consensus. The importance of this consensus
is demonstrated by the shortfall of previous efforts which lacked full industry support to
reform the FAA. The Commission's recommendations are included in the proposed legislation
in Attachment I and are summarized below.
- The FAA's Budget Treatment Must Change: The Commission recommends that the
FAA's funding and financing system receive a federal budget treatment ensuring that
revenues from aviation users and spending on aviation services are directly linked, and
shielded from discretionary budget caps. This will ensure that FAA expenditures will be
driven by aviation demand.
- FAA's Management Must Become Performance Based: The Commission recommends
that the air traffic control services be placed in a performance based organization (PBO)
which is managed by a Chief Operating Officer, and overseen by a board of public interest
directors. In addition, the FAA should have a cost accounting system and be given
authority to implement innovative programs involving leasing and borrowing authority. The
Commission further recommends that the safety and security functions of the FAA that are
separate from the PBO should also adopt a performance based management philosophy so that
the quality of these programs can be improved.
- FAA's Revenue Stream Must Become More Cost Based: The Commission
recommends that the FAA adopt a cost-based revenue stream to support its air traffic
system activities including capital investments. At the same time, funding for aviation
security, safety, and government use of the air traffic system should be provided by the
federal government general fund.
- The FAA Must Control Its Operating Costs and Increase Capital Investments:
The Commission has reviewed the FAA's forecast budget needs and assumes the agency's own
budget projections to be reasonable in a status quo environment. However, the Commission
recommends that FAA operating costs could be better managed and controlled and that
investments in air traffic control modernization should be increased.
- Airport Capital Needs Must Be Met: The federal requirements of airport
capital development currently exceed the amount of revenue presently available to finance
these requirements. The Airport Improvement Program (AIP) is the linchpin of airport
financial planning and the Commission believes AIP should be funded at a minimum of $2
billion annually over the next five years.
These recommendations are strongly interconnected. Without budget treatment that links
aviation revenues and spending together, key capital investments will not be made despite
industry's willingness to pay. Without movement to a cost-based system, FAA's improved
performance will be limited, because the agency will lack critical data to judge
performance and appropriate market signals to make sound investment decisions. Without
management and organizational changes, there will be no guarantee that any dollar that
goes into the FAA is used wisely and efficiently.
These connections are the basis for why the Commission's recommendations are
comprehensive and sweeping. It is the belief of the Commission that without these changes,
the aviation system infrastructure of this country will become an impediment to economic
growth. Critics of these proposals, or defenders of the status quo, must provide a
compelling alternative, for the current system is headed down a path toward economic
disaster and reduced safety. Since this is unacceptable, the Commission offers its report
as a clarion call to action and innovation.